Investing in Rental Properties – Why Hire a Property Manager?

The goal for investing in property is either to resell the property, or rent it out. Both can provide excellent return on the investment, but require entirely different focus and resources. Renting out property involves a large amount of work. You have two options – you can either Do the work yourself, or hire someone to do the work for you. In this article, I will talk about why you would want to hire a property manager.

glendale property manager

Think about your real goal for renting out an invested property – you are looking for a return on that investment in the form of regular monthly checks. In order to make this happen on a rental property you have to go through a few steps. You need to have the unit(s) in the property condition and ready to receive tenants. Then you need to go find those tenants. Once you have found tenants who are interested in signing for a term, you need to make sure those tenants regularly pay you on time. You also need to make sure the building stays in proper condition while the tenants use it. What if a tenant is upset? What if a tenant wants to leave? There are a myriad of questions that can come along.

Let’s take a step back and talk about value. As previously stated, the purpose of an investment property is to generate money – you invest in the property, and then either by reselling the property for a greater value, or renting for a monthly fee, you make a return on that investment. The purpose of investing in property is NOT to acquire a whole bunch of extra responsibilities and legal hassles, thus reducing the value of your time spent and ultimately your ROI.

What you are really looking for in a property manager is someone to maximize the money you have put into the property. Look at it as time spent. Let’s say you invest $1,000 – and your goal is to regain that investment in one month. In order to do this you spend 40 hours per week (for 120 hours in the month) on that investment and you do achieve that $1,000 in the first month. Now let’s consider that after making that $1,000 investment, instead of spending 40 hours per week you pay someone $500 for that month – the total of $1,000 is achieved but you only make $500. However, in the second scenario you spent one hour hiring someone. In the first scenario, you worked for $25/hr – in the second, you earned the $500/hr.

Property managers are professionals who provide a service – their time is crafted specifically to take care of the needs of your property, so that as an investor and owner you can simply collect a check every month and spend your time – which is worth far more than the time it takes to manage a property – attending to other aspects of your business (such as investing in more properties).

So from an investment point of view, paying someone to do all the work clearly provides a higher return for your time. There are other reasons to hire a property manager aside from this.

Legally speaking, it is far easier to deal with fair housing laws when the owner is not involved in any of the interactions with the tenant. Neutral third parties provide a buffer which can prevent potential lawsuits. If the owner is the one choosing tenants to fill vacancies, then it is far too easy for someone to claim favoritism or discrimination – since the Owner’s intentions and goals are slated more towards earning money off the property, whereas a third party does not have any motivation other than to fill vacancies.

There is also future value to consider. When investing a property that you intend on renting for an extended duration, you also have to consider the upkeep and advancement of the property over the years. This means keeping in mind everything from basic maintenance of the building and appliances to improvements to the structure. How often will you renovate? For that matter, how will you keep track of this sort of thing if you are juggling everything else with respect to managing the property? If you give the daily running of the property into the hands of someone else, you are free to step back and make proper plans for increasing the value of the property via renovations or additions.
Hiring a property manager is about security and peace of mind – it’s a way for you to maximize the value of your time while achieving the most return on your investment.

Photo via Creative Commons: Joel Zalud

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