Property Management Companies

Is it worth having a property management company manage your properties? I am currently managing my own but I am getting ready to start acquiring a lot more and I am thinking it would be best to let someone else manage them. What are your thoughts?

Thanks

Hi,

I have both managed myself and hired outside management to manage my property! Probable best way to decide what to do depends on how many properties / unit's you own and what this equates to financially.

If you have one or two rentals and let’s for example say each rental rents for $1,000 per month and property management is worth $100 per unit, your outside management cost will be $200 per month or $2,400 per year.

Now if you have say thirty units and each unit rents for $1,000 and property management is $100 per unit, then the $3,000 per month potentially allocated to management is sufficient to pay a part time or full time on staff property manager to look after your property and your going to get better quality and direct attention to detail while saving some portion of that $3,000 dollars.

But as soon as your big enough to make financial sense to manage in house I would do that over throwing money to outside management as I always know exactly what’s going on with my property and have better control.

                      GR

It depends on what your decision criteria is—if it’s lowest cost of ownership, then DIY property management in some cases serves that objective.

But if you are basing it on best possible use of resources (you and your time and expertise), then outsourcing to a third party managed service would allow you to pursue higher return/higher reward activities.

Whether you are interested in saving money or saving time, you also need to consider the tax consequences of DIY versus outsourced property management. Current tax law treats professional services used to manage your rental business as an deductible operating expense where sweat equity (landlord labor) is not tax deductible.

I personally favor best possible use, but I wanted to provide a balanced response giving both sides of the issue.

Hope this helps.