No matter if you have one rental property or twenty, the prospect of hiring a property manager is something that you’ve likely given some thought.
After all, managing properties, while often relatively straightforward in the beginning, is something that can become increasingly difficult with each new property. While there’s a good chance you’ll be able to manage your own rentals for a while; once you have a few more properties under your belt, the amount of work that’s on your plate can quickly pile up.
Whether you’re a seasoned landlord who’s growing tired of keeping up with the mounting work and maintenance that’s required at your properties, or a new landlord who’s looking to plan ahead, coming up with a plan for management is key to creating a solid investment strategy, and accurately assessing your returns.
With this in mind, let’s take a look at a few tips for determining how many properties you can manage on your own; along with a few questions that will help you to determine if you should seek help.
Should You Self-Manage?
Even if you feel like managing your own properties, it’s always a good idea to calculate the cost of property management right from the start.
Landlord, personal finance expert, and co-founder of SparkRental.com, G. Brian Davis advises landlords to tally up property management costs right from the start. He recommends adding10% of your projected rent for property management fees and then paying yourself that percentage. While it may seem a bit excessive, withholding funds and paying them to yourself, this strategy can help to get you off on the right foot. It makes sense when you think about it. If you factor in property management expenses from the start, you’ll be able to accurately calculate your returns –and determine if the property in question is one that will produce a decent rate of return –giving you a better idea about whether it’s worth investing in, or if you should keep looking for something better. You’ll also never have to ask the question “Can I afford a property manager?” as you’ll have already factored the costs in from the start.
Now, some landlords feel that they don’t want to hire someone because they want to learn how to manage the property on their own, starting small and learning the ropes as they go along. This can be a great way to gain experience that you can then use as you scale your property portfolio, just keep in mind that you may need to start outsourcing, once the level of work begins to pick up.
When to Ask for Help?
If you are looking to manage the properties on your own, and have the time, the knowledge, and the ability as well as the drive and motivation –then there is nothing wrong with doing it yourself.
However, it’s also important to know when to draw the line. At what point does property management become a bit too much to handle?
There’s no one-size-fits-all solution on when you should outsource, the simple answer is when it’s no longer working for you. To help give you an idea on when it may be time to outsource, here’s a look at a few questions you’ll want to consider.
- How Many Properties Do You Have?
While one, solitary single-family residence may be something that you can easily handle in your spare time; especially if you have good tenant, if you have a few properties on the line, it’s another story. The same principles apply when it comes to multi-family housing. With more occupants and more units come added work and responsibility.
- How Much Time Do You Have?
Another key consideration is the time factor. Many landlords find it tremendously difficult to balance the responsibilities of a full-time job and rental property. If you’re finding it hard to juggle all of your responsibilities, let alone have anything that resembles a social life, then hiring a property manager may be for you.
- Where Is the Property Located?
Another important factor is the property’s location. Is the property’s located in another city or even state? Is it more than an hour’s commute from your home? Travel costs to and from a long-distance property can add up –and fast, and this is one scenario where most landlords will agree that it makes sense to hire a pro.
- Do You Enjoy Property Management?
Again, not everyone is cut out for this kind of work. If you aren’t enjoying the process of managing your rental properties, or if you’re finding yourself overwhelmed, frustrated, and simply tired of the entire process, then you might want to hire a property management company to help relieve some of that extra, unneeded pressure; allowing you to outsource all of the hassles while still being able to generate an ROI.
- Are You Familiar With Landlord-Tenant Law?
Being a landlord is generally a straightforward process, but landlord-tenant law is one area where things can quickly become complicated –and fast. There are many laws concerning landlord responsibilities and guidelines that you’ll need to follow, and keeping up with them can be tricky. Areas you’ll want to pay special attention to include the screening process, to ensure that you’re operating in compliance with federal anti-discrimination laws, as well as state and local legislation on the handling of security deposits, notice for entering, and evictions. If you’re not familiar with landlord-tenant laws, you could end up making a mistake that could land you in court. You’ll want to ensure that you brush up on them –or hire a reputable property manager who will be able to help keep you in the clear.
- How Are Your Vacancy Rates?
You should also ask yourself how quickly you are able to fill vacancies. Vacancies can quickly add up, taking a bite into your profits. Two months of lost rent could easily be more than the cost of a property manager, so consider whether it would make financial sense to hire a professional whose job is to keep your vacancy rates low.
- Is It Worth It to You?
Finally, and perhaps most importantly, you’ll want to ask whether property management is something that’s worth your time and effort. Sure, there are some benefits to doing it yourself; you’ll learn along the way, you can potentially save some money, but at the end of the day, it’s not a great way to create a passive income stream. Remember; successfully scaling your property portfolio is all about working smarter, not harder. By having a system in place for property management, you’ll be able to add new properties to your portfolio far more easily, without having to worry about how you’re going to manage them yourself.
The bottom line? There is no right or wrong answer to how many properties one person can manage on their own. It all depends on your ability, preferences, and investing goals. Some successful investors thrive on the constant demands of being a property manager and landlord, while others choose to outsource the daily work of property management –allowing them to focus on other, more high-level tasks like growing and managing their property portfolio.
At the end of the day, the decision to self-manage or outsource is up to you. Just be sure to weigh up your options carefully and deliberately, considering the pros and cons, and ultimately choosing the strategy that’ll help you to reach your investment goals.
Landlords: which do you prefer? Going it alone or enlisting the help of a property manager?
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