Key Takeaways
- Compare the value of your time, not just management fees, when deciding whether self-management makes financial sense for your rental.
- Build consistent leasing, screening, maintenance, and recordkeeping procedures if you plan to manage your property yourself.
- Consider professional management when property location, portfolio growth, or competing responsibilities make hands-on management difficult.
- Evaluate a manager’s services, local experience, communication systems, and fee structure before deciding whether the added cost fits your investment strategy.
People say that investing in real estate is a means of creating wealth over years. However, owning a rental property does not mean that such an endeavor is passive. You have to find tenants, fix broken equipment, and monitor the property.
Performing these functions and generally being involved in the management of the property can be perfectly normal for some landlords. But if you do not feel that managing the property is your cup of tea, you can choose to hire someone to perform this activity for you.
In this article, LRES Property Management will go over the differences between self-managing and hiring a property manager.
What Does Self-Management Involve?
Self-management is a situation when the owner of the rental property accepts the responsibility for its management and has to perform all the associated functions.
It could entail: creating rental listings, getting prospective tenants to call, organizing viewings, vetting potential tenants, making lease documents, conducting pre- and post-rental assessments, handling maintenance requests, keeping financial records, and supervising lease extensions.
Why Self-Managing is Attractive
Self-management has one obvious benefit: it is in your hands. There is no need for an owner to wait for the management firm to make decisions or communicate with tenants.
When it comes to maintenance issues, the owner can simply decide how things should happen. If there is someone qualified to rent the property, the owner can easily proceed with the renting process directly.
Self-management can also be a good educational experience. An owner who deals with their rentals on their own may learn more about tenant expectations, maintenance expenses, lease agreements, and real-life situations of working with investment property.
For someone establishing a small portfolio, this serves as a great way to gather experience. It is worth noting that self-management works best for owners living close to the property and having flexible working hours.
Costs of Self-Management
The direct cost of self-management is time. This is a less obvious cost of disruption introduced in the owner’s personal and business life. A maintenance request made by a tenant probably won’t come during a desirable business time.
A potential tenant may want to inspect a property when the owner is engaged in their work. A contractor may need a specific time for access. And a vacancy may require several contacts before finding the tenant.
The owner may save management costs by doing all tasks themselves, though they are spending a lot of personal time doing things that could have been delegated.
This does not indicate that self-management is a bad choice. It simply states that an owner’s time should be regarded as a real business cost when making the decision.
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What a Property Manager Has to Offer
A property manager may take a lot of operational tasks from a rental property owner. Potential services may include property marketing, screening tenants, collecting rent, administration of the lease and/or renewals, and other administrative tasks.
Arguably, the biggest advantage might be the uniformity. As opposed to treating every situation as a new case, a property management company works through a system or procedure that has already been established.
This could especially come in handy as one increases the number of properties being rented out. Instead of the owner being the first point of contact for any inquiries from tenants, the management agency is treated as the point of contact.
For certain investors, that distinction is exactly what ensures that one has an investment instead of another employment.
Local Knowledge Can Have an Impact
Property management is especially valuable when the owner does not know the current rental market. A local expert will know rental demand patterns at the neighborhood level, what tenants expect, the same seasonal trends, how a property should be presented and marketed, etc.
In instances of problems with the property, such as maintenance issues, someone with local knowledge will have established relationships with contractors and will likely be able to arrange repairs more quickly than an owner who has just bought a property in a new area.
Although local knowledge does not always guarantee a better outcome, it at a minimum shortens the learning curve for an owner.
Screening Tenants Requires Discipline
Tenant screening is perhaps the most critical aspect of rental property management, and owners facing a vacancy may be tempted to approve an applicant in a hurry.
However, filling a vacancy is not the ultimate goal. The ultimate aim is to identify a qualified tenant through a consistent and legal screening process.
Many professional property managers have procedures in place for each step, such as collecting applications, screening reports, documenting decisions, and communicating with applicants.
Owners who manage their own properties also need to put their own procedures in place so that they are consistent, as well as be aware of fair housing laws and other applicable laws.
Final Thoughts
Owning a rental property can be a significant investment over the long term, but it takes a lot of work to keep it running smoothly.
If you are comfortable with managing tenants, dealing with maintenance responsibilities, leasing, and handling administrative tasks, you might find it worthwhile and beneficial to manage the property yourself.
However, if these activities prevent you from engaging in other important aspects of life, then managing the property professionally might be a better, more beneficial option.
Before you make your decision, consider all your options, your time, experience, the locality you are in, the number of properties in your portfolio, and your ability to cope with unexpected incidents.
Then calculate the true costs of both approaches, both financial and also in terms of time, stress, risk, and opportunity. The best management option is the one that helps you protect your property, responsibly care for your tenants, and meet the larger financial goals.
If you want more information about what a property manager can do for you, contact LRES Property Management today!
Frequently Asked Questions
How Should Landlords Compare Property Management Fees With The Cost Of Self-Managing?
Estimate the hours you spend on leasing, applicant communication, rent collection, maintenance coordination, recordkeeping, and other recurring responsibilities, then consider what that time could be worth elsewhere.
You can also account for expenses such as marketing, software, professional services, and contractor coordination. A management fee may make sense when the services support a broader investment strategy, but the right calculation depends on your property, portfolio, and priorities.
When Does Hiring A Property Manager Make More Sense For An Orlando Rental?
Professional management may be worth considering when an Orlando rental is difficult to manage from your current location, when your schedule offers little flexibility, or when you are adding properties to your portfolio.
LRES Property Management serves Orlando and communities throughout Central Florida and offers services that include property marketing, rent collection, maintenance management, and financial reporting.
What Should I Ask A Property Manager Before Hiring Them?
Ask exactly what is included in the management agreement and which services or situations may involve additional charges.
It is also important to understand how fees are calculated and when they apply. LRES, for example, publishes different management plans and separate charges for certain services, demonstrating why owners should review the complete fee structure.
What Are The Biggest Compliance Considerations For Self-Managing Landlords?
Self-managing landlords need to understand the federal, state, and local requirements that apply to their rental property and management practices.
Because the rules that apply can depend on the circumstances, owners should avoid relying on general information when dealing with a specific legal issue. When questions arise, consulting a qualified Florida attorney can help clarify the requirements that apply.
How Can Owners Make Self-Management More Efficient?
Create repeatable procedures before problems arise rather than deciding how to handle every situation from scratch. Owners should periodically review their procedures to make sure they remain consistent with applicable requirements.
If administrative responsibilities continue taking time away from work, family, or other investment activities, that is a practical point at which to reconsider professional management.
