6 Questions to Ask Before You Hire a Property Manager

By Dan Rafter on 8 January 2018 0 comments

Your goal when buying rental property is to make money. Hiring a property manager to operate that property for you — find tenants, schedule repairs, or hire outside help like landscaping companies — costs money, and can quickly eat into your profits. Managing your rental properties on your own eliminates this extra expense.

There are times when it does make sense to hire a property manager, however. In those times, that extra expense is well worth it. You just need to determine when this move is the right one.

Here are a few questions you need to answer to determine whether hiring a property manager makes sense for you. (See also: How to Choose Income Rental Property)

1. Where is your rental property located?

Hiring a property manager makes the most sense when your rental buildings are located far from where you live. Maybe you live in New York, but your rental properties are in Florida. Managing those properties from more than 1,000 miles away is going to be a challenge.

Say tenants complain that their heat isn't working. You can't just jet down to your property to eyeball what might be wrong before calling in a contractor. If you are working with an area property manager, though, they can quickly respond to your tenants' complaints and find a professional to fix the problem.

Traveling to and from a property located hundreds or thousands of miles from your home can be expensive. Hiring a property manager might be the more cost-effective solution when your rental units are located too far away.

2. Do you own too many properties to manage on your own?

Even if your properties aren't located far away, you might need the help of a property manager if you own several rental properties. Yes, the more properties you own, the more income you might generate from them. But the more problems you'll have to deal with, too.

If you own several properties, you'll receive more late-night phone calls from distressed tenants. You'll have to spend more time vetting potential renters. You'll have to build a deeper roster of qualified plumbers, carpenters, electricians, and landscapers.

This all takes work. Hiring a property manager to oversee multiple buildings that you own can eliminate much of the stress that goes with this.

3. How much money do you have?

The cost of hiring a property manager varies. But it's not free. According to property management search website All Property Manager, you can expect to pay from 8 to 12 percent of the monthly rental value of a property.

Say your rental property earns $10,000 a month in rental income. At 8 percent, you'd pay a property manager around $800 a month. You'll have to determine if you have room in your budget for this fee. If the property management fee will take away too much of your profits, you might be better off managing your rental properties on your own.

4. How much time do you have?

Fielding tenant phone calls, vetting new renters, hiring contractors, and collecting rent payments takes time. If you are also working a full-time job and raising a family, you might not have enough time to manage a property and your other responsibilities.

If managing rental properties is your full-time job, your schedule might permit you to take on the duties of property management. The key is to be realistic about how much time you have. The more hectic your schedule, the more sense it makes to hire a property manager.

5. How much experience do you have?

Managing rental property comes with a steep learning curve. You might think you know what the job entails. But until you build experience in the field, you might be surprised at all that's involved in successfully managing a rental property.

That's why hiring a property manager often makes sense for inexperienced real estate investors. When you hire a property manager, you can take the time to learn the rental business while an experienced professional handles the day-to-day operations. Yes, you'll pay a bit more for this professional. But a property manager can help you avoid the most common rookie mistakes involved in investing in and managing rental properties.

6. How much conflict can you handle?

Even if you take the time to screen tenants, you can still end up with renters who won't pay their rent or who will damage your properties. Are you willing to take on the stressful and complex job of having to evict someone? If not, hiring a property manager might be the best choice.

A property manager can handle the often-lengthy process of evicting bad tenants. And by having a professional take on this task, you can avoid the emotional turmoil. It's not cheap but sometimes it's worth the fee so you can skip the headaches.

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