- Self-manage or use property management? Factors to consider
- Pros and Cons of Hiring a Property Management Company
- The Pros and Cons of Self-Management
- Could Property Management Software be the Answer?
- The decision to self-manage properties or hire a property management company depends on factors like time commitment, cost, personal skills, property portfolio size, and proximity to the rentals.
- Hiring a property management company offers benefits such as reduced stress, time savings, professional expertise, tenant screening, and a maintenance network, but it comes with associated costs.
The question of whether to hire a property management company or take on the role of a landlord yourself looms large. It’s a decision that can significantly impact your experience as a property investor, as well as the success of your investments.
In this guide, we’ll explore the various considerations that go into making this decision. We’ll delve into the pros and cons of both self-management and hiring a property management company, presenting you with a well-rounded perspective to help you make the best decision for your properties.
So, should you hire a property management company or go it alone as a self-managing landlord? Let’s find out.
Self-manage or use property management? Factors to consider
The decision to self-manage or hire a property management company hinges on several key factors, and understanding these factors is pivotal in making an informed choice. Let’s dive into each of these elements.
1. Time Commitment
Managing your properties yourself can be quite demanding on your schedule. This would include tasks like screening and managing tenants, conducting property maintenance (or liaising with tradespeople), dealing with legal aspects, and collecting rent. If you’re opting for a hands-on approach, be prepared to dedicate a few hours per week per property you own. Property management companies can relieve you of most of these tasks, freeing up your time for other endeavours but it comes at a cost.
Self-management may seem cost-effective on the surface since you avoid management fees. However, you must consider whether the time you invest in property management might be more profitably spent elsewhere. Hiring a property management company involves additional expenses, typically around 10% of the monthly rent plus VAT, but this cost could be outweighed by the time savings and the efficiencies that professionals can bring.
3. Personal Skills and Interests
Assess your skills and interests when it comes to managing properties. Are you equipped with knowledge of property laws and regulations? Are you good at managing people and solving problems? Moreover, do you enjoy performing these tasks, or would you rather focus on other aspects of property investment?
4. Property Portfolio Size
The size of your property portfolio can be a determining factor. A single property or a small portfolio may be manageable for self-management. However, as your property holdings expand, so do your responsibilities. When handling multiple properties, the logistics of self-management can become overwhelming. In such cases, property management companies are often a more practical choice.
5. Your Proximity to the rentals
Your proximity to the rental properties plays a role in your decision. If your properties are scattered across the UK, self-management can be borderline impossible. In this case, property management would be your best choice.
Guidance on Weighing the Factors
To make an informed decision, take time to evaluate these factors as they apply to your specific circumstances. Create a list of your properties, detailing the time and effort required to manage each one. Compare this to the cost of hiring a management company.
Assess your skills and interests. If you’re not confident in your abilities or find the tasks involved in property management unappealing, the professional expertise offered by management companies might be a worthwhile investment.
Pros and Cons of Hiring a Property Management Company
Here, we’ll explore the advantages and disadvantages of hiring a property management company.
Benefits of Hiring a Property Management Company
1. Reduced Stress: Perhaps the largest benefit of hiring a property management company is the reduction of stress. If you’ve ever dealt with late-night maintenance requests or tenant disputes, you know these aspects can be demanding. Property managers handle these tasks, allowing you to enjoy peace of mind.
2. Time Savings: Property managers take on the majority of tasks that landlords typically handle, such as maintenance requests, rent collection, and legal documentation. You’ll have more time available for other investments, personal life, or simply to relax.
3. Professional Expertise: Property managers are well-versed in property management and the local property market. Their expertise can be invaluable in setting rental rates, understanding tenancy laws, and ensuring your investment is managed effectively.
4. Tenant Screening: A significant part of their role includes finding and screening tenants. Property management companies have the experience to identify reliable tenants, minimising the risk of problematic renters.
5. Maintenance Network: Property managers have a network of trusted tradespeople. When maintenance or repairs are required, they can promptly address issues through reliable professionals.
Drawbacks of Hiring a Property Management Company
1. Management Fees: Property management services are not free. You’ll typically pay around 10% of your monthly rent plus VAT to the property management company. This cost is deducted before your rental income is paid to you. For example, if your property generates £800 in monthly rent, the management company would deduct £96 before transferring your share.
2. Cost of Tradespeople: Property management companies have their network of tradespeople for maintenance tasks. However, it’s common for these professionals to be more expensive compared to ones you could hire independently.
The Pros and Cons of Self-Management
Choosing to self-manage your investment properties can be an enticing option, offering several advantages. However, there’s an equal amount of drawbacks to also consider.
Benefits of Self-Management
1. Cost Savings: One of the most significant advantages of self-management is the potential for cost savings. You can avoid management fees that property management companies typically charge, which often amount to around 10% of the monthly rent plus VAT.
2. Increased Involvement: Managing your properties personally allows you to be hands-on with your investments. This can be very appealing to landlords who are full-time in property.
Drawbacks of Self-Management
1. Time Commitment: Self-management demands some time investment. Handling tenant inquiries, managing maintenance requests, and staying updated on property laws can be time-consuming. If you have a large portfolio or limited availability, this time commitment can become overwhelming.
2. Stress: Property management can be stressful. Dealing with difficult tenants, addressing maintenance emergencies, and navigating legal issues can take a toll on your peace of mind. Stress levels can rise, especially when multiple properties are involved.
3. Learning Curve: Property management requires an understanding of tenancy laws and people management. If you’re new to property investment, there can be a steep learning curve. Mistakes in these areas can be costly and problematic.
Could Property Management Software be the Answer?
Property management software is designed to assist landlords and property investors in managing various aspects of their rental properties. It simplifies day-to-day operations, making property management more efficient and less time-consuming.
Lendlord stands out as our top choice for property management software. It offers features for portfolio and tenancy management, cash flow tracking, and digital tax management. Plus, Lendlord provides free property analysis tools to assess investment viability.
Key Features of Lendlord’s Property Management Software
1. Portfolio Management: Organise and manage your entire property portfolio from a single dashboard, helping you track income, expenses, and cash flow.
2. Tenancy Management: Maintain tenant records, lease agreements, and communication history for efficient tenant management.
3. Digital Tax Management: Streamline tax season with the ability to generate tax reports and maintain digital financial records.
When weighing up whether to hire a property management company, you need to consider factors like time, cost, skills, and preferences. Doing so will help you make the best decision for yourself and your properties.
At AmateurLandlord, we offer the tools and resources you need to succeed in property investment. Whether you choose to self-manage or hire a property management company, we’re here to support your journey.