Did you know that the U.S property management market size was USD 3.40 billion in 2020? What’s more staggering is that it’s projected to grow to USD 6.16 billion in 2028. There is a reason why people invest in property management; it is a booming field. When it comes to property management, there is an age-old debate: should you opt for in-house management, also known as self-management, or property management firms?
There is a long list of responsibilities that property managers need to handle, such as advertising, vetting the renter, setting the rent price accurately, leasing requirements, maintaining the property, etc.While some might be able to handle this all alone, others require professional help.
To help ease your mind, we will discuss the pros and cons of an in-house property manager vs. a property management firm so you can analyze the best fit for your business. Let’s get started!
What Is An In-House Property Manager?
Some landlords hire their own staff to handle their property rather than hire a company. These in-house property managers are responsible for multiple tasks, such as dealing with potential and existing tenants, planning budgets, collecting rent, making invoices, etc.
The responsibilities can vary from landlord to landlord, but the crux of the job is to be a liaison between the owner and the tenants and ensure both parties are satisfied and the lease is being upheld.
Listed below are some of the pros and cons of hiring an in-house property manager or self-manager.
Pros
Cost-Effective
One of the primary reasons property owners self-manage or hire their own staff is that this method is cost-effective. Some property management companies charge a percentage of your monthly rent, depending on your profit margins.
This could take a huge chunk out of your earnings. Moreover, if you are managing your property, you don’t have to waste money and resources on extensive training, accommodation, or traveling.
More Control
Another benefit of self-management or in-house property managers is added control. Since you are working closely with the property managers and have trained them according to your requirements, you can give them greater responsibility and enjoy the benefits of letting them manage things.
For instance, when negotiating rent, in-house property managers are at an advantage because they are more willing to work out a deal rather than waiting for the authority to give their sign-off.
Easy Communication
The best way to manage a property business is to build good relationships with both the tenants and the owners and this is only possible through close communication. Since you will be working with an individual in-house property manager or small team, you can ensure they will be able to handle all emergencies easily. According to these Tampa property managers, they can offer undivided attention and ensure the work process is not disturbed.
Cons
Lack Of Resources
A major disadvantage of in-house property managers is that they manage a handful of properties and do not have the tools and resources required to take care of certain issues. They either have never encountered such a situation or don’t have vendors for the job. This means money and time invested in finding the best solution, vendors, and ensuring tenants remain satisfied.
Legal liability
Legal liability is a major concern, and in-house property managers are at a disadvantage. For instance, many tenants scam owners by sub-letting, and even the strongest of leases cannot give you the protection you need. Moreover, evictions, recovering delinquent rent or damages, or even staying up-to-date with the latest landlord-tenant law is challenging for an in-house property manager.
What Is A Property Management Firm
A property management firm is a third-party company hired by the landlord to help manage multiple properties or an expanding business. A management company is an independent contractor, so you don’t have to train them, saving you time and effort. The management company handles day-to-day operations, marketing vacant properties, collecting rent, maintaining buildings, and dealing with tenant requests.
Property management firms are preferred because they bring their vast experience, resources, and vendors to help manage your growing business. The extra professional help can be highly beneficial to your property investment.
Pros
Access To Skills
By hiring a third-party property management firm, you can find someone who meets your needs and requirements and has the resources to grow your business effectively. Companies have the skill and knowledge to lease property to high-quality tenants and manage day-to-day tasks, so you don’t have to worry about anything. Firms can help you find a better tenant 9.8 out of 10 times; don’t screw up these odds just to save a few bucks.
Multiple Resources
Property management firms invest in tools, equipment, and resources to provide the best quality services. They help create guidelines, ensure the staff and tenants stick to them, follow an extensive tenant screening process, and protect you from legal liability. Firms also have an online portal on which you can keep track of your properties, paid rent, maintenance, etc.
Easy Accounting
When it comes to expenses, you might think a property management firm will cost you more, but that’s not the case. For instance, if we talk about taxes, all repairs and improvements on your rental property are tax-deductible, same goes with management fees. Moreover, the time you spent filling out various tax forms is not worth it when you can get it all organized and itemized for a lesser fee.
Cons
Less Room For Negotiation
The only major drawback of hiring a property management firm is that they don’t have much room for negotiation, which elongates response time. For instance, firms are given set prices for each rental. If a prospective renter puts in a lower offer, it first needs to go through the landlord before getting accepted. Moreover, since firms handle hundreds of properties at once, tenant and landlord requests can take longer to process.
There are multiple reasons why you should go for a property management firm, such as having multiple properties, not liking hands-on management, limited time, and you can afford it. I hope I was able to answer your “in-house property manager vs. property management firm” query and help you decide on the right model for your expanding business.