You’ve just taken your first step onto the rental property ladder and have found the perfect property to let. The question is - what do you do next once you have won the bid?
Knowing what task to tackle first can overwhelm even the most experienced of investors, but it doesn’t have to be this way.
You in fact have two choices. The easiest option is to hire yourself a property manager to handle your properties and organise your tenants. The second... is to persevere; learn the ropes and take on the full responsibility yourself.
Before you make this decision though, let us first show you what you can achieve through hiring a property manager:
1. With a property manager at your side, you can step back and focus on achieving your next property. They can:
• Find you tenants
• Organise repairs and maintenance
• Monitor your accounts and bookkeeping
• Collect rent and other fees
• Handle evictions
• Give advice about property management
Sounds impressive - yes? And stress-free?
There is one flaw to this system - they may manage everything, from tenants to rent, but they are only an agent acting on your behalf. As the owner you are still legally responsible for the manager’s actions, so if they make a mistake - it could equal more work for you.
2. You can still be in control. Before you hire, you must make it clear who will perform what role. For example are they to handle your accounts and you organise the maintenance? With co-ordination and a thorough plan you can reduce mistakes, plus keep a stake in the management of your property investment.
3. As with all hiring processes, there is the downside of fees. The first thing to consider here is the size of the company you are hiring from. The larger the company, the bigger the cost, so before you hire a property manager, check first their hire fees and see how much this will impact upon your profit margin.
They may substantially lessen your responsibilities, but if their hire fees cut into your profits, then they are an unnecessary addition. Especially if they do not offer your property investment guaranteed extra profits.
* Please note: the more properties you own, the more beneficial a property manager could be for your property investment.
So is hiring a property manager a logical solution? The choice is yours, but here are a few more questions for you to consider that may influence your decision:
• Do you have what it takes to run a rental property?
• Do you have any previous experience in repairs and rent collection?
• Is your rental property situated near to your own home?
• Will your property require frequent visits, repairs or attention?
• What are the services you need to make your property investment work? What skills are you lacking in? For example rent collection; accounting or bookkeeping? Making the decision to hire a property manager for a few simple tasks can dramatically cut into your profit margins. So are they really necessary?
• Is the company you’re hiring trustworthy?
Whatever your answer, you need to bear in the mind the reason for your property investment. What are you hoping to achieve by buying a rental property?
For the majority of us it is to boost our finances and make an additional income.
So you need to ask yourself one more final question: will a property manager add to the profitability of your rental property or cut into your finances?
