Why Hire A Property Management Company?


Property ManagerIf I didn't have access to a good, competent property management company, I wouldn't have even considered buying rental properties in the first place, that's the honest truth.

Knowing that I can pay a very fair price for someone else to handle ALL of the headaches that rental properties are known for – is a total game-changer.

I'd like you to take a moment and ask yourself two questions.

Would you rather…

A. Create a Permanent Job For Yourself as a Manager of Rental Properties?

or

B. Retire Early With a Portfolio of Passive Real Estate Income?

Technically speaking, you can't do both because both of these paths are fundamentally opposed to each other – they lead to two different places! If you want to create a permanent job for yourself, you can't retire early – and if you want to retire early, you can't create a permanent job for yourself.

When I started my rental property business, my goal was to take Option B, because I didn't want the money to stop coming in once I stopped working. I wanted streams of income for a lifetime.

I've Heard The Arguments That Some Investors Make.

They just bought their first rental house or duplex and they don't want to give away 10% of their rent revenue to a management company.

I GET IT.

I'm not saying this is the wrong attitude, but I DEFINITELY think they're missing some very important points.

Just consider some of the benefits that come with hiring a management company:

You don't have to deal with any of the tenant headaches.

Most of the time, you don't even need to know who your tenants are! My management company screens each tenant and makes sure they're going to be a good occupant and make their rental payments. They handle ALL of the time-consuming parts of the job and they deposit money directly into my account every month. On average, I spend about 2 minutes per month thinking about my rental properties while the money builds up in my bank account over time. Showings, screenings, house visits and evictions are all handled by my property manager while I'm comfortable living my life.

You don't have to be a handyman.

Management companies are EXPERTS at repairs and maintenance. They know how to do these things quickly and inexpensively because they do these jobs every single day. Generally speaking, your management company will know more about how to streamline this process than you will ever be able to learn on your own. The reason I outsource my property management is the same reason why I bring my car to a mechanic – because I don't need to be the expert when somebody else already is.

You can invest in properties anywhere in the world.

Logistically speaking, if you live in New York, there is no reason you can't buy a property in California and turn it into your own personal cash cow. Just because you can't drive by and see it every day doesn't mean it can't produce a significant stream of income AND be managed better than you could ever do it by yourself. The whole premise of a management company is to allow you to go about your life without having to deal with the hands-on issues of managing real estate. With a management company in the mix, it makes no difference whether the property is across the street or halfway around the world!

You'll make better investment decisions.

Your property manager has a vested interest in you doing well. They're in your corner because if you do well, THEY do well. Every time I buy a new rental property, I have many ongoing conversations with my property manager, getting tons of free consulting from an expert who knows the neighborhood a lot better than I do. They tell me what kind of rent revenue I can realistically expect to make (which coincidentally, is almost always less than what the seller told me), what kinds of issues and costs I can expect to deal with, what the neighborhood is really like and most importantly, if they think I'm actually getting it for a reasonable deal. This information, (coming from a credible source like my management company) is a HUGE benefit that I wouldn't have access to if I was trying to manage this whole operation on my own.

You can side-step the busy work and focus on growing your business.

Do you think Donald Trump maintains his billionaire status by unclogging every toilet in the Trump Tower? Do you think Robert Kiyosaki earned his financial freedom by personally answering every tenant complaint that came up along the way? Of course not. The big dogs reached their level of success because they knew what to spend their time on. You're the business owner – to spend your time growing the business and leave the most time-consuming (and dare I say, time-wasting?) tasks for someone who can do the job a lot better, faster, and cheaper than you can.

The monthly management fee should already be paid for.

Whenever you analyze and purchase a new property, the deal should be designed to support the cost of a property manager (because SOMEONE will have to do the job, even if it's you!). Before you pull the trigger to buy a new rental property, you should always make sure you can afford to cut out 10% of your gross revenue for property management and still show solid cash flow.

My property management company charges 10% of my monthly rental revenue for their services, and I'll be completely honest…  they are such a vital part of the equation – I would pay even more if I had to.

They're worth it! They provide the most important service of all – they allow me to live a life of freedom, and that makes all the difference in the world.

What is your freedom worth? Is it worth a 10% management fee? It sure is to me – and that isn't going to change anytime soon!

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You are invited to an exclusive webinar with Seth Williams and Jaren Barnes on Wednesday, October 24 at 8:00pm EDT (5:00 PDT).

Jaren will be hosting a live presentation addressing some of the most critical elements involved with finding deals and motivated sellers in the land business.

In this live webinar, you’ll get the scoop on how to choose the right market, how motivated sellers think, where to find them and what to say ( including some of the best tips, tricks, stories and lessons you’ll need to know as you start pursuing cheap land deals on your own). You won’t want to miss it!

