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3 Main Pros And Cons Of Managing Your Property Yourself
It is common for real estate investors to manage their first investment property themselves. They do the rental collection, repairs, advertising, prospecting, interviewing tenants, paying the bills, and even run little errands for demanding tenants. And if you are like most people being a first time landlord, you will be doing everything yourself as well. But as your portfolio expands, there will come a point where you have to make a decision whether to continue being a self-appointed property manager, or to get some help.
Your ego might make you feel incompetent for starting to let being a landlord overwhelm you. At this point, you may also start to question your own ability to be an efficient landlord. But there is nothing to be embarrassed about being unable to handle everything. A bigger jobscope demands assistance. The top dog at an organisation needs as much help as he can. There is absolutely no way one person can know each minor aspect of a business and manage all the ins and outs himself. So don’t put yourself under that type of pressure. There’s nothing to stop you from digging in and become a super-landlord as well, as long as you can handle it.
These are the 3 main advantages and drawbacks of managing your property yourself.
Advantage 1 – Save on recurring maintenance charges
There is no way a development can operate without a management team. Someone has to be there to call up the trash collection services when they are late, schedule landscaping to minimize inconvenience to tenants, demand emergency attention from a plumber when a pipe burst, etc. It can be an easy job when you are managing just one property. As your portfolio grows, things can quickly get out of hand.
But if you are able to manage these task yourself, you are going to save a significant amount on management fees. This can be a significant amount when you are still a minor player and cash flow just about covers the mortgage.
Advantage 2 – Save on maintenance charges
Someone has to trim the lawn, do housekeeping, chemical wash the air-conditioner, etc. These services can cost you up to $100/hour if you are to hire. Since a dollar saved is a dollar earned, doing these maintenance activities yourself means you are putting these money into your own pocket. You can even pay yourself for doing these tasks.
Advantage 3 – Passion
Nobody is going to have the same passion for your investment as you. This includes your spouse. It is ridiculous to have that expectation anyway. Even if you hire a top-end management company to do a job for you, you will still find that their passion for your property is way short of the level you are at. They are not investors like you for a reason. They are contented to do a routine job and go home when the clock strikes to spend time with family and friends.
Drawback 1 – Your day job will suffer
More and more organisational employees are taking the leap into property investments. There is every chance that you have a day job as well and wants to see how far investing in properties can take you. It’s one hell of a balancing act to be an active landlord while managing work commitments as well. Imagine halfway into your million-dollar presentation, your tenants calls you about something that has gone wrong. This will throw you off your frame of mind and your work will suffer. If your properties demands constant attention while you have a day job, it is not fair to your employer, your clients, tenants, and you as well. Know when to quit while your reputation is still intact.
Drawback 2 – No more personal time
Not only management issues will bother you during office hours, they will bother you during off-hours as well. This includes weekends, week nights, public holidays. Depending on the type of personality you have, family time could be your only source of recharging yourself from the hassle and stress of taking up so much work load. The irony is that having too much on your hands may make it impossible to plan for free personal time as there is no longer “free” time.
Drawback 3 – Higher exposure to liability risks
You can admit it. You are not going to read through the 1001 pages of legislation that governs real estating. You could very well be just a part-timer. This means that you are putting yourself at liability risk by not being well-versed on legalities and market practices in the industry. Whereas a professional property manager is expected to familiarise themselves with these legal requirements and restrictions. Just a single legal action against you can potentially push you over the edge. This is not to say that lawsuits will not happen when you hire a property manager. But you will be at a smaller risk since you have someone competent working for you. And if bad things really start to happen, reach out for the agreement contract with the management company and look for terms that point to their negligence.