To Manage Or Not To Manage - Before hiring a property management

To Manage Or Not To Manage

If you are currently investing in rental properties or just about to take the plunge, you will need to consider hiring a property management company.You like the idea of having rental income, however you might not be ready to quit your job to manage your investments full time. Often, your rental property is on the other side of the city or as far as another province.The responsibility of maintaining your property can become overwhelming.You might want to hire a property manager.

Before hiring a property management company you need to have an idea about which services you will leave to them, and what you will do yourself. Do you want to collect rents? It may sound easy – it’s not.You must know the Landlord Tenant Act thoroughly or your tenants could take advantage of you. What if something needs to be repaired? Can you have it fixed within a reasonable time frame?If the property is close by you can keep an eye on it. Some landlords spend more time looking after their real estate investments than they do at their full time job!

The most popular reason for hiring a property manager is to free up your time and to have peace of mind knowing that your properties are being looked after by a professional. Not all management companies are created equal. Some companies offer full-service or you can opt for part-time management and divide up the workload and pay only for the services you really need.This is one of the biggest decisions you will make as a rental property owner.A property manager is an asset, and there is a cost.As always, do your due diligence to find a company that meets your needs.



Make sure the company has systems in place. For example, we have a great marketing system for handling vacancies. We line up all potential tenants in one afternoon – its fast and efficient. Other systems need to be in place such as tracking expenses, bookkeeping etc.

Fees for management can vary. Generally it’s a percentage of effective gross income (EGI), which is gross rental income less vacancies and bad debts.Typically fees range from 8-12% of the EGI for a single family unit and 4-6% for a multi-family building. Unless you want to learn about property management, build in the costs of hiring a property manager to your due diligence business plan and hire one from the start.

Even if you are managing your real estate portfolio yourself, you can use that budgeted management fee to pay yourself. By always including a management fee in your calculations, you have the future option of hiring a professional property manager.Therefore you will not affect your projected cash flow, and can turn your rental income into true passive income.

 

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To Manage Or Not To Manage
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Before hiring a property management company you need to have an idea about which services you will leave to them, and what you will do yourself.
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realtyWW Info
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To Manage Or Not To Manage 5 (100%) 1 vote

January 6, 2017



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