WHEN DOES PROPERTY MANAGEMENT MAKE SENSE?

Brought to you by Advantage Asset Management – A Houston Property Management Company

This is a common question that almost all real estate investors ask themselves. Should I outsource to a property management company, or should I manage myself? We will review this question in more detail below.

Screen Shot 2019-01-14 at 5.44.10 PM1). You have little knowledge about real estate and need a partner.

This is a good way to learn and get some experience. Property managers can give you advice and show you how they manage properties. On the surface, it sounds relatively simple. You just collect rent and make sure you fix anything that breaks down; however, when you see how things actually can pan out, it can be a little overwhelming.

 Screen Shot 2019-01-14 at 5.44.10 PM2.) You have little time to dedicate to your property.
This is a critical one because time is invaluable. How you spend your time is important to all aspects of your life (career, personal, etc.), and if you want to spend it managing a property, make sure you can justify the opportunity cost of what you would do with that time. If you have extra time or have a real estate related job (i.e. handy man, Realtor, etc.), it may work out perfectly to manage your own properties.

Screen Shot 2019-01-14 at 5.44.10 PM3.) You just want peace of mind.

This is something you can’t really put a price on. If you have a good partner managing your property, you can rest easy knowing you don’t have to drop everything to solve every problem that may arise. In the case of extreme circumstances (evictions, floods, major property damage), it really does help having a company who can deal with those situations effectively.

Screen Shot 2019-01-14 at 5.44.10 PM4). You don’t live close to your rental property.

While technology has made many factors “spaceless” (such as collecting rent or entering in work orders with local vendors, managing a property from afar is still a difficult task. If you are not able to visit the property occasionally on a proactive basis or urgently if an issue arises, you will be reliant on the tenants and maintenance people to tell you if something is needed.

Screen Shot 2019-01-14 at 5.44.10 PM5.) The Numbers Work Out.

If you’re cash flow positive with property management fees, it will make the decision much easier. Make sure you have run the numbers to see if it all makes sense or ask the property management company to do it.  Keep in mind that property management is tax deductible.

Screen Shot 2019-01-14 at 5.44.10 PM6.) You want to grow your real estate portfolio.

In this scenario, you want to focus your time on growing, and you don’t want to spend your time managing a property. Partner with a property management company and let them know your goals and intentions.

See some of our other articles where we go into deeper discussions on specific scenarios regarding investment properties.  We look forward to answering any questions or clarifying anything else that can you help you make an informed decision!

*This contains excerpts from our full article. To continue reading, CLICK below to read in full.

When Does Property Management Make Sense