All too often, potential landlords look at the cost of hiring a property manager and hesitate because they think that they can manage the property themselves and save some cash. Setting aside for a moment that the property manager will save the owner money on maintenance and repairs that will probably far exceed the minimal management fees, let’s look at the biggest element of why paying that management fee is worthwhile: time on market.
The most important thing in maximizing your profitability on your rental property is getting it rented as quickly as possible. If you think you’re saving money by not hiring a professional property manager, but it takes three months longer to find a tenant, did your really save any money? Probably not. In fact, you probably cost yourself a heck of a lot! Let’s look at an example:
Let’s say you have a rental property that could rent for about $1,000/mo. If you were to hire our firm, your costs the first year for our services would be $1,950. That includes our management fee and the tenant procurement fee for placing a new tenant in the property. Now, we typically find a good tenant in about 3 weeks. That means that your property would be rented for 49 out of 52 weeks in the first year. With pro-rated rent, that means you would receive a total of $11,250 in rent for the year using our services. Subtract our our management fees, and you received $9,300 for the year.
Now, how about if you had done it yourself? The reality is that marketing is everything in real estate. Because an individual landlord doesn’t have access to all of the marketing platforms that we do, you can probably expect to take 3 months to rent your property. So, at the end of the year, you will receive only $9,000 in rent. You actually netted $300 less than you would have with our services. And to make matters worse, because you don’t have the tenant screening abilities that we do, you probably ended up with a worse tenant who may not pay the rent and will have to be evicted, costing you even more lost rent, plus court costs and attorney’s fees. And then there’s all of the hassles of trying to collect rent, getting repairs taken care of, keeping financial records for your taxes, etc.
Remember, marketing is everything in real estate. We will advertise your rental property on thousands of websites, as well as in the Multiple Listing Service available to real estate agents. This is what it takes to quickly rent a property. Don’t walk by dollars trying to pick up pennies. Hiring a property manager will save you money!