Should you hire a property management firm?

You made the plunge and now you have your first rental unit. Or perhaps you have many rental units or an entire apartment complex.

Whatever the situation, it has probably crossed your mind, at least briefly, to hire a property management company to manage your rental properties. And you are probably wondering if this is a good idea.

There are many factors to consider before making a decision to hire a rental management company.

The first is cash flow. Does the property or group of properties throw off enough profit to pay the cost of hiring a property manager. If it doesn’t and you don’t want to pay the difference out of your pocket, you have your answer. Hiring a property manager wouldn’t work for you.

But what if there was enough cash flow or if you were comfortable selling out extra money to hire a property manager?

The next decision point is to see if you can find a property management company that has a good reputation in your community and fits your budget. This step is really important as a bad property manager can end up costing you a lot of money whereas a good property manager can actually put extra cash in your pocket by finding more stable tenants and dealing with problem with their network of contractors at known fair prices.

Assuming you have the cash flow and can find a firm that checks out OK and that you are comfortable working with, it is probably a good decision to move ahead and put your properties under the umbrella of their management.

Now that you have a simple decision tree to decide if you should hire a property manager, it is a good time to reflect on why you might want to do this. After all you will be paying this company money that can go into your pocket.

So what we have here is the typical time vs money equation.

If you do it all yourself, you are taking time away from finding new deals and away from your family when you get those 2AM calls about a stopped up toilet or a leaky roof and all the other chores that come with managing your own properties.

If you let a property management company handle everything, you are acknowledging that your time has a value. And that is a very smart decision. That extra time can be invested in finding more good deals, growing the value of your real estate empire. It can also be invested in knowing that you will have no late night emergency calls to deal with. And the sort of peace of mind that can bring is tremendous.

So is a property management company right for you? Only you can answer that question.

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