You have already made the smart decision to be a real estate investor, and that at some point you’ll need a property manager. Now it’s time to figure out when the best time to start using the services of a property manager. Do you want to start with one from the get go, or do you want to manage the property yourself for a bit and do it later? The answer to that will depend on a few considerations.
The first is how many properties do you have?
If it’s just one, you may want to wait a bit before starting with a property manager. This is especially true if you are in the same location as your property and the property is well maintained. In this case the cost may outweigh the benefit.
However, if this is your second or third or more it would probably be the right time. If you have a lot of properties you will benefit from what the property management company will be able to provide.
Multiple units means that you won’t have the time to be sure that you have good tenants and well maintained properties. You may be able to get rents collected, but it is doubtful that you have your own system to take automatic payments.
What about the knowledge and time it takes to evict a bad tenant?
If you have one or more properties and you live at least an hour or more away from them, you need a property management company.
That “hey, my heat is out” midnight call will be even more annoying to both you and your tenant if it takes you until 2 or 3 in the morning to even get there to see what is going on.
Then what if you don’t know who to call in the area to fix it? The same goes for evicting a bad tenant from a long distance away, or finding a new tenant from that same distance away. It is all made that much more difficult, so why try when someone who knows the area, has contractors on hand to make repairs and knows the local landlord tenant law?
Another consideration is how busy your life is and how well you can handle the added burden of taking care of your property or properties. If you think it would be too much, why not hire a property management company? They will take that burden from your shoulders, leaving you to handle your daytime job or the other businesses, as well as your family.
Part of this consideration is your desire to be a hands-on landlord. If you don’t, then you need to hire someone to do it for you. What you may not realize is if you do become “hands-on” you’ll become an employer and have all of the headaches that entails.
Last consideration is whether your property is, or will be, part of a state or federal affordable housing program. These programs can have complicated requirements and dealing with tenants in this kind of program can be a minefield that could get you in a lot of hot water.
Typically, these programs involve the landlord receiving financial assistance, like a grant or low interest loan in return for a guaranty that they will rent at least part of the property to tenants earning below a certain income level. Also under this type of consideration is all of the different fair housing laws. Do you know what they are? Do you know what it means to violate them? Do you know what it will cost you if you violate them? These are also very complicated laws and regulations and one misstep could cost you thousands of dollars or more.
Making the decision to hire a professional to help you with your investment properties will vary but keeping the above in mind will help you make the right decision at the right time.