Losing Money by Not Paying a Property Manager

Inexperienced Landlords Look At Professional Property Management As An Expense. In Reality The Best Property Management Companies Increase Returns & Free Time For Real Estate Investors!

It’s hard to explain to someone that they are losing money by doing something themselves and not paying a professional but this is exactly the case for most rental property owners. “Doing it yourself” is such a popular concept it is the name of an entire TV network! The “DIY” network has a variety of programs that teach people how to perform repairs, remodels, and upgrades. Doing things yourself is fine when it’s obvious at the end you have succeeded with your goal and you don’t need to call a professional. This is evident when your new bookcase does not collapse and your upgraded light fixture switches on with no sparks but this is much harder to judge when it comes to the complicated process of managing your own rental property. When deciding if you should manage your own property there are a few key items to consider, maintenance skill, leasing process, and your availability/value of your time.

Maintenance skill

Maintenance is going to be one of the biggest expenses a property owner experiences and unfortunately it is not always predictable. If you are not familiar with repairing faucets, toilets, light fixtures, railings, lighting pilots, replacing water heaters or many of the other dozens of items that are commonly repaired or replaced you will need to hire someone to perform these tasks. If you need to hire people to handle most of these items, you should probably hire a property management company.

Contractor Conundrum

Unless you have lots of work or big jobs for a contractor you will inevitably be down the priority list as they need to allocate time to the most profitable jobs they can. As a landlord, you want to avoid large expensive projects and paying top dollar for repairs. This means it will be very difficult to get a contractor on short notice and difficult to keep costs down, both of which will put your real estate business at risk. The best property management companies will utilize inhouse maintenance which will be available 24/7 while also keeping costs down.

Leasing Process

Turnovers are simultaneously an opportunity and big risk for property owners. A vacant unit is a clean slate where you can attract the best tenant and you want to do this as soon as possible to have lost the minimum amount of rent. The problem here is that in order to attract the best tenant you need an attractive property when compared to your competition. This means that while you are losing potential rental income you now must spend money on repairs and upgrades! This is a large financial swing for many landlords and a crucial decision. Many landlords will look to perform minimum repairs and get a tenant immediately. Often the compounding effect of a less than marketable property coupled with poor tenant screening results in a vicious cycle of bad or nonpaying tenants and less available capital at each future turnover. I have seen many small landlords fall into this cycle. A good property manager will help you process a turn over efficiently while also making sure your property is marketable and have strong tenant screening systems.

Can’t get enough of it, it really is money.

Time is the most basic variable to think about when deciding if you are losing money by not hiring a professional property manager. Maintenance and leasing are complicated enough but time is the prerequisite to even having the ability to try those two functions. Is your schedule flexible? Can you respond to late night repair calls in the middle of winter? Can you show your vacant property at a moments notice? Now if you are one of the privileged property owners who does have time to perform most of the required tasks, there still is one last question. What is your time worth? How much would you pay for free time to spend with your friends and family? How much would you have to be paid to leave a family gathering or party to respond to a tenant maintenance call? Could you be making money during this time? Many owners fail to consider time when deciding to manage themselves or to hire a professional for their property.

Don’t lose money and time!

The difference between the price of outside contractors and the price of inhouse maintenance provided by a property management company for a year will likely be more than it will cost for professional management in most cases. When you consider turnovers, leasing and the value of your time on top of that fact, it becomes clear that not paying a property manager is likely costing you!

Nick D'Agnillo is the CEO & Founder of Nexus Property Management®. A National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.

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