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About the author

Seth Williams is a land investor and residential income property owner, with hundreds of closed transactions and nearly a decade of experience in the commercial real estate banking industry. He is also the Founder of REtipster.com - a real estate investing blog that offers real world guidance for part-time real estate investors.

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  • My parents bought properties and they are having a hard time managing most of the rentals. It was explained here that a property manager can help deal with tenants and repairs of the property. Moreover, it’s important to hire professional real estate property management for quality service.

  • Thanks for the tip about finding a property manager because you wouldn’t have to deal with the problems of repairing things. It would be good to consider their services and qualifications as well in order to know that a manager could do this. My husband and I are looking for someone to manage our rental home, so we’ll have to consider their experience first.

  • I own a few different rental properties but I don’t have a ton of time to take care of them, so I am thinking of hiring a property management company to handle any issues that come up with the properties. You make a great point that you will not have to worry about repairs and maintenance because the property management company are experts in this regard. Also, the fact that it will save me time is a huge benefit so that I can focus more on my full-time job and have peace of mind that my rental properties are also taken care of.

  • Derek Dewitt says:

    My wife and I have an old house we want to rent out soon, but we aren’t sure if we need a property manager or not. I like your point about how you don’t have to deal with tenants who are late paying rent. I don’t want to have to get involved in their finances, so having a manager that can enforce the rent would be helpful.

  • It’s surprising to know that a property management company does the job of screening each tenant and makes sure that they’re going to be a good occupant and make their rental payments. My mother has a small property that has rooms which can be rented. I’ll suggest that she checks for a property management company that she can hire so that she won’t have problems dealing with problematic tenants.

    • Yeah, it’s really in their best interests to screen them well too – because a good tenant will be a lot less headache for them (and the property owner) in the long run.

  • Amanda Drew says:

    You make a good point that the property manager will want you to do well because if you do well then they’ll do well too. They’d also be able to act as a buffer between you and your tenants and can help you get rent and fix any problems that come up. It seems like it would always be a good idea to get a property manager for your space.

    • That’s very true Amanda. I’d say that’s one of the things I appreciate the most about my PM – that they act as a buffer between me and my tenants, so I don’t have to deal with any messy personal issues or irresponsibility first hand.

  • I like how you said that a property management service wants you to do well because they will do well if you do. This seems like a really nice part of having someone like this working for you. That way they will only do that which will help you because they know that it will help them too.

  • Jeremy Thompson says:

    I like how you mentioned that getting the help of a property maintenance service would be sure to be of a convenience as they would handle all the difficult parts of your rental business. That would be great especially for those landlords that have many rental businesses to take note of. Having the help of the property maintenance service will let them enjoy the passive income they’ll be getting from the rent while also bathing with the convenience of not having to think so much about how their properties are holding up every day. Thanks!

  • Vivian Black says:

    It’s interesting to learn that property managers also have the ability to be a handyman since they have the experience. Additionally, with their help, you can also expand your landlord business anywhere in the world with little to no worries. That looks like a win-win for me when it comes to all parties involved. If I were a landlord, I would be sure to hire some property managers since they are very convenient to have. My productivity will also be easily boosted. Thanks!

    • Seth Williams says:

      I totally agree Vivian. I great property manager is worth their weight in gold. I love the one I’m working with – there’s no way I would be in the rental property business without them.

  • Bernard Clyde says:

    I like your point that having a property management company to help you can give you more time to focus on growing your business. It’s important that the day to day management and care of your properties is delegated to a group who is closer and more capable of taking care of the property. That way, you will not only have more time to grow your business, but the properties you own will be under better, more direct care, in the long run.

  • Rachel Lannister says:

    I had heard in the past that many property owners used management services. I was amazed to learn that property management services are actually great at handling the repairs and similar services your tenant might have. Especially since properties require constant maintenance, having one team you can rely on that for all those needs would be quite convenient.

    • Seth Williams says:

      Totally. It’s a huge burden of get off your shoulders when you can find the right PM to handle this stuff. Thanks Rachel!

  • LNWeaver says:

    That sounds useful that a management company can handle all your face to face interactions for you. That way you can spend time invested in other things. I’ve been thinking about getting into real estate as a part of my investment portfolio.

    • Seth Williams says:

      Absolutely. I LOVE the fact that I can generate rental income and I don’t have to deal with tenants. It’s pretty great!

  • PORTIQO says:

    As rightly pointed out in your article the pros of having a property manager to manage the properties outweighs the cons. The property owner can just take care of the investment part and afterwards enjoy passive benefits if his/her investments. Hope your article clears the misconceptions about property managers and property management firms, Thanks.

