Whether you rent out a condo, house, apartment building, or other property that you own, being a landlord can provide a blessed source of extra income…or a massive pain in the neck. Maybe you’re tired of taking middle-of-the-night phone calls. Perhaps you’re on the cusp of evicting a tenant. Or maybe your only tenant’s lease is ending, and you dread the hunt for a new renter.
Any of these circumstances, no matter how big or small, can be a serious drain on your time and energy. But what can a property manager do that you can’t? Are their services really worth the percentage of profit you’re giving up just so you don’t have to work quite so hard?
Who is most qualified for the job?
You know yourself best, and if you’re the kind of person who would prefer to receive income from your property with minimal personal effort, a property manager could be your best bet. Convenience is one of the top motivations for working with a property manager, who can handle the burdensome and time-consuming tasks of responding to tenant requests and property maintenance.
You also are likely getting additional expertise in handling the legal details. “An experienced property manager should have familiarity addressing complex city and state regulations, keeping records of lease expiration and renewals, and managing rent rolls and filing requirements,” says Jeffrey R. Homapour, a New York City attorney focused on landlord-tenant litigation.
“There isn’t much a property manager can do that a landlord can’t,” says Homapour. “However, a property manager can do it more efficiently and effectively.” And if you’re not local to your property, being able to count on someone who is nearby is priceless. “Property owners who do not hire a local management company often find themselves wasting time traveling to the property to take care of small tasks. A local management company is important for promptly inspecting complaints, hiring local contractors and managing repairs, picking up and dropping off keys, and granting access to service companies if necessary,” says Homapour.
Consider the costs
Before you hire a property manager, evaluate whether the price is worth the services offered. “Many owners mistakenly believe that by self-managing their property, they are saving money (and therefore making more profit). Unfortunately, this way of thinking is flawed,” says Movses Shakarian, founder of Shakarian Law Group in Los Angeles and in-house counsel for K.I.G. Capital Management.
“A solid property management company should be able to assist owners in identifying various ways to increase income and control costs,” says Shakarian, who advises landlords seek a property management company that is proactive instead of reactive—one that doesn’t simply wait for rent checks and work orders to come in. “A professional property management company should have the experience to identify issues of concern with the property before it becomes a liability to the owner or before it becomes too costly to repair.”
Also, be on the lookout for the non-monetary costs of aligning yourself with a property management company that doesn’t look out for your best interests. “If they do not perform appropriately, this is a reflection on the landlord,” says Victoria Shtainer, a residential specialist and attorney in New York City. And, as Shakarian points out, some property management companies make owners feel as if they have no control over their own property: “If this is an issue, switch companies.”
Weigh the responsibilities
If you plan to forgo the services of a property manager, it’s important to honestly evaluate whether you’re prepared to manage the tasks required of a landlord. For example, if you own an apartment building, your duties are specific. “There are certain services you have to always provide in a building to maintain cleanliness and ensure there are no underlying issues,” says Shtainer. Ask yourself: Am I willing to sort recycling from trash? Am I capable of dealing with appliance issues? And so on. “Essentially, it is a question of the landlord’s time, willingness, and ability to manage a property that will render a manager valuable to them or not,” says Shtainer.
Though Homapour points out that there really is nothing like being hands-on with the property you own, it can be a challenge serving as the sole point of contact for your property if you’re unfamiliar with management requirements. “You may find yourself spending more time than you need catching up with ever-changing city and state laws. Paying an experienced property manager to deal with your headaches could be worth every penny. Establishing a management agreement based upon the income of the property will incentivize a property manager to yield the greatest return on your investment.”
Be honest with yourself. Would your property and tenant(s) be better off with a professional property manager in charge? “Landlords can often be too emotionally involved with their properties, which can affect their judgment,” says Shakarian. If that’s you, consider an alternative.