I am a big fan of “to each their own” and you won’t hear me knock someone who prefers to be a landlord versus using a property manager, but for those of you convinced you need to be a landlord for whatever reason or you on the fence about it, hopefully some of these realities will help you out.
1. I’ll Save 10% a Month by Not Paying a Property Manager
On the surface, this seems legit.
This may actually be legit if you have a perfect tenant who always pays on time, rarely has maintenance issues, doesn’t cause damage, stays in the house for a fairly long term, and never gives you any run around about anything. I’ve had tenants like this in the past and they are great! One of them I was able to easily manage (i.e. landlord) myself from over 2,000 miles away and never had a problem. The unfortunate reality, however, is most tenants aren’t that good. Property managers aren’t usually in place to handle perfect tenants, they are in place to handle less-than-perfect tenants.
As soon as a less-than-perfect tenant or situation comes up, it’s going to require time and effort to deal with it. As soon as that happens, you need to understand what your time is worth if you are landlording your own property. For a detailed breakdown of the true cost of landlording your own property (including both the financial cost and the cost on your sanity), check out Are You Really Saving Money by Being a Landlord? In short though, think about a property that collects $1,000/month in rent. A 10% property management fee would cost you then $100/month.
For a mere $100/month, is it really worth it to take on constant stress over a property? You can’t possible tell me it is (unless you really do have that perfect tenant). In case you doubt me, here is one more article to check out a time when not landlording came in really handy for me- When I Prefer Property Managers over Being a Landlord. I’ll spare you the additional argument of active vs. passive income and whether landlording is really that passive, but if you are interested, I have articles on that too!
2. I’ll Take Care of My Property Better Than Anyone Else Ever Would…
That may be true…
But good news! A rental property doesn’t have to be taken care of at pristine levels, which I’m sure is where your bar is for how one should be taken care of.
If your bar is only at minimal care for a property, just for that maybe you should probably hire a property manager. I’m a huge perfectionist, no doubt. I won’t even drive by my rental properties when I’m in town because if I so much as see a scuff on a garage door, I’ll freak out and get totally stressed about getting that scuff off. I know this about me. But does a scuff on a garage door really matter?
Not at all (unless it’s so severe it’s just tacky and violates HOA regulations). The standard I have for a property is incredibly high. If I were to maintain every rental property I own at that level, I’d be wasting time and money. I don’t condone minimal care on rental properties, they need to be comfortable and pleasant for tenants, but a scuff on a garage door isn’t going to hurt anything. But if I were in charge? I’d have to cover up the scuff because it would drive me crazy. So yes, I would take better care of a rental property than any property manager would, but it would be wasted effort.