Hard work pays off. You probably know this if you are thinking about investing in real estate. You saved up thousands of dollars’ worth of work hours and you are finally going to make your money work for you. Instead of stocks and bonds -and their ups and downs- you decide to go for a solid, safe alternative: a house. It’s simple, right? You buy the house, get someone living there and collect the rent every month. Well, it’s not that simple. There’s plenty left to do after buying a house. You -or someone else- has to manage your property in order to get it working. You can either choose to manage it yourself or get a professional to do it. Which one is better?
Self-Managing
If you have decided to take matters into your own hands, good for you. You have probably made this choice because you want to save money and take full control of your investment. If you go down this route, you will soon realize saving money has a price as well: there are a lot of disadvantages to self-managing. If this is your first time doing it, there are a lot of unexpected things you may encounter:
- Vacancies: The first thing you have to do is get someone living in your house. This is harder than it seems. Placing an ad online won’t magically get people to come and pay for rent. You have to show the house, fill application forms and choose the right tenants for you. Every month you fail to get a tenant, you’re losing money.
- Rent collection: If you found the perfect tenants, you’d be able to collect money every month. There are no problems there, although it can be a little awkward to ask for the money at first.
- Late payments: You’ll face no problems collecting rent until there’s a problem collecting rent… and it can get even more awkward. Your tenant will ask you for extra days, eventually being one month -or more- late. This can get incredibly problematic as time goes on.
- Maintenance: Even though someone else is living in your house, it’s still your house. You have to maintain it to avoid value loss. Regular visits to make sure everything is okay are a must, and you’ll have to fix everything that’s broken. You may face an emergency call at 3 am if something went terribly wrong… and you’ll have to get there to deal with it.
- Landlord duties: There are plenty of other things you’ll have to deal with like taxes, insurance, and inspections. There are worst-case scenarios where you’ll have to evict your tenants as well.
Hiring A Property Manager
If self-managing seems like an incredible headache waiting to happen, you wouldn’t be wrong. You can avoid dealing with most of the responsibilities of renting a property if you hire a professional to do it for you. It’s going to cost money — a small percentage from each monthly rent payment. But in exchange for that, your property manager will deal with your house’s maintenance, rent collection and everything else in between. If your house is vacant, they know how to get a new tenant as quickly as possible. You are not paying for someone to take care of your property, you are paying for the expertise to make sure everything goes great and to make sure you’ll have nothing to worry about but checking how much money is going into your bank account.
Hard work pays off — in the short term. Smart work pays larger dividends in the long term. For a little money each month you’ll avoid big problems if you decide to hire a property manager. You can still self-manage, but is it worth it? One house might be manageable, but what if you decide to expand? It’s best to hire people you can trust from the get-go and let your money work for you.