Owning property and renting it out to tenants in Beverly Hills is a fantastic financial move – it will diversify your revenue streams and means that you make money in your sleep. (Image Credits: Expect Best/Pexels)
However, after you decide to rent out your property, you must determine if you will manage it yourself or hire a property management company to do all the work for you.
DIY Property Management
If you want to manage the property yourself, that means you must interact with your tenants, take care of all repairs, and organize the finances. DIY property management is a lot of work, but it can help you reap greater financial rewards.
Pros
- More money in your pocket: You will not lose any profits by paying people to manage your property.
- More control: You will have complete and direct control over how you run your operation. You will also be able to vet potential tenants more thoroughly to meet your standards.
Cons
- Time-consuming: Property management can become a full-time job if you have many tenants and properties. However, if you just own one building, then it might be quite doable.
Hiring Property Management
A property manager’s duties include marketing rental vacancies, screening potential tenants, executing lease agreements, collecting rent, and taking care of repairs and maintenance for the property. Hiring a property management company can help remove much of the burden from your shoulders, but you will have to give up some of your profits to acquire their help.
Pros
- Time-efficient: If you have a full-time job, dealing with tenants and repairs is likely the last thing you would want to do in your free time.
- Requires less experience: If you don’t know much about taxes, building codes, or business, then you might be better off trusting these complicated subjects to a professional.
- Fill more vacancies: Property management companies can help you fill vacancies in your property much more quickly than you might be able to do on your own.
- Allows for quicker maintenance response time: Your tenants will appreciate working with a dedicated maintenance team who can respond to their requests whenever they arise.
- Ability to grow: If you think you may buy many properties to rent out, at a certain point, you will need help. Additionally, you may be able to take advantage of economies of scale if the same company manages many of your properties.
Cons
- Less money in your pocket: Having to pay for a property manager cuts the profit you will be able to bring in as a landlord. Some companies may still charge a fee, even if the property does not have a tenant.
- Less control of your operations: If you go with a property manager, you need to make sure that you choose one you can trust; otherwise, you may run into more problems than you started with.
Which Should You Choose?
The two most significant factors that this decision boils down to are how much time you have and how much money you have. If you do not have much time but have plenty of money, hiring a property manager is probably the way to go. Conversely, if you have a lot of time, but not much discretionary spending money, then you might want to go for it yourself.
There is not necessarily a right or wrong answer, but there may be one method that fits into your life much more seamlessly than the other. You also need to consider which option will give your tenants the best experience as well. Ultimately, if you put enough forethought into the decision, you will come to the right conclusion for your situation.