There are many decisions that you will need to make when investing in real estate. One of those decisions is whether or not you need a property manager – they can take a substantial piece of coin from the cashflow every month – are they worth it? There are cases for self management, but today, we will discuss the case for using a manager;
Property managers have many uses and are a great idea for those who plan to buy many properties and want to have a life away from their real estate. A property manager is your buffer between your tenants and your family.
The biggest, yet perhaps the most intangible benefit to having a property manager is that it enables us to keep our emotions in check. As much as we say that investing needs to be unemotional, the fact is, for many of us, this is our nest egg, this is our family’s future and I’m sorry, but that makes it emotional. Hands down. And it’s the emotions in real estate that will take us out of the game before they’ve given it time to see their cashflow turn to wealth. You see, cashflow every month is great, but its not really life changing until you get into lots and lots of properties. Where the life changing power of real estate comes in is when the mortgages start to get paid down by thousands of dollars a year, the rents go up and cashflow becomes strong, the market appreciates and brings you equity….and all of these things take time. So if there is something we can do keep the emotions evenly keeled until those things kick in, it is often worth the loss of cashflow to do it.
The benefits of a good property manager are quite numerous. To begin with you will find that they eliminate the need for tenants to have your phone number. This alone is life saving 😊 If you’ve dealt with rental properties before without the buffer of a property manager I’m sure you’re aware that it doesn’t matter what time of night or the morning things go wrong, you are the first person your tenants call to fix those things. Even things like their internet going down or a light bulb going out….neither of which have anything to do with you! Basically, a property manager is able to handle many things for you while letting you sleep through the night or get through that kids dance rehearsal without making you want to pull your hair out. All the more important of course, if you plan to purchase more properties. The late night or during dinner phone calls or issues coming up right when you have your own personal issues to deal with can be stressful. If you know that you tend to ride emotional waves, you may want to go with a property manager from the start just so you don’t quit before the big rewards come.
Property managers also often have maintenance people that can handle many of the things that go wrong with rental properties. The fee for these services may be included in your fees for the using the property management service in general or certain services may charge additional fees. Regardless your property manager is often the best source to find contractors as they often offer more business to these contractors, therefore get better rates and get prioritized for work. It’s a nice way to have someone else deal with some of the negative things about owning rental properties, helping us keep emotions out.
My personal favorite reason to seek the services of a property management service is that they are qualified to handle the legalities of taking care of tenants who cannot make the rent for months on end. This is after all a business and while you can relate to the circumstances that leave some people unable to pay their rent, you still need the income from their property in order to make your bills. It’s much easier to leave some of the less pleasant tasks to someone else, especially if you are a softy for sob stories.
Property managers also handle the advertising for your property and the cleaning up and retouches that are necessary between tenants. They also allow you to take vacations and such filled with the knowledge that your properties and tenants are in good hands even when you aren’t there to oversee everything. Everyone needs to take a break sometimes it’s nice to know that with a reliable property manager you can actually sit back and relax while taking those breaks without worrying about being available if something goes wrong.
The more properties you have, the more sense it makes to utilize the services of a reliable property manager but even if you choose to manage yourself for the first while, just make sure that you have enough cashflow to turn it over to a manager should you wish to. Make sure to account for those numbers when purchasing the property, even if you don’t plan to utilize it right away. This buys you insurance in case it gets too stressful – and helps you last until your Cashflow Turns to Wealth.