When it comes to being a landlord, you have a big decision to make. Do you handle everything yourself, or hire a property manager to do it for you. Today, we’re breaking down some pros and cons to self-managing your rental property.
You’ll save money on management fees.
A property management company is going to charge a monthly fee to manage your rental property, and likely will charge a fee to find tenants as well. This will inevitably cut into your monthly cash flow with your rental. Not paying management fees each month gives you greater control over your finances, and gives you more opportunity for positive cash flow.
You have complete control of your rental property.
If you manage your rental property yourself, you’ll have 100% control over the rental. You can ensure you get to pick the best tenants, you can fix repairs yourself and save money on maintenance, and you can mitigate tenant conflict yourself. You will know everything that is going on with the property 100% of the time.
There’s lots of technology options for DIY Landlords.
Every day, it seems another company is offering “free” or “low cost” platforms for self-managing landlords. This can be ideal for collecting rents, keeping track of your finances, and maybe even working as a hub to receive maintenance requests from your tenant. What these platforms don’t cover is the challenges faced in the rental industry, the stuff us property manager’s deal with every day. Finding vendors for maintenance problems, handling emergency maintenance, tenant conflicts, legal problems, evictions, and court appearances.
You’ll have flexibility.
More than likely, a property management company is going to have a process for just about anything that comes along. With you being a DIY landlord, you’ll have more flexibility to handle things your way. Maybe your tenant is handy, and instead of you wasting a Saturday coming out to fix a kitchen faucet leak, your tenant does the job and takes a few bucks off the rent. Easy peasy. Just please, if you do this, make sure your tenant is qualified to do the job.
Ok, so yes, there are definitely some benefits to being a DIY landlord, but, you know that I am a property manager, and after years of managing rental properties, I definitely see the benefit of using a property management company. Let’s look at some cons of being a DIY landlord.
You’re in charge of maintenance.
Self-managing your rental property provides you the opportunity to oversee 100% of the maintenance. This means you are “always” on call. And let me tell you, all the excitement happens as soon as you go out of town on vacation. But really, even just a couple of maintenance issues throughout the year can cause a lot of headache. A property manager will have established relationships with vendors already. Your tenant calls in that the AC isn’t working? Now you have to call around and find a reputable HVAC contractor. Basement cracks need repaired? You better be sure to vet a few companies. And not to mention middle of the night maintenance. Again, you are always on call, whether that call comes in one time a year or 10 times a year, you always have to be ready.
You have to always be up to date on federal, state, and local laws.
If you don’t have a property management company, you need to make sure you’re in compliance with all of the laws. And now, more than ever, with eviction moratoriums those laws are constantly changing. Even on a local level. St. Charles might be doing evictions, but St. Louis County is not. What’s the legal way of refunding a security deposit? How much notice do you have to give a tenant to enter the property? When can you charge late fees? What if you’re out of town for two weeks and can’t make repairs – what can your tenant do? If you’re not abiding by proper landlord tenant law, you could find yourself in a world of legal trouble.
Proper tenant screening and air-tight leases.
Do you have the tools to thoroughly screen a tenant and have an air-tight lease?
One thing I tell every prospective client of mine – whether you go with me or another property management company, make sure to hire a reputable property management company to conduct your tenant screening and draw up your lease. If you want to manage it yourself after that, great. But, getting set up with a good tenant on a state approved, air-tight lease is so very important.
Tenants tend to behave better in professionally managed properties.
I once managed a property where the tenants paid on time, every single month. I think this went on for about two years. The owners decided since they had such good tenants, they would take over and manage it themselves. Fine, no hard feelings – I actually remained friends with them. Literally the first month they took over, the tenants were a half month late on their rent. Each month after that – yep at least two weeks late on the rent. Tenants think they can get away with more when it’s a private landlord, rather than a property management company.
So yes, there are pros and cons to being a DIY landlord. What’s best for you? My biggest advice – do your research. If you think you can DIY, be sure to know what you are getting into. And keep in mind – there’s no harm in trying us first.