You have a property that you need to rent out, but before it can start bringing in any money, you’ll need to decide how you’re going to manage it.
There are two main options – either hiring a real estate agent or self-managing your property. There are advantages and drawbacks to both, so which one should you choose?
Here’s a comparison to help you make the right decision for yourself.
Self-management vs Property manager
Whether you choose to self-manage your property or hire an agent depends on your motivation.
Property management companies can help you deal with the day to day tasks involving your rental property, although you would lose a chunk of your rental income in fees.
On the other hand, self-managing your property means that you keep more rental income and have more control over your rental property, but will require slightly more personal involvement.
Property Management Company
You need to ask yourself – do you just want to get the income from renting out your property without dealing with the ins and outs of managing the property?
If you are someone that has lots of other things that need your attention and can’t spend the time looking after every little thing regarding the property, then hiring a property manager will be a good option. For the price of $2,000 to $3,000 per year, a property manager would handle the day-to-day tasks involved with renting out your property.
The next question you should ask is – are you someone who wants to have control and oversight over your property?
If so, then self-managing may be the way to go. You would be able to pay more attention to your property, more than any property manager would, as after all, it’s your own property.
You would save on the agent management fees, while boosting the potential of the property by having more direct control and oversight.
If you’re happy to take out a bit of time to consider how to market your property, work closely with your tenants and manage your relationship with them – then self-managing is the way to go. You might even have some trade skills you could use in the maintenance of the property.
The difference between the two options is very much affected by how you see yourself in relation to your property.
Is your property merely an asset class within your diversified portfolio?
Or, are you in the business of being a property owner? That is, someone who is interested in getting involved in the management and making the most out of their property.
Benefits of hiring a property manager
Typically for the cost of 1 to 2 weeks of rent, you could engage a real estate property manager to handle the initial letting process of your property. They’ll handle showing around potential tenants, doing the reference checks, and moving the tenant in.
Once you’ve got your tenant, you can continue to engage the property manager to manage your property. A property manager you hire manages the day to day aspects of letting a property, so you don’t have to think about anything. For example, they can handle repairs, chasing rent payments, and inspecting the property. It takes some of the pressure off you, but you’ll need to pay for these services which will affect your profits.
Taking care of marketing
There’s some work involved to get a tenant. A property manager could prepare a listing, publish it, and run an open house inspection. A property manager is already set up to do this. They can show people around, get the references, and make a recommendation to you.
You’re a busy person, and managing a property takes time. A property manager could help you collect your rent, keep your records up to date, and answer tenant enquiries. Of course, you would still need to be involved in any decision making, however, the day-to-day is handled for you.
Handling trickier situations
Not everything goes smoothly when renting out a property. Things can go wrong, for example, the tenant is paying rent is late. The property manager can have the difficult conversations for you.
Disadvantages to hiring a property manager
As well as advantages, there are drawbacks to this option. Why would you not want to use it?
There’s no denying that with a property manager, you’re giving over some control of your property to them. Someone else will be making decisions on your property. Are they going to always make the best decision for you? A good property manager will always check in with you before doing something, but some might do whatever is convenient.
Then there’s the costs involved in having someone else involved in the renting process. You’ll need to pay the property manager to handle your property for you, and that’s going to eat into your profits. Do you want to lose out on potential earnings by hiring a middle man?
For some real estate agencies, the leasing function is just a side business to the property sales business. Less experienced agents handle the leasing function before progressing the the property sales area. Unless the agency is focused on leasing, the agents might not be as motivated.
At the end of the day, the property manager discharges their obligations by performing a reasonable effort. If something goes wrong, they’re not responsible for the loss as long as they’ve acted reasonably.
Benefits of self management
If full management isn’t for you, then you should consider self management. Is it going to work better for your needs?
Self-management could potentially save you $2000-$3000 a year, and being more personally involved could mean achieving a better outcome.
Of course, there are always costs involved in renting out a property. Building updates, repairs and more always cost money. However, with self management you’re handling them yourself, you’re not paying the property manager to do it for you. That means more of that rent goes into your pocket, rather than someone else’s. Many choose to self manage as they want to make more money on their investment.
Don’t wait for an agent to notify you – the best thing about self management is having full control of your property, at all times
Great for experienced landlords
If you own multiple properties and have been renting them out for a while, you’re going to know the ins and outs of the process well. This is where many people choose to step in and handle the running of the properties themselves. You can reap all the benefits of it, without worrying about paying someone else. As you’re experienced, you know what to expect and how to keep everything running.
You want to get to know your tenants
If you’re managing the property yourself, then you’re going to get to know your tenants a lot better. This starts right from the selection process, as you’ll be doing viewings yourself and assessing potential tenants yourself. Once they have moved in, you’ll be able to get to know them. Having that relationship is great, as it encourages the tenants to take care of a property. They’ll also find it easier to come to you with problems, and sooner.
Full control over your property
The best thing about self management is that you’ll have full control over your property, at all times. You won’t have to wait for a rental agent to let you know about any issues, as you’ll be the first point of contact. It’s the best option for those who prefer to be hands on.
How Rentdesk can help self-managing owners
Of course, there are some drawbacks too to self management including having to keep up day-to-day tasks and being up to date with leasing regulations. Rentdesk offers an online rental management platform to assist self-managing owners at the lower cost compared to hiring a property manager.
Helping find and onboard new tenants
Agents have access to internet portals and tools to make finding and on-boarding tenants easy. You can have the same access to internet portals, tools to capture leads and onboard tenants.
Taking care of day-to-day tasks
Day to day tasks can be quite manual if you don’t have the systems in place. Rentdesk helps automate a number of procedures including managing rental payments, the rental ledger, and handling tenant requests.
Keeping up with regulations
If you’re not legally minded or inexperienced, then it’s very easy to fall foul of the law when you self-manage your property. All the latest regulations are built into the system, so you don’t have to worry about keeping track of every single rule.
Should you self-manage your property?
With all this information, you should now be able to decide if self management is for you.
You may prefer to have a property manager help manage your property. You consider yourself a passive investor. Someone who just wants to receive a bank deposit. The manager takes on the day to day.
Self management often works best if you want to make the most out of their property. You want to foster better relationships with their tenants, as it makes everything run so much smoother and lets you stay more in touch with the property.
With so many tools and online resources available these days to assist self-managing property owners, it isn’t as hard as it used to be.
So, which should you do? It very much depends on you and what you want to get out from your property. If you want to simply get the money coming in, and don’t mind losing some profit to do so, you can hire a property manager to help you. If you want to have control over your property and get the full benefit of operating a rental property, then self-management is for you.