“If you’ve ever spoken to a financial planner about investing, then you are very aware of the importance of diversification. When you diversify your portfolio, you spread out the risk. Real estate will always serve as a safe tangible asset to mitigate the risk in your portfolio. Many have amassed wealth by solely investing in real estate.”
– James Harris, Entrepreneur
The idea of real estate as an investment opportunity is likely not new for you. Many people understand that managing properties and tenants can provide additional streams of income. While it’s not a completely passive form of extra income, owning rental housing can be a profitable side gig that benefits families of all sizes.
So, let’s say you’ve decided to dive in. You want the benefits of additional income brought in by rental properties, and you’re willing to take the risks.
How do you know if you should manage everything yourself or hire a property manager to take care of the properties for you? If you’re not sure, here are a few things to consider:
1. How much time do you have to dedicate to managing your property?
Are you a business owner with enough flexibility in your schedule that you can stop and take care of issues that come up for your tenants or does your job often take you out of town so you’re not around enough to do timely check-ins on the properties?
If you’re not able to dedicate enough time to managing your property, then you should consider hiring a property manager. Property managers are responsible for all aspects of managing a property, from finding and screening tenants to handling repairs and maintenance. They typically charge a percentage of the rent as a management fee, which can be worth the investment if it allows you to save time and focus on other things.
2. How well do you know the local real estate market?
Have you lived in the area a long time or recently moved into the neighborhood? If you’re very familiar with local real estate and you know the ins and outs of its properties, you may want to manage the rental housing on your own.
On the other hand, if you don’t have a lot of experience in the local market, it’s worth thinking about hiring a property manager. Experienced property managers have the inside scoop on local real estate. You can feel confident that they understand all that goes along with renting in the area.
Because of their knowledge and proximity to the properties, they’re available to handle responsibilities such as:
- Responding to tenant inquiries.
- Showing properties.
- Screening tenants.
- Repairing and maintaining the properties.
3. Do you have the skills to manage your own rental properties?
The U.S. Bureau of Labor Statistics describes the duties of property managers:
- Oversee commercial or residential properties.
- Ensure the property investments achieve expected revenues.
- Handle the properties’ financial operations.
- Collect rent.
- Pay mortgages, taxes, insurance premiums, payroll, and maintenance bills on time.
- Advertise the property during vacancies or hire a leasing agent to find a tenant.
- Suggest to the owners the amount of rent tenants should pay.
When you look over this list, how do your skills compare? Whether or not you have strong skills in every one of these areas, you may still have what it takes to be a landlord. You’ll just need a willingness to learn and the patience to take the time to learn.
But, if the list seems overwhelming and you don’t feel strongly about developing your own skills to manage properties, hiring could be the best solution for you.
4. Are you comfortable dealing with tenants?
We could also ask this question in a different way: Are you comfortable dealing with people?
Tenants are people, after all.
Think about how you deal with people in everyday life — at the grocery store, on the job, on the highway — and be honest about your interactions. If you’re someone who’s always flying off the handle with strangers, managing properties is probably not a good idea.
The best property managers have people skills, those intangible characteristics job interviewers call soft skills. They’re good listeners, strong communicators, team players, and more. If people skills aren’t your forte, be kind to your tenants and hire a property manager who likes people and works well with them.
4. Can you afford to hire a property manager?
Have you looked at your numbers so you know whether or not hiring a property manager fits in your budget? If not, go ahead and run the numbers so you have a better idea of where you are.
A property manager can take so much of the stress of the day-to-day rental operations off of your plate that it almost feels more reasonable to ask…How can I not afford to hire a manager?
“For a property owner who doesn’t have a lot of cash now, property management can quickly turn a decent investment into a negative cash-flowing investment. Of course, the other side of the coin is that by allowing a manager to look after a property, it frees up the investor’s time to do ‘higher value’ tasks, like finding more rental properties. If a management company costs $2,000 per year, but the time saved helps an investor buy one more property per year that nets him or her $5,000 in cash flow, then the savings might be worth it.”
– Brandon Turner, Forbes Contributor
There’s no clear-cut answer to the question of whether you should hire a property manager for your rental properties. It really depends on your unique circumstances. Asking yourself the above questions will help you determine if the time is right for you to hire help to manage your rentals.
When you need a company you can trust to handle your operational responsibilities, reach out to our team at Gaskill Realty. Our rental property managers in Raleigh and the Triangle area of North Carolina provide full-service management of both commercial and residential properties.