Should I hire a Property Manager to manage my rental unit or do it myself?

Although companies, like Rhenti, make do-it-yourself (DIY) landlording easy with the use of marketing and leasing software, the day-to-day of managing tenanted rentals can be very time-consuming for some property owners. This is usually based on the number of units you are renting out, the age of your properties - since older buildings often require more maintenance - and your proximity to your rentals. Sometimes, it’s easier to hire a property manager to keep rental units running smoothly. This can help ensure tenants stay longer, minor damages in units get fixed right away (and don’t lead to bigger, more costly issues), and rent is paid on time.

Common scenarios that might lend well to hiring a property manager include:

• You’ve never been a landlord before: if you don’t have any previous experience as a landlord and are concerned about rules and regulations, hiring a property manager would be a great way to ask questions and learn from an expert. 

• You have many rentals to manage: the reality is, the more rental properties you have, the harder it is to manage them all. If you have a day job and your schedule doesn’t give you flexibility, you may be better off hiring a property manager to help you out. 

• You don’t live near your rental property: being in the same city lends well to maintaining a property. Sometimes you need to check things out yourself before hiring an expert to fix them, or a tenant is locked out in the middle of the night and you need to bring them a spare key. Not living nearby means you might need to rely on other people.

   

Are you a DIY homeowner looking to rent out your home? Let Rhenti help you find a tenant fast.

What does a property manager do?

The scope of services offered by property managers varies, and you can set up your working relationship based on what services you need. Below are a list of services property managers and property management companies commonly offer. 

1. Readying vacant units

2. Selecting a rent price

3. Marketing properties that need to be rented out

4. Selecting tenants

5. Setting up the lease agreement

6. Resolving tenant issues

7. Collecting rent

8. Managing maintenance teams working on the rental property

9. Managing tenants moving out

10. Handling evictions

11. Ensuring properties comply with local laws (e.g. health and safety laws)

12. Tax-related documentation

13. Reporting 

14. Keeping records

How much do property managers charge?

Property management fees range in cost but typically fall between 5-12% of the rental value. 

Something you should take note of when setting up an agreement with a property management company is if their fees are based on rent collected or rental value/rent due. This is important because if the property manager doesn’t successfully collect the rent due and the contract states they get paid regardless (i.e. rental value or rent due), you still need to be prepared to pay them. 

You can negotiate the price based on what services you need. The more units you have managed, the more likely it is you will be able to get a better rate. 

Normally landlords try to make sure their property management costs make sense for their rental. Ideally, the cost of your monthly mortgage payments, property tax, average monthly maintenance expenses and property management fees should not exceed the monthly rent payment from tenants. 

Potential downsides of hiring a property manager:

Hiring a property manager has potential downsides that are not obvious. They include:

• Tenant selection: no one will ever care about your property - one of your largest assets - as you do. A property manager’s standards for selecting tenants may not be aligned with yours. This could result in renting to a tenant that is not the right fit for your property, which could end up as a costly misstep.

• One of many: many property managers have a portfolio of many rental units that they manage. Depending on the size of their team, your income property will be just one of many and it may not get the attention that it needs.

• Your rental income cashflow doesn’t allow for it : hiring a property manager isn’t a trivial expense. If your rental income doesn’t account for the cost of hiring a property manager, partnering with one may negatively impact your monthly cashflow.

   

Tips for hiring a property manager:

When selecting a property manager, pay attention to how quick they are to respond to you and what their responses are like. If they are slow to respond and provide confusing answers, this can be telling of how they will interact with your tenants. 

Here are 16 questions to ask when interviewing potential property managers/property management companies:

1. What experience do you have with the rental market the property is located in?

2. Can you provide references from property owners with similar properties? (Ask their references what the occupancy rate is like in the buildings they manage).

3. What problems do you typically solve?

4. Have you ever had to evict someone? What was the process like?

5. What do you do if a tenant doesn’t pay rent?

6. What is the most challenging problem you’ve had to solve and how did you do it?

7. How do you market properties to prospective tenants? Tips on how to market to student renters

8. How do you screen tenants?

9. Do you do monthly reporting? (Reports typically include information on the condition of the unit, if it is occupied, and the rental rate). 

10. What do you do to keep rental units in good shape?

11. How do you deal with tenant requests and issues?

12. How do you deal with maintenance requests? Do you have your own repair/maintenance team? Do you have go-to contractors for common maintenance issues? How do you manage vendors?

13. What percentage of the tenants you work with renew their lease? 

14. What percentage of tenants move out before their lease is up? (Their answer could be indicative of a high eviction rate which could mean they don’t select tenants carefully).

15. How many properties do you manage?

16. How many people are on your team and who else would be helping to manage my property? Are you on-call 24/7? (Emergencies do happen, so this is something worth asking).

Thinking that the do-it-yourself (DIY) route is best for you? Learn how you can best attract renters and find the right tenant for your vacant rental.