To Manage or Not to Manage? Pros and Cons of Self-Management for Investment Rental Properties Owners

As a rental property owner, the decision to manage your own investment property can be a difficult one. On one hand, managing your own rental property can save you money in management fees and give you more control over the day-to-day operations of your investment. On the other hand, managing rental properties requires time, effort, and expertise, and if done incorrectly, can result in costly mistakes and legal issues. In this article, we’ll explore the pros and cons of managing your own investment property and provide some tips to help you make an informed decision.

exterior of apartment building 2022 07 20 04 46 13 utc

Pros of managing your own investment property

Save money on management fees

One of the most significant benefits of managing your own rental property is saving money on management fees. Property management companies typically charge between 8-10% of the monthly rental income, which can add up to a substantial amount of money over time. By managing your own property, you can avoid these fees and keep more of your rental income.

More control over your investment

Another advantage of managing your own investment property is having more control over your investment. You can make decisions about repairs, upgrades, and tenant selection without having to consult with a property management company. This can allow you to make decisions more quickly and potentially increase your return on investment.

Better understanding of the property

Managing your own rental property can give you a better understanding of the property’s condition and potential issues. By regularly visiting and maintaining the property, you can identify any problems before they become major issues. Additionally, you can get to know the tenants and build a positive relationship, which can lead to longer tenancy and lower vacancy rates.

Learning experience

Managing your own rental property can be a valuable learning experience. You’ll gain knowledge about property maintenance, tenant management, and the rental market, which can help you make informed decisions in the future. Additionally, this knowledge can be applied to other investment properties you may acquire in the future.

Cons of managing your own investment property

Time and effort

Managing your own rental property requires a significant amount of time and effort. You’ll need to market the property, screen potential tenants, collect rent, maintain the property, and handle any tenant issues or disputes that arise. If you have a full-time job or other obligations, managing your own rental property may not be feasible.

Lack of expertise

Property management requires a certain level of expertise, particularly when it comes to legal issues such as evictions and fair housing laws. If you’re not familiar with the laws and regulations governing rental properties, you could inadvertently violate them and face costly legal issues.

Emotional attachment

As the owner of the property, you may have an emotional attachment to it, which can cloud your judgment when it comes to tenant selection or maintenance decisions. This can lead to poor decisions that negatively impact your investment.

Potential for burnout

Managing your own rental property can be a stressful and demanding job. If you’re not prepared for the responsibilities and challenges that come with property management, you could experience burnout and become disillusioned with the investment.

Tips for managing your own investment property

If you decide to manage your own rental property, there are several tips you can follow to ensure success:

Familiarize yourself with landlord-tenant laws

Before renting out your property, it’s essential to familiarize yourself with the laws and regulations governing rental properties in your area. This includes fair housing laws, eviction procedures, and tenant rights. Ignorance of these laws is not an excuse, and violating them can lead to costly legal issues.

Screen tenants carefully

Tenant selection is one of the most critical aspects of rental property management. Take the time to screen potential tenants carefully, including running credit and background checks, verifying employment and income, and checking references. This can help you identify potential red flags and avoid tenants who may be unreliable or have a history of causing damage.

Set clear expectations

Once you’ve selected tenants, it’s important to set clear expectations about rent payments, property maintenance, and tenant behavior. Provide a clear lease agreement that outlines these expectations, and ensure that tenants understand their responsibilities.

Maintain the property regularly

Regular property maintenance can help prevent major issues from arising and ensure that the property is safe and habitable for tenants. Schedule regular inspections, address any maintenance issues promptly, and keep the property clean and presentable.

Keep good records

Maintaining accurate records is essential for rental property management. Keep detailed records of rent payments, repairs and maintenance, and tenant communications. This can help you stay organized and provide evidence in the event of a legal dispute.

Consider hiring a property management company

If you’re not prepared to handle the responsibilities of managing your own rental property, consider hiring a property management company. They can handle tenant selection, rent collection, maintenance, and legal issues for a fee. This can alleviate some of the stress and time commitment of managing a rental property on your own.

TL;DR The decision to manage your own rental property comes down to your personal preferences and circumstances. While it can save you money and provide more control over your investment, it also requires time, effort, and expertise. Consider the pros and cons carefully and follow the tips outlined above to make an informed decision that’s right for you.

Updated: February 1, 2023 at 10:41pm

Licensed Real Estate Agent in Bergen County NJ

Stay informed, make better choices, and navigate the Real Estate landscape with confidence. We're here to help you achieve your goals. Get in touch