There are many advantages to becoming a landlord. It’s a chance to make what can be a largely passive income from property that you already own, and when everything is going well, it can seem like an easy way to make money. Many people who start by renting out one property end up with a portfolio of properties, or even an apartment block that they lease out to multiple tenants.
But most of these successful landlords don’t manage their properties on their own. They aren’t the people searching for and screening tenants. They have very little to do with collecting rent or dealing with repairs. Some of them have minimal involvement with the day-to-day running of their properties at all.
That’s because managing properties, or even just one, is hard work, and it can even be dangerous. Many inexperienced landlords have found themselves in legal or financial trouble because they fail to understand what is really required when managing rental properties. Or they become so stressed by everything they need to do that they can’t maintain positive relationships with their tenants. This can lead them to sell their properties, which massively reduces their potential income.
If you are wondering whether you should manage your rental property yourself or hire a property management team to take over, here are some of the things to consider.
Do You Understand What It Means to Manage Your Own Property?
When you envision becoming a landlord, it’s easy to focus on the part where you collect a rent check every month and forget the rest. But it takes a lot more to become a successful and profitable landlord.
You first need to make sure your property is suitable to rent out and safe for other people to live in. It needs to meet all legal standards and adhere to any regulations in your area.
Then, you need to find people to live in it. But not just any people—you want good tenants who will care for your property and pay their rent. This requires a screening process. You’ll need to draw up contracts and collect deposits.
After you’ve found reliable tenants, your responsibilities include repairs and maintenance, collecting rent, arranging cleaners for communal areas, and dealing with complaints, evictions, and other legal issues. If your tenants ever leave, you’ll have to arrange end-of-tenancy cleaning before you start the whole process again. Just the step of finding and signing tenants is an involved process that takes time and commitment to accomplish.
Do You Have Time?
The first question that you should ask yourself is if you have time to handle all the work that comes with property ownership. If you try to rush the process, you could end up with undesirable tenants, and you might have to regularly search for new tenants (and face a loss of income while you do).
You could miscalculate the amount of repairs necessary or the time it will take to complete them—but a rushed repair job could lead to low-quality work that will soon require repairs again.
A property management company can take care of all of this for you. They’ll already have connections to help get work done quickly, keeping your income flowing while freeing up your time to deal with any other issues.
Can You Afford to Manage Your Own Property?
You might think that a property management company is an expense you can’t afford, but a better question might be if you can afford to go it alone.
You’ll need plenty of emergency funds to pay for any repairs up front as well as to cover any shortfall on running costs if rent isn’t paid.
A property management company comes with its own cash flow. But, perhaps more importantly, it also comes with connections and contracts. It might have deals with cleaning and repairs companies it uses regularly, which can cut costs and give you some leeway with payments. As a new landlord, it would take time to develop similar money-saving relationships on your own.
Do You Understand the Legal Side of Being a Landlord?
The legalities of being a landlord are complex and often overwhelming. There are many laws in place to protect tenants and ensure that landlords are fair. Many new landlords find that even with the best of intentions and a desire to provide a good service and care for their tenants, they make legal mistakes which can be costly.
A property management team comes with a wealth of experience and knowledge of the law. They will handle the drafting of contracts and tenancy agreements, eviction notices, and other correspondence, and they’ll advise on the best legal practices to follow.
A Property Management Company Can Help
While managing your own rental property may be a good option for some, many landlords will find that hiring a rental property management company will help reduce stress, legal concerns, time spent resolving issues, and even expenses surrounding a rental property. A reliable property management company can take care of the day-to-day responsibilities of your properties while providing excellent care for your tenants and for you.