Investing in rental properties is a great way to make money, but it’s easy to end up in tricky situations once tenants enter the picture – and that’s why most property owners shouldn’t also work directly with their tenants. Rather, to maintain a healthy business relationship, owners should have a professional property manager handle tenant relations. Their support and services can make the difference between a favorable financial situation and serious property problems.
The Role Of The Property Manager
What sets a property manager apart from the owner? Simply put, the owner is just the individual who buys the property as an investment and decides to put it on the market. The property manager is a hired representative of the owner who performs a range of tasks including finding and screening clients, collecting rent, handling maintenance requests, and managing conflicts between tenants. The property manager may consult with the owner on financial issues, such as rent changes, make marketing decisions, and also enforces property policies, such as whether tenants are required to have rental insurance.
In addition to all these ordinary, daily activities, property managers also handle the messiest part of tenant relations – eviction. When you have a problem tenant who is disruptive or destructive, or who simply doesn’t pay their rent, the property manager is the one who handles the legal and interpersonal work to move that tenant out, and that’s no small feat.
The Downside Of DIY
It can be tempting to take on the property management role yourself when starting out in the property investment business, since that will reduce your expenses, but any savings is superficial. Generally speaking, properties with professional managers are more profitable than their personally managed counterparts. Property managers also allow you to focus your energies on “higher value” tasks, whether that’s another job or business or seeking out added investments.
In addition to increasing income, hiring a property manager can also benefit your relationship with your tenants. As Houston property management company Green Residential explains, “There are certain relationships in life that function best when there is a third party go between… The relationship between a landlord and a tenant is one of these relationships.” When problems arise between tenants and owners, the situation tends to break down more quickly, leading tenants to leave. Suddenly you have an empty property, no leads, and no income.
Management Is A Skill
Property management may seem straightforward, but the fact is, it’s a skill like anything else. Just because you’re good at identifying profitable investments, that doesn’t mean you’ll also be skilled at identifying tenants and managing day-to-day operations. Paying a property manager to do this work is like anything else: you’re paying a fee to have the job done right and that’s key to protecting your investments.
Some owners are great property managers, but in many cases, these are the individuals who found their way to investing because they wanted to work with tenants, rather than the other way around. Most owners, though, would need to commit the time you would ordinarily spend managing your investments learning the ropes and handling daily issues. Property managers may also be responsible for basic maintenance, are highly organized, and have excellent interpersonal skills. They may even participate in continuing education programs for property managers to stay up to date on best practices, new software, and management trends. Is this what you want to spend your time doing, or would you rather focus on your investment work?
We all succeed when we focus and build on our strengths, which is why being a property owner doesn’t mean you should also be its manager. You’ve built a successful business based on your investment savvy. That’s more than enough. Choose a manager who can help that business flourish and protect your investments.