When acquiring real estate property, you have to decide how you will handle day-to-day operations. Many investors choose to manage the property themselves, especially if they have a proven track record and prior experience in the field, but in most cases, people prefer to hire a property manager to do the work.
Hiring a property manager is a significant investment, but the value, experience, and vision that they bring to the table are considerable since they can help you get the maximum ROI possible.
In this article, let’s explore the benefits of hiring a property manager before you decide how would you like to manage your assets.
Property management expenses
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Like every other service provider, the cost of hiring a property manager varies according to the company. Generally, the fees are calculated based on the level of experience and reputation of the management company, the range of services needed, the local market, and the conditions of the property itself.
With that said, you could be paying a management company between 8% to 10% of the collected rent for a long-term rental property, like a multifamily complex.
To illustrate this further, let’s say you have a 4-unit asset that makes $4,000 monthly in collections. Assuming your property is fully occupied, 10% of your rent translates to $4,800 per year.
Another thing to have in mind is that you’re better off hiring a property manager if you have multifamily properties since the management fees for single-family homes are often much more expensive.
The cost keeps rising in the case of vacation rentals, where you can expect to be charged at least 25% of the collected rent, given that the logistics and implications of managing this type of property are significantly more complex than other types of assets.
The benefits of hiring a property manager
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Having read all of that, you might be thinking that 10% seems like a large expense, but what you’re getting will show it’s worth
In the first place, a reputable property manager will have extensive knowledge of the local market in which he or she will operate, which also means they know with a great deal of accuracy how much money can they get for a particular property.
A good property manager will usually rent a property for more than you had hoped to get in most cases, which means that their work will effectively pay for itself.
Another important element to consider is the fact that they will handle all of the marketing operations related to your assets. Generally speaking, property managers are working with several properties at a time, which means they’re also investing in bringing in more tenants to make bigger returns.
And the most important part of getting a property manager is that they will handle the day-to-day operations of your property. If it’s vacant, they’ll attract potential renters, verify references, conduct credit checks, and overall facilitate the process of moving in for them.
Once they strike a deal and the property is occupied, they deal with any maintenance issues, complaints from tenants, facilitate repairs if needed, collect rents and even start an eviction process if necessary. They can also handle certain bills on your behalf, like water, garbage collection, sewer, and more.
Should you hire a property manager?
Generally speaking, we’re of the opinion that most real estate investors would benefit from hiring a property manager, as the potential value you can get makes well worth the price.
It is a good investment for any type of investor. For those with little to no experience in real estate investing, it takes a lot of effort and time to manage even one investment property, and even seasonal investors will reach a point where managing a portfolio of assets starts feeling like a full-time job.
For that reason, hiring a property manager opens up the opportunity for investors to focus on their career, family, and finding new deals, while the details and nuances of managing rental properties are outsourced to a professional that can guarantee success and great returns.