The hardest job to hire for is something you used to do.
For me, as a real estate investor, there were two jobs that were hardest to give up.
One job that was hard to hire out was painting, as I had been a painter myself for 13 years before becoming a contractor for another 10 years. Of course, there’s nothing wrong with working in a trade, but after hurting my back and then entering the world of real estate and note investing, it no longer made sense for me.
The second job I was slow to hire out was property management. In the end, however, I didn’t have much of a choice. I had been a property manager at a ReMax, and we merged with another real estate office that already had a rental department. As a result, they no longer allowed their regular agents to do property management.
fter these rules changed in my real estate office, not only did I have to find a property management company for my clients, who were typically investors with multiple properties, but I also had to find a property manager for my own rentals since at this point, I no longer had enough time to do it myself, especially after entering the note business.
Luckily, I knew a couple who had gone into the property management space several years before, and they were managing a lot of units at this point. Plus, I knew the wife from when I first started in the business, and she had a very good reputation. On top of being a real estate broker, she was also a District Justice, which is someone who oversees landlord/tenant complaints at the local court level.
Besides the long track record and the fact she was politically connected, there were many other benefits I quickly enjoyed upon hiring them.
6 Advantages of Hiring a Property Manager
1. They were affordable.
In fact, they’re much more affordable than I originally thought. When I factored in all the things they did and the time they saved me, it is well worth outsourcing.
2. They offered great on-call service.
They had a 24-hour emergency service that covered things like heating, plumbing, or electrical issues. Today, I travel a lot, and this service is invaluable to me. I can still use my contractors if I want to, but sometimes it’s easier just to let them handle most of the little repairs.
- They maintain great records.
The beauty of using their service is that they track everything from the rents to the repairs, and they even write the checks to cover expenses like utilities and contractors. It’s great to get a nice year-end package that I can just hand over to my accountant.
3. They represent me in court.
Today, I’m a really busy guy. I can focus my time on running my business, or doing the things I’m best at, and they can fill in for me on those unfortunate cases that require a court appearance.
4. They’re compliant.
I especially appreciate their emphasis on compliance when it comes to drawing up leases and screening tenants. I love that they screen for things like credit history, criminal background, evictions, and even Meghan’s Law (history of sex offenses). They also have to stay up-to-date on licensing requirements, local ordinances, and state laws and regulations.
5. They handle my showings.
Not only do they show properties to prospective tenants until they’re rented, but they also meet various HUD and Township inspectors for yearly rental licenses. This is another area where the property manager saves me a lot of time and aggravation.
Tip: If you own multiple properties, see if you can leverage your total book of business to negotiate a better set of terms with the property manager.
Of course, you should consider any disadvantages too before outsourcing property management.
Disadvantages of Hiring a Property Manager
When it comes to disadvantages of hiring a property manager, I can really only think of two: cost and control.
- For many real estate investors, the biggest deterrent from hiring a property manager is probably the cost, which definitely cuts into your monthly cash flow. So if you have the time and the skills, and it’s more lucrative for you than other tasks, it may make sense to manage your own units.
- Another disadvantage could be that once you hire a property manager you’re not in control of everything anymore. Maybe you’re not as dialed-in when it comes to the maintenance and condition of your properties or the choosing of your tenants, especially as you start to rely more and more on the management company. Whether you can accept that is a personal as well as a business decision.
Starting Over, What Would I Do?
Considering both the advantages I experienced and the potential disadvantages of hiring a property manager, would I make the decision to hire a property manager again?
My answer is a resounding yes.
If you don’t outsource the job, in a sense, you’re just hiring yourself. Looking back, I think it was a valuable experience doing it myself at first, as it actually taught how to manage a property manager, as well as what to look for when hiring one.
Knowing how much time and effort is required to effectively manage my units today, the only thing I would have done differently is turn my units over to a management company sooner.
My biggest reasons for outsourcing property management are that it allows focus on what I do best (raising private equity and running a company) and that it gives me peace of mind. The focus thing is a really big deal, especially since I love what I do, I’m good at it, and it’s lucrative. So, if you make your money finding deals, flipping deals, or fixing deals, then go do that. Unless property management is your core business, focus on the stuff you do best, and stop trying to save money in the wrong (time-consuming) areas.
Peace of mind has also been more and more important to me and my family as we approach retirement. When I was young (and not so smart), I tried to do everything. But guess what—you can’t take it all with you, right? Heaven forbid something were to happen to me unexpectedly, I don’t want my family having to deal with the property management and maintenance issues. Having this all set up in advance with good people, systems, and processes helps me sleep better knowing I did the best I could for them.
So, personally, my only regret is that I didn’t hire a property manager sooner. But I realize this isn’t the case for everyone.