LANDLORDS … 2 PROPERTY MANAGEMENT OPTIONS
Your Objective Assessment & Decision Matrix to Choose
(First in a Series of 2 Articles)
New readers of this blog … and “veterans” … are invited to read or re-read the article:
6 PILLARS OF PROPERTY MANAGEMENT SUCCESS
What They Are … and Why They’re Important
You’ll discover a solid foundation for the following article by understanding how the 6 pillars work in concert to drive consistent growth and ROI on your rental property investment. The 6 pillars are:
- Leasing & Marketing
- Maintenance
- Operations
- Accounting
- Crisis Management
- Compensation
Options … You Have Options
You may be reading this as a seasoned residential landlord or giving serious consideration to “put your toe in that water”. Veteran investors will confirm that once the property is acquired, competent management is essential to maximize the value of your investment. That message from experienced investors delivers a “heads-up” for first-time landlords as well.
Property managers’ primary responsibilities are to keep residential rental investors and their tenants happy. That means satisfaction by both parties in the condition of the rental unit, the grounds and maintenance services. While the manager works for the owner, the needs of the tenant are paramount to retain quality, long-term, profitable renters.
So, what to do? Your property management options boil down to two … or a combination depending on your time and talents.
- Hire a professional property management firm, or
- Become a DIY (do it yourself) landlord.
Caution! Don’t make any spur-of-the-moment decisions until you’ve taken an objective assessment of your experience, abilities and participation preferences. What follows is your Landlord Quiz to help you evaluate your alternatives and create a decision-matrix to move forward with your ideal property management choice.
Your Critical Next Step … Self Evaluation
Be candid with yourself as you answer each of the following five questions. Then score each on a scale of 1 to 5 … with 5 being the best rating.
- What experience do you have in managing residential rental property?
- Do you prefer to be a passive investor or a hands-on landlord?
- How far away are your investment properties from your residence?
- Assuming you are considering DIY, can you effectively service all your properties?
- Are your rental payments adequate to pay a property manager?
What experience do you have in managing residential rental property?
DIY and “learn as you go” is a perfect formula for disaster in protecting and enhancing your investment. If your know-how is limited to paying your own rent or mortgage each month, score yourself as a 1 on this issue.
1___ 2___ 3___ 4___ 5___
Do you prefer to be a passive investor or a hands-on landlord?
There are several issues to consider in this regard.
- Do you have a great need to remain in control of all aspects of your investment?
- A hands-on landlord also becomes heir to the stress factors of tenant-management. How willing or emotionally able are you to deal with complaints, maintenance and non-compliance with lease obligations? These are often face-to-face and confrontational.
- Hands-on management means dealing with internal or contract resources for maintenance and repairs. Do you want to take on the people-supervision?
1___ 2___ 3___ 4___ 5___
How far away are your investment properties from your residence?
DIY and distance are deadly housemates. Responding to emergencies, maintenance, rent collection and vacancies is severely impacted and often impaired.
1___ 2___ 3___ 4___ 5___
Assuming you are considering DIY, can you effectively service all your properties?
Do you have time to effectively manage your properties? Lack of time to devote to the needs of your tenants and property maintenance will have a severe adverse effect on the success of your investment.
1___ 2___ 3___ 4___ 5___
Will your rental revenue support the cost of a property manager?
Property managers do not work for free. Are your rent receipts adequate to afford a property manager, cover other overheads and yield a profit … or at least render your venture break-even?
1___ 2___ 3___ 4___ 5___
Next Step
Now review how you scored your Landlord Quiz. Only you can evaluate whether you can “go-it-alone” … DIY. Alternatively, it may be your judgment to seek assistance from a professional property manager … or at least evaluate that path as a possibility.
Total Points Scored: _____ of a Possible 25
Remember! While your options boil down to two … DIY or hire a professional property management firm … you may choose a blended combination depending on your budget, time and talents. “Mix-and-match” is a preferred route for many residential real estate investors.
Property Management … In the Hands of Professionals
OK. Let’s say your appraisal of your Quiz scores guides you to explore the benefits of enlisting the aid of professional management. That will be the topic of the second of the two articles in this series. In our next issue you’ll learn what to look for and questions to ask of property management candidates to provide a sound basis for your decision-making.
Can’t Wait for Next Issue?!
Give us a call or drop an email. We’ll respond promptly and
relieve your stress to evaluate your property management options.