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Pros and Cons of Hiring a Property Manager

By TenantCloud October 29, 2024

Deciding whether to hire a property management company will be one of the biggest decisions you can make as a property investor.

This will be especially true when you start to own more than one property, as dealing with it may become overwhelming, especially if you want to continue expanding your portfolio.

Property managers can handle many tasks for you, but it's essential to consider the pros and cons to see if it fits your needs.

The Advantages of Hiring a Property Manager

Hiring a property management company can make your life easier. Let's go over some of the main benefits.

Time Savings

Many people who rent out a property also have full-time jobs. Managing properties alone can be a full-time job, and it's simply more straightforward to have someone deal with maintenance requests, rent collection, and day-to-day issues.

They will take all this off your plate so you can focus on your day job, family, or growing your property portfolio. There's also a chance the property isn’t close to where you live now. Hiring a property manager that's close by will save you time and money.

Expertise in the Field

Property managers are experts at what they do. They are also working for you, and they are working for other property owners. They will understand the local regulations, tenants' rights, property law, and other things you don’t need to know. This can save you time and money in situations like evictions or lease disputes, and they can make sure you stay compliant.

They can also help you get the right price for your rental as they will be up to date with market trends or help advise on what could make your property more appealing.

Tenant Relations

Let’s face it: handling the tenants is probably the hardest part of being a landlord. Sometimes, we can get an amazing tenant, but other times, we could end up with a tenant from hell.

A property manager can help with this process by doing background checks and sorting out lease agreements. Then, hopefully, if any issues arise, the property manager can deal with most of this without you knowing.

It also helps create a better experience for the tenant if they have a single point of contact with whom they can speak easily.

Help with Maintenance

Maintenance can become a real headache and one of the most challenging aspects of being a landlord. Having a property manager in place can help keep your tenants (and property) happy.

It’s likely that property managers already have good relationships with reliable contractors from their years in the industry. This means your property can get fixed quicker, with less coordination, and, overall, a happy tenant. It also means you won’t get an emergency maintenance call in the middle of the night.

Reduced Time of the Property Being Empty

There's nothing worse than having a property empty for a period that costs you money. A property manager can help find you a new tenant, maybe even before the old ones move out. They can help market the property, have connections, and prepare it for the next potential occupant. This alone could be worth the cost of a property manager.

Disadvantages of Hiring a Property Manager

Obviously, with every pro comes a con, and it's up to you to consider both sides. The main decision will likely be cost, but consider some cons.

The Cost

This is the biggest consideration. Property management services are not cheap, but they know they can charge a large fee to give the property owner more of a hands-off income.

Their costs can typically range from 8% to 12% of the monthly rent, and some will even charge an extra fee for placing a tenant, dealing with maintenance or other services. If you are a landlord with only a tiny margin (after paying the mortgage on the property, etc), then property manager expenses can add up and could outweigh the benefits of hiring one.

Make sure you get a proper breakdown of the management fee structure before proceeding.

Loss of Control

It can be a big decision to hand over control when you hire a property management company to look after your rental property.

Decisions such as tenant selection, property maintenance contractors, and sometimes even rental rates can be taken out of your control. It all depends on how hands-on you want to be. Property managers know your property is very important to you and want it to be taken care of. At the same time, they won’t want someone watching their every move, making their job more difficult. If you must always be involved, you may need to self-manage the property.

Screening Process

One of the best ways to retain and find good clients is to have a thorough screening process. You (the landlord) may never actually meet the prospective tenant renting your property because the property management company will handle the screening process. It would be good to ask them what's involved in their screening process and maybe have some extra suggestions that you want to add.

You will never be able to have complete control since you are trusting the rental property manager, but maybe offering to give them things a tenant must have might help. Just know that the screening process will probably never be as strict as if you were dealing with it yourself.

How to Hire a Property Management Company

If you’ve decided that hiring a property manager is the best solution for you, then the next step is finding the right property management company. Its an important choice, as you will be trusting them with your property and income.

Here are a few ideas of things to consider.

Online Reviews

A good property manager will have online reviews on platforms like Yelp, Google, Facebook, Forbes and other trusted services. Look for a property management company with great reviews to start a short list of potential companies.

Questions To Ask When Hiring A Property Manager

Asking the property management company about their portfolio is very important as it's a good way to determine how many properties they manage. It's important to find one that's right for you. If they manage too many, then it could mean that they have less time to dedicate to your rental property. Therefore, it's good to find out how many staff work at the company.

Discuss Fees

It's important to agree on a management fee structure and find out if lease renewals, advertising, or dealing with maintenance are all included in the fees. Understanding all the upfront charges will help prevent any surprises later on.

Routine Inspections

It's essential that regular inspections of the property are completed and that this is done as part of the agreement. Inspections done by the property management company help prevent larger issues down the line.

TenantCloud's Hybrid Approach

Perhaps a hybrid approach could be for you. TenantCloud offers a flexible solution. Our property management software combines automation tools with an intuitive platform that allows landlords to manage real estate efficiently while staying in control.

Tasks like rent collection, tenant screening, and maintenance requests are already in our owner portal along with other owner resources. It's a way to put routine tasks on autopilot while still being able to handle important ones yourself.

Automated rent collection - Easily collect rent with automatic reminders and payment tracking. Tenants can pay using ACH or credit cards.

Tenant screening and leasing—We make it easy to screen tenants with background and credit checks. You can also create and e-sign lease agreements stored within TenantCloud.
Maintenance management - Tenants can log in and submit maintenance requests. Everything is then tracked within the system.
Simple accounting tools - Easily manage finances with built-in reports, invoices, and receipts. You can connect your bank and sync with QuickBooks.

Is a Property Manager Right For You?

The decision to hire a residential property management company requires a lot of thought. If you have just one property, it's likely more cost-effective to manage it yourself.

When you start to branch out into two or more properties, you might feel that the real estate portfolio is becoming too much to manage, and the expense of a property manager might be the best decision you ever make. Landlords who prefer to be more hands-on and whose properties are close to each other may decide that the price is too high and prefer to stay managed.

If you are still unsure, consider our hybrid approach, which could offer the best of both worlds.

If you are a property owner who needs more tips on property management, check out our real estate management blog.