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Talk to a few potential clients, apply some paint every so often, and collect the rent.  Is that all it takes to manage a property on your own? You can save a lot of money managing a property on your own, but will it cost you more in the long run?

The answers to these questions will change from person to person, and even from season to season. Managing an investment property takes a lot of time and expertise if you want to do it well. We put together a list of what a property manager does, so you can decide if managing a property on your own is right for you, or if you should find someone else to do it for you.

So what exactly does a property manager do?

MANAGE MONTHLY INCOME

It goes without saying, but one of the most important steps of managing a property is making sure you get paid. Setting and collecting rent can be very simple tasks, but if they aren’t done right, they can actually cost you a lot of money.

If you hope to maximize your monthly income, you will need to carefully study the market in your area. Set the rent too high, and you could be losing out on thousands of dollars a month while your unit sits vacant. Set it too low, and you can easily leave money on the table. A good property manager will have an intimate knowledge of your area and understand how to price your unit.

Once the rent is set, you still have to make sure you get paid each month. It sounds simple, but for a first-time manager, this can actually take a lot of time, especially if you have multiple properties. Fortunately, the process has gotten much simpler since automated payment systems have become so readily available. Just cross your fingers and hope your first tenant doesn’t try to pay in pennies! ?

PLAN FOR INVESTMENT GROWTH

The value of a rental property isn’t just its monthly income. In a place like San Diego, where we are located, the cost of land alone can be hundreds of thousands of dollars. If you want to see the highest gains year after year on that investment, you need to make sure you know where to spend your money.

We have seen that most first-time managers end up going down one of two dangerous paths. Either they try to save anywhere they can, or they start replacing things at the first sign of wear and tear. Both paths will lead to huge losses in profit in the long run. Delaying maintenance too long can quickly result in huge unexpected costs when it leads to bigger issues. At the same time, if it is not going to increase your property value or save you money over time, you shouldn’t do it.

A good property manager will be a wizard with the numbers and have a strong understanding of real estate. Knowing how and where to spend money maintaining your property can make the difference between a failed investment and wild success.

FIND AND MANAGE TENANTS

There is nothing that will lead people to give up managing a property on their own faster than frustrating interactions with tenants. Selecting a good renter can mean years of low maintenance income, but selecting the wrong one can cost you thousands of dollars in lost income and countless hours.

One of my friends recently decided to manage his new investment property on his own. He is a very savvy guy, but his very first tenant spelled disaster for his investment. After two months, the tenant completely stopped paying rent, and he spent the next several months dealing with the eviction process. In San Diego where we are, this is a long and frustrating process.

Dealing with tenants is what property managers do best. A typical manager will handle the following and more:

  • Tenant screening
  • Creating leases and getting them signed
  • Move-in/Move-out process
  • Emergency maintenance calls
  • Tenant complaints
  • Evictions

PROTECT YOU FROM LAWSUITS

In California, there are countless laws designed to protect renters from predatory or negligent landowners. Trying to keep track of all of them, if it isn’t your full-time job, can be tricky. Property managers (in most cases) are required to be licensed by the state to ensure they are updated on the latest rules and regulations.

Even during the tenant selection process, you can end up in huge trouble if you don’t do things the right way. If you do decide to manage your property on your own, make sure you study up on the local laws.

OTHER THINGS TO CONSIDER

  1. Do you live locally?
    Trying to manage a property that you don’t live close to can be next to impossible. Even something as simple as a leaky toilet can be a huge endeavor to resolve if you are far away. Even for savvy investors, managing a property from a distance is usually not a good idea.
  2. What is your opportunity cost?
    If you are going to manage a property on your own to save money, make sure that it actually makes sense. Any time you spend managing a property is time you could spend making more money somewhere else instead.

There is no simple answer to whether you should manage a property on your own, but hopefully, you have a better idea of what it takes to do it right. Remember that if you don’t do it well, you can end up losing a lot more money than you would spend on a property manager. But if you study up and spend the time to manage your property the way it should be, it can be one of the most rewarding investments you can make.


Still Looking For More Info?

Call us today at (858) 274-3500 or fill out the form below to set up a free rental consultation.