  • Dave Anderson says:

    I like how property management companies have handymen that can get common problems fixed for the tenants. Also, I agree that by going through a property management company you can be sure that you get paid each month on time. I think that hiring a management company would pay for itself when small things break down and they fix them easily. Another thing is that it would decrease the amount of stress that you have by a lot.

  • Tom says:

    Great article Seth. Hiring a property management company definitely has many benefits. You’ve tackled a bunch of the benefits in this article and provided a great read. Another resource I think your readers might benefit from is this article http://tsquareproperties.net/the-benefits-of-hiring-a-property-management-company which talks about a few additional benefits.

    You should be treating rental properties like a business. In order for any successful business to grow you need people handling the workload or else you won’t have time to focus on growth. If you’re too busy being a landlord for your rental unit it’s tough to find time to research additional income properties that may prove to be very profitable.

  • Scott says:

    I like that you point out that one of the benefits of hiring a property management company is that you don’t have to know how to fix anything in the house. I am thinking about buying a town home and renting the rooms out to college students. I’ll definitely keep this in mind when the time gets closer.

  • Tomas Killington says:

    My wife and I are in the process of moving out of state. We have an investment property, but we will be moving away from it. We didn’t realize that a property management firm can take care of everything we need so that we don’t have to visit the property ourselves. That seems like a great option for us.

    • Seth Williams says:

      Absolutely Tomas! Assuming you can find a good one, it’s a great way to go. That’s how I chose to run my business back when I first got started and I’ve never regretted it!

  • Derek Mcdoogle says:

    In your article, you stated that the reason I outsource my property management is the same reason why I bring my car to a mechanic – because I don’t need to be the expert when somebody else already is. I can imagine that trying to run and oversee a company on your own could be a very difficult task. I wonder if most commercial property management companies have a team that helps them run the properties.

    • Seth Williams says:

      Hi Derek – great points, and yes, I think most commercial property management companies do have a team that helps run the properties (at least, that’s how the ones I know work). Thanks for the comment!

  • Linda says:

    That is great article. But, I don’t think that it’s very difficult to find a good tenant without property manager. There are a bunch of article devoted to the proper tenant screening. Besides, many rental listing services offer not only to post property with them, but also run credit report and background check on each applicant. If homeowner have only one rental unit, I don’t think it would be a problem to find a qualified tenant on their own. This service https://rentberry.com/tenant-screening/ submits renters applications, credit reports and background checks once tenants apply for property. So, all landlord needs is to gather references form previous landlords and conduct an interview. List of questions that property owner might ask an applicant could be found on the Web as well.

    • Seth Williams says:

      Thanks for sharing your thoughts Linda. I can totally see what you’re saying.

      My approach has always been from more of a “passive” perspective – even if finding a good tenant isn’t difficult (and it probably isn’t in many markets), it does take time a little bit of time and effort to do the screening and searching… which is something I’d rather outsource to my PM, because I’ve got plenty of other things filling my plate. That being said – if a landlord is willing to invest this small bit from their end, it probably isn’t hard to handle it all in-house, if that’s the way they’d prefer to do it.

  • Finn Stewart says:

    I can imagine how hard it is to manage a property by yourself, especially if the property has a lot of tenants. That’s why I really like how you mention that if you hire a property management company, you won’t have to handle all the time-consuming parts of the job that deal with the tenants. Plus, you also could expand your property without having to worry if you can handle it all by yourself.

  • Portiqo says:

    For some the 10% fees will seem like a lot when they first start out with renting their property but as time passes it becomes evident that having a property management company will not only save a lot of stress and trouble but also free up time to focus on expanding and growing in this business.

  • Jalu Sakti says:

    I love the analogies you gave of world leaders leaving the small details of their business up to property managers. That really clarified in my mind why they are important. If your company is just starting out, you might not see the need for a property manager, but once it starts to grow, it’s definitely a nice thing to have. It’s also necessary because you won’t be able to take care of all the details that need to be overseen when you have so much other stuff to work on in the company.

  • opgny says:

    i totally agree with you

  • oxford property management says:

    i agree with you, property managers really helpful for manage our property

  • Mark David says:

    Hiring Property Management Company can be good or bad. As we think for Good side, it will be beneficial for us that they will show us all property which they know. All are burden will go and its property management consultant headache to find property for us. Bad side, can we trust on them? Are they going to show Good Property with best location as we want? There are so many questions can arise in mind.

    • Seth Williams says:

      I know what you mean Mark – just like anything in business, there is no black and white answer to the question. Some properties managers can do great work, others – not so much… you always need to look at the specifics of your situation to make the right decitions.

      Thanks for sharing your thoughts!

