Why would I hire a professional property manager when I can just manage my own properties?
If you’re new to real estate investing – or even if you have a small, healthy portfolio – that question may seem hard to answer. After all, self-management comes with some real benefits: You can lavish care on your property. You can get to know your tenants personally. And perhaps most important, you can keep 100% of your rental income, since you’re not shelling out fees to a management agency. And isn’t that why you became a real estate investor – to maximize your income?
It’s a tempting line of reasoning, and there are certainly property investors who make the landlord / self-management approach work. But the surprising fact is that hiring a professional property manager helps most owners make more money and gain their time back. To understand why, you need to begin with one simple question.
How much is your time worth?
If you’re like most property owners, you grossly underestimate the amount of time it takes to self-manage your real estate portfolio. It’s not just about rent collection or routine service calls. It’s also handling move-ins and move-outs, gathering and processing documentation, marketing the property, finding new tenants to fill vacancies, and so on.
So let’s imagine you own a few single-family homes, and you’re collecting $30K in annual rental income. Not bad! Of course, after taxes, you’re only keeping about $23K of that. And if it takes you 20 hours of work a week to keep up with your property management duties, that means you’re working for around $23 per hour. Is that really all your time is worth?
Even if you luck out and find a very low-maintenance investment, you might double your hourly wage. But is $46 per hour the best you can do? If you want to keep growing as an investor, you need to plow your time into something more valuable: investing.
Making use of your investment chops
As an owner, you already have an incredibly valuable skill-set: You know how to evaluate, develop, and invest in residential property. In this sense, it’s a waste of resources for you to be patching drywall or trudging down to the notary public. Just like a CEO might hire an executive assistant, you need someone to take care of entry-level tasks so you can use your time in smarter ways.
That’s exactly how a manager can help you grow your net worth. Once you’re freed from the menial tasks of managing a property, you can focus on researching new investment opportunities, investigating potential risks and rewards, and ultimately purchasing new properties to add to your portfolio. And that kind of work will be worth a lot more to you in the long run than $20 per hour.
How exactly managers free up your time
Even if that all sounds good in practice, you might still have serious reservations about hiring a property manager. Will they actually save you time – or will you just end up ‘managing your property manager’?
In fact, management services can protect your time as a property owner in ways you wouldn’t even expect. Here’s a short list of the key ways a manager makes your life easier:
- Tenant screening. You might think your ‘gut feel’ is good enough, but one problem tenant who trashes your property can wipe out a whole year’s income. Do you really want to risk it? Good real estate management firms run thorough background checks and used advanced analytics to find the very best renters who maximize your long-term income.
- Navigating the law. With everything from local zoning and building codes to tax laws and the Fair Housing Act in play, mastering the legal intricacies of being a landlord can be incredibly challenging. When you hire a property manager, all of that becomes someone else’s problem.
- Repairs and maintenance. Keeping up with basic property maintenance can feel like treading water. Leaky pipes, broken boilers, jammed door locks, roof and foundation work… it’s truly a 24/7 responsibility. Property managers stay on the front lines of that battle. When there’s a crisis, their phone rings – not yours.
- Negotiating better rates. When major work needs to be done, top-tier property managers like Great Jones can call on a trusted network of service professionals. We’ve pre-negotiated deeply discounted rates on parts and labor, so the job gets done for a fraction of what it would cost you as a normal retail customer.
Sound appealing? Learn more about how Great Jones can simplify your life, so you can spend more time on what matters – whether that’s building your estate or just enjoying your leisure time.