Managing a rental property can often feel like a constant balancing act between maximizing profits and minimizing headaches. Sometimes, you’re deep into numbers and legal fine print, and other times, you’re dealing with clogged drains and broken locks.

Whether you’re a first-time rental investor or a proud owner of multiple rental units, you know that efficient property management is the engine that moves your rental property investment forward. But what’s the best way to go about it? Should you manage your rental property by yourself, or will calling in the experts be more beneficial?

In this article, we weigh the pros and cons of professional property management and being a DIY landlord. We dive into the aspects of property management that matter the most, including time, cost savings, compliance with laws, and more.

Pros and Cons of Being a DIY Landlord

Benefits of Self-Managing Your Rental Property

First, let’s begin with the advantages of handling property management yourself. If you just have one rental that’s nearby, and you have extra time to spare, then being a DIY landlord could make sense, at least in the beginning. Here’s a look at some of the pros of being a DIY landlord:

1. You Have Full Control Over the Decision-Making Process

One of the biggest perks of going the DIY route is having complete autonomy over every decision related to your rental properties. You call the shots, from setting rental rates to selecting tenants. This level of control can be empowering, especially if you have a clear vision for your investment strategy. The autonomy and personal touch of DIY management can be rewarding for landlords who enjoy hands-on involvement in their rental properties.

2. You Have Direct Tenant Interaction

Being hands-on allows you to forge personal connections with the people living in your properties. You’re there to provide prompt and personalized service to keep your tenants happy, whether by considering a pet policy or providing better storage options. This direct communication fosters trust, making it easier to address issues and maintain tenant satisfaction. Plus, it gives you firsthand insight into the needs and preferences of your renters, allowing you to tailor your approach.

Cons of Self Managing Your Rental Property

On the other hand, there are some downsides to going the DIY route with property management. If you’re short on time, your property is in another city, and you just don’t have time to spend on maintenance on the weekends, then outsourcing to a property manager might make sense. Here’s a look at some downsides to being a DIY landlord:

1. You’re Saddled With Time-Consuming Tasks

Finding responsible tenants is one of the most significant time-suckers in DIY management. Advertising your property, sorting through applications, thoroughly verifying references, and conducting interviews can quickly become a full-time job.

Another area you might spend a lot of time on is troubleshooting problems. From pest problems to malfunctioning appliances, the landlord will be the first person a tenant calls for help. Coordinating with contractors, scheduling repairs, and ensuring work is done to your satisfaction can be a logistical challenge.

2. A Lack of Expertise in Legal Matters Can Be Risky

Navigating through landlord-tenant laws and regulations requires a deep understanding of landlord-tenant laws. Legislation pertains to everything from proper eviction procedures to handling security deposit rules and varies from state to state. For the uninitiated, the road can be filled with potential pitfalls.

Furthermore, crafting ironclad lease agreements that protect your interests while remaining fair and compliant isn’t easy. DIY landlords may lack the legal expertise to draft comprehensive contracts as well. 

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3. Potential for More Direct Costs

Direct expenses for materials, tools, and legal fees can eat into your profits and diminish your overall return on investment. These costs may include, but aren’t limited to:

• Supplies for maintenance and repairs

• Property management software for tenant screening and bookkeeping

• Hiring a lawyer to draft lease agreements

Moreover, the DIY approach may lead to inefficiencies and oversights that result in additional costs down the line. Let’s say you try to handle an extensive repair by yourself. Without the necessary expertise or equipment, the work could result in a poor quality repair that requires costly fixes later on. 

4. You Could Lose Out On Other Opportunities

DIY management may seem cost-effective on the surface, but it’s essential to consider the value of the time you invest in managing your rental properties. Time spent on DIY management tasks represents an opportunity cost. Every hour spent screening tenants, addressing maintenance issues, or handling legal matters could have been spent on higher value tasks or ventures.

5. You Might Experience Stress and Burn-out

Financial Samurai founder Sam Dogen said that being a landlord “tests his faith in humanity sometimes.” The cost of DIY management extends beyond the dollar signs; its stress can also impact your overall well-being. In one survey, 88% of American landlords said they experience some stress in renting out their properties. This intangible cost is just as significant to consider when evaluating the actual cost of DIY management.

Pros of Hiring a Property Manager

One significant advantage of hiring a reputable property manager is knowing that your investment is in the hands of experienced professionals. 

Here are other benefits you could be enjoying:

1. You Will Gain Back More of Your Time

Property managers handle everything from the big, time-consuming tasks to the nitty-gritty details, from collecting tenant applications and scheduling regular inspections to collecting rent on time every month. As a result, you’ll have more time to spare for other important aspects of your life or business, whether it’s pursuing new investment opportunities or simply enjoying some much needed  downtime.