  • Nitu Sidhu says:

    The biggest issue for investors is finding a property management company that they can trust. I agree with your article Seth, it is almost a no-brainer, but I do understand from an investor’s perspective in that you are literally handing over the keys to your most valued asset to a stranger. There’s a certain emotional connection to a rental property, but once you do find that trustworthy property manager they will help you make more money in the long run, and give you peace of mind as well. We are working on a website that can bridge the gap between investors and property managers with everythingpropertymanagement.com. Check it out here, hopefully you can find some useful takeaways! http://everythingpropertymanagement.com/

  • Lillian Schaeffer says:

    This is some great information, and I appreciate your point that having a property manager means you don’t have to deal with tenant problems. My husband and I are going to be moving out of this house and into a new one, and we want to put our old one up for rent. We’ll be living a fair distance away, and it would be a hassle to have to come back every time a tenant was having a problem, so we’ll definitely look into hiring a property manager to take care of that instead. Thanks for the great post!

    • Seth Williams says:

      Best of luck Lillian! I’ve found that having a PM onboard is a HUGE advantage. Hopefully you’ll find a good one and feel the same way. 🙂

  • Sam Wilkins says:

    You make a great point about not having to deal with the tenant headaches. That would make life a lot less stressful and a lot easier. My sister was talking about hiring a property management company, so I will send her this article to see if it helps her out.

    • Seth Williams says:

      Thanks Sam! Keep in mind, not ALL property managers are great (just like in any profession, some do a solid job, others don’t), but if you can find a good one – you’ll thank yourself every day for the decision. I was lucky enough to find a good one and I’ve never regretter passing this job off to someone else… it’s one of the smartest things I’ve ever done!

  • April Cook says:

    I’ve been interested in investing in rental properties, but I had never given much thought to using commercial property management. I like that with using a manager you are free to invest in properties around the world since you don’t have to be there personally to take care of things. If you have multiple properties, in different states, will you need a local manager or each one? Thanks for all this great information!

  • Nathan Johnson says:

    I am just about to buy my first investment property and I am deciding on whether to get a property manager or not. After reading your article, I can see why it is a great idea to get a manager to handle all the issues. I like that it makes real estate investing so much easier! Thanks for the info!

    • Seth Williams says:

      Thanks for sharing your thoughts Nathan! Glad you found it helpful.

      I agree wholeheartedly with your assessment. 🙂

  • Elizabeth says:

    This article serves as a great resource for anyone asking themselves whether or not they should hire a property management company. It highlights the benefits that come from having a third party handle the stresses that can come from attempting to manage your own properties and rentals.

    My company, Reynolds Realty Advisors, recently posted a very helpful infographic featuring a quiz that allows you to answer the question of whether hiring a property manager is the right decision for you: http://www.reynoldsrealtyadvisors.com/time-hire-property-manager-infographic/. I think this could be an valuable resource for your readers in addition to this awesome article you have posted.

    Please visit our website: http://www.reynoldsrealtyadvisors.com to check out other articles or find helpful information for anyone looking to make the most out of their properties or rentals!

  • glendale ca property management says:

    Commercial property insurance also provides protection to the financial obligations that may arise out of the occupation
    of a property by a tenant. As for the tenants, their main obligation is
    to pay the rent on time. If you are considering using building management software for the first time, or finding something more suitable for your needs, you are on the right track by reading this article.

  • Ryan says:

    I agree working with a property management company is the best strategy, for any investor.The problem is finding a good PM company.Though i agree with your advice because, for financial freedom, you have to be in a position to make money while you are asleep.

  • jimi says:

    What happens in between the time you buy and sell is mission critical. I’d suggest that every investor spend at least one “tour of duty” as a property manager – if for no other reason than to be a more effective overseer of your hired gun PM. Personally, I like the operations side of this business and love the fact that many people think it’s harder than it is.
    Two suggestions:

    1) Understand exactly who will be responsible for your property. The owner/manager who answered all your great questions effectively is usually handing it off to some 25 year-old newbie.
    2) Be careful about outsourcing the tenant screening/tenant selection process. Finding the BEST tenant for your property is not unlike hiring a long-term (hopefully) employee … their job is to be a good steward of your investment. Your interests, as owner, are not exactly aligned with the short-term/narrow interests of the property manager. Property managers benefit from turnover (more fees). They also typically have less zeal than the owner in regards to underwriting tenant quality … satisfied with signing the first marginally qualified tenant through the door … sign here, press hard, third copy is yours, NEXT!

    • Seth Williams says:

      Hi Jimi – WOW, those are some great insights! Thanks for sharing your thoughts. I agree, getting some first hand experience in this realm definitely has it’s value. It may not be the ideal fit for those who want to retire early, but this can be some crucially helpful experience for those who are just getting into this line of business.

  • Daniel says:

    So true!! This is my plan as well as soon as I get a rental property.
    I don’t have to know everything just to save a few bucks. I’d rather spend my time on something else.

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