How to Decide Whether or Not You Really Need a Property Manager?
If you have built up an expansive real estate portfolio, you are better off than most in terms of inflation-adjusted returns. However, managing those properties can be a tall order – especially as you expand your assets over time. As a property owner, you are responsible for everything from marketing to maintenance and rent collection. When tax season rolls by, you must also deal with taxes, renew rental licenses, and the list goes on.
As you can imagine, this can seem like a full-time job. If the properties are located in different states, you could be spending a great deal of time shuttling from one location to the next – unless you hire a property manager. An experienced property manager can help you save time and effort and help you earn more money.
What Does a Property Manager Do?
Many property owners have little to no time for day-to-day issues like maintenance and tenant acquisitions. Property managers help take care of the routine tasks and allow the owners to concentrate on growing revenue. For example, a property manager keeps records of all associated expenses and income.
What are the Key Property Manager Responsibilities?
Not all property managers are the same. Many of them choose to specialize in certain roles, while others are generalists. Here are some of the key roles and responsibilities that are commonly handled by property managers:
- Setting rental rates
- Monitoring vacant units
- Listing and promoting vacant units
- Screening new tenants, signing a rental agreement, and providing onboarding support.
- Collect rent payments
- Handle routine repairs and maintenance
- Removing tenants that fail to pay rent
- Keep track of and pay property taxes
Things to Consider When Hiring a Property Manager
Hiring a property manager has its benefits but there are a few drawbacks that you should also be aware of. Knowing the pros and cons will ultimately help you make an informed choice. Let’s start with the pros:
- No property management issues to worry about
- Relief from constant travel if you have out-of-state properties in your portfolio
- Steady passive income
The cons of hiring a property manager are as follows:
- Higher operating costs
- Lack of control over day-to-day operations
- No way to guarantee tenant creditworthiness
Alternatives to Hiring a Property Manager
A property manager can free you to focus on increasing the ROI of your property rather than being tied down in taking care of day-to-day management. However, there are other alternatives too. For example, investing in a Delaware State Trust (DST) can give you many of the same benefits at a lower overall cost.
DSTs allow you to acquire a fractional share in various investment properties. It is a risk-sharing model where the returns are directly proportional to the investment. DSTs have low minimums, which put premium properties within reach of the average investor.
More importantly, DSTs assume responsibility for the acquisition, management, and disposition of the properties, with investors only acting as beneficiaries. Lastly, the IRS treats DSTs on par with real property for the purposes of a 1031 exchange. Even if you have already shortlisted a replacement property, experts recommend having a DST as a backup just in case.
True North is a trusted real estate investment advisor that helps investors make strategic decisions in a time of uncertainty. Our team creates personalized investment plans for investors and enables them to achieve their financial goals.
For more information, contact us today!
