If you look through some of the various deals that we have analyzed on our websites over the years, you may notice that if we have a percentage and an amount listed for property management, we follow the figure for that expense with “or manage it yourself and keep this money.” So, if you have rental properties, or are beginning to invest in some, you may wonder whether you should use a property management service or give yourself a little more cash flow every month by managing it yourself.
If you are investing outside of your local area, usually the decision is easy. You pay someone to manage your houses because you just can’t take care of everything from a distance. You simply need someone who is physically present that can show the property, respond to maintenance requests, post three day notices for non-paying tenants, and so on.
But what about local properties? Should you always manage them yourself? Again, the decision might be an easy one if you have a full time job and only invest in real estate part time. It’s probably worth it for you to pay the ten percent (more or less depending on your area) not to be bothered with the day to day hassles of managing rentals.
The less clear decision is for the full time real estate investor. It may seem obvious that the investor should do her own management to maximize her cash flow each month. However, when you consider that the time and energy that go into the many day-to-day tasks of management actually takes time away from more profitable activities like finding new deals… it may be worth it, even for the full time investor, to hire a property manager.
Until my next post,
James
P.S. For some great tools for interviewing and selecting real estate agents and property managers, check out the resources for them in the Dream Team section of the Real Estate Investor Wiki for Real Estate Investor Bronze Members. Or, if you plan to do your own property management, check out the property management resources and training materials.
