Every successful real estate investor knows the importance of property management to guarantee a successful real estate investing career. Property management is not as simple as finding tenants and collecting rent – it requires time, effort, organization, and social skills to successfully manage a real estate investment property! For this reason, many property investors opt for hiring professional property management to take care of their investment properties.
Professional property management companies give property investors peace of mind when it comes to their real estate investment. They offer a set of services including marketing, financing, tenancy, and maintenance, and take care of the tasks that a real estate investor dreads. However, even though hiring professional property management has many advantages, it’s not always a smart decision for two main reasons.
Why is Professional Property Management Not Always Needed?
Every real estate investor is driven by the same motivation – to make money from investment properties! Hiring professional property management obviously comes with a price. Property investors have to pay a significant percentage of their rental income for their services (typically 4% – 12%) as a monthly fee. Moreover, professional property management companies also charge the real estate investor for additional expenses when needed, like for advertising the investment property and performing tenant-screening. As a result, they will definitely affect your profit margin, which is the first disadvantage. Property investors who depend on their rental income to pay off their mortgages have to take this into consideration before hiring professional property management.
The second disadvantage of giving a professional property management company full control over an investment property is that this leaves the real estate investor with less knowledge regarding real estate investing. Sure, professional property management companies take care of the tasks that most property investors dread, like tenant screening, conducting repairs and maintenance, collecting rent, etc. However, performing these tasks gives property investors the necessary knowledge and experience they need to succeed. Thus, not managing your property on your own will leave you feeling lost in the real estate market simply because you can’t understand something that you have no experience with!
When is Professional Property Management Really Needed?
Hire Professional Property Management if You’re Investing in Multiple Investment Properties
Managing one rental property on your own is not too much of a hassle if you have experience in the real estate business. Real estate is learning by doing, so with time, managing a rental property becomes a second nature to property investors. However, owning and managing multiple investment properties is another story. In this case, property management becomes a much more challenging task and requires much more time and energy from a real estate investor. Therefore, if you’re investing in multiple investment properties, you really don’t have a choice but to hire professional property management!
Related: Are You Ready for Owning and Managing Multiple Investment Properties?
Hire Professional Property Management if You’re a Part-Time Real Estate Investor
If you’re in the real estate investing business only as a part-time property investor while having your other full-time job to worry about, then the services of a professional property management company are definitely required. Property management is a demanding task that requires your full attention and it takes up a good amount of property investors’ time and effort. Consequently, if you’re working a 9 – 5 full-time job, you’ll find it hard to keep up with the demands of the real estate market. In this scenario, professional property management is worth the money for a successful real estate investment.
Hire Professional Property Management if You’re Investing in Airbnb
Investing in real estate through Airbnb can be a hassle, especially if you’re in a real estate market with high demand for Airbnb rentals. Airbnb rentals are short-term investment properties, meaning the real estate investor will not have only one tenant for a long time period, but a number of tenants staying in the rental property for a short time. Meaning, investing in Airbnb rentals requires the real estate investor to manage the rental property in terms of finding tenants, collecting rent, and cleaning and preparing the rental property for the next tenant over and over again!
As you can see, for property investors with Airbnb rentals, professional property management is an absolute must! Nowadays, with the growing popularity of Airbnb rentals, property investors can find professional property management companies who deal exclusively with Airbnb rentals.
Related: Four Things to Consider Before Purchasing an Airbnb Investment Property
Hire Professional Property Management if You’re Investing in a Different Location
For property investors who own a rental property outside of their local real estate market (like an out of state investment property or even in a different city), successfully managing and maintaining the investment is almost impossible due to the long distances. Therefore, these property investors don’t have another option but to hire a professional property management company if they want peace of mind when it comes to their investment and it’s definitely worth the money.
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Hire Professional Property Management if You’re a Beginner Real Estate Investor
Some won’t advise beginner property investors to use the services of professional property management if they want to gain experience in the real estate market and seeing as they’re costly. However, it’s smart to hire one and watch and learn from them. Beginner property investors should observe how professional property management companies work to establish some experience. Then, after gaining the necessary skills, you can start managing your investment property on your own!
Related: Real Estate Investing for Beginners – Do’s and Don’ts
Hiring Professional Property Management – The Bottom Line
Professional property management companies provide great services and perform all the tasks that would keep a property investor up at night. If you’re an owner of multiple investment properties, Airbnb rentals, a rental property in a different location, a part-time or a beginner real estate investor, then hiring a professional property management is definitely needed. However, keep in mind that these come with a price. Thus, you still need to analyze your rental income to decide whether or not hiring a professional property management is worth the money.
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