2. Emergencies Can Be Handled Promptly

In an emergency, having a property manager on your side can be extremely helpful. An experienced property manager should be equipped to handle crises effectively and promptly. They will typically have a network of reliable contractors and vendors that can resolve issues quickly, minimizing potential damage to your property.

3. Your Vacancy Periods May Be Reduced

A good property manager may be able to help you minimize vacancy periods, which could potentially save you money in lost rental income. From listing vacancies on high-traffic platforms to conducting thorough tenant screenings and facilitating smooth move-ins, property managers work to keep your rental units occupied and your cash flow steady.

At Renters Warehouse, we offer tenant placement that’s just 11-17 days on average! Get started with a FREE rental price analysis, to see how much you could be getting for your rental.

4. They Should Have Experience With Landlord-Tenant Laws

There’s a plethora of landlord-tenant laws and regulations, both federal and local, and they’re constantly evolving. Good property managers stay abreast of these changes and can operate in your stead to help your properties stay compliant. They handle lease agreements, eviction proceedings, and tenant disputes precisely and professionally, minimizing the risk of lawsuits and expensive legal mistakes.

5. You’ll Gain Expert Insights Into Rental Market Trends

Good property managers will also have valuable insights into your local market’s rental trends and pricing dynamics. They conduct thorough market analyses to determine optimal rental rates for your properties, considering factors such as location, property condition, and demand. They’ll know how to set competitive rental rates that maximize your rental income without pricing out potential tenants to achieve the best possible return on your investment.

6. You’ll Get Access to Their Network of Contractors

Another advantage of hiring a property manager is that they often have a reliable plumber, handyman, and other professionals on speed dial. In some cases, they may even get special discounts with local contractors. These connections mean maintenance and repairs are handled efficiently, ensuring tenant satisfaction and adding value to your investment.

Cons of Hiring a Property Manager

There is really only one downside to hiring a property manager: the fees. However, many landlords find that the benefits of outsourcing all of the property management more than offset the costs.

1. Property Management Fees

Property management companies charge fees to compensate for the property manager’s time and expertise, it’s essential to weigh the costs against the benefits to ensure that you’re getting good value for your money. Choose a vetted and trusted professional property management company to ensure you’re getting the best bang for your buck.

DIY Landlord: Money-Saving or Money Pit?

Let’s look at two critical aspects of the property management outsourcing equation: time and cost.

When we break down the hours invested in DIY management tasks, it becomes clear just how much time and effort are required to keep things running smoothly. Only 20% of landlords spend less than 4 hours a month managing their property, with 76% stating that they spend less than 40 hours a month. Multiply that by the number of properties in your portfolio, and you’re looking at a significant time commitment.

Now, let’s crunch some numbers and compare the costs of DIY management versus hiring a property manager.

Let’s say your rental property generates $1,500 monthly rent, and a property management company charges a 10% fee. That’s $150 per month or $1,800 per year in management fees alone. At first glance, this may seem like a hefty expense. However, the picture starts to shift when we factor in the value of your time spent on DIY management tasks.

If you spend 15 hours per month managing the property and value your time at $30 per hour (a conservative estimate), that’s $450 per month or $5,400 per year in opportunity cost. Suddenly, the $1,800 annual management fee doesn’t seem quite as steep as the $5,400 in potential earnings lost by DIY management. Plus, when you consider the peace of mind and expertise that a property manager brings to the table, this also adds value to the proposition.

While DIY management may seem like the more cost-effective option, a closer look reveals that hiring a professional may save both time and money.

Final Thoughts: Consider the Value of Your Time

As an investor, time is one of your most valuable assets, and it’s time that allows you to explore more investment opportunities and expand your portfolio. However, determining its true worth can be more nuanced than simply assigning a dollar amount. To accurately assess the value of your time, consider these factors:

• Hourly Rate: Estimate how much your time is worth hourly. This can be based on your current income or the value you place on your leisure time.
• Opportunity Cost: If you spend five hours per month managing your rental property, those are five hours that could have been spent pursuing other income-generating activities. Assigning value to these missed opportunities can help you gauge the actual cost of DIY management.
• Impact on Business Growth: Could your time be spent networking, researching new investment opportunities, or improving your properties to attract reliable tenants? Think of the long-term implications of investing, or not investing, your time in other aspects of your business.

This list of pros and cons can help you make more informed decisions about allocating your time and resources, whether investing in professional property management services or delegating specific tasks to free up more time for high-impact activities. After all, time is money, and as a savvy landlord, it’s essential to make the most of both.

Need more clarity on outsourcing your property management? Here are the 7 factors you need to consider. At Renters Warehouse, we offer 24/7 hassle-free property management. We’ll take care of the daily grind so you can focus on other things: like overseeing your investments or expanding your rental portfolio.