Landlord vs Property Management Company: Which Will You Decide?
When you become a rental property owner, one of the first things you have to decide is whether you want to take on the responsibilities of a landlord or hire a property management firm to do the hard work for you.
To gain a better understanding of these two choices, our comprehensive guide details the pros and cons of each:
Landlord
A landlord is essentially a property’s gatekeeper, with responsibilities to both the rental business and the tenants. Some of them include:
- Finding new tenants
- Marketing/Advertising
- Collecting rent
- Setting rental rates
- Repair and maintenance
Although, the aforementioned tasks can be challenging, being a landlord has its advantages:
- Income: You get a monthly check to pay the property’s mortgage and – dependent on current rental rates – make a sizable profit as well.
- Tax deductions: You can deduct the costs of replacing water pipes, replacing damaged furniture, professional services, and more.
Cons include:
- Vacancies: If your property is vacant, it can’t generate an income, making it essentially worthless. It’s up to you to create and implement advertising and marketing campaigns to attract applicants, screen them, and much, much more.
- Legal issues: You must remain current on the Nevada’s land and property legislations and laws to know where you stand when it comes to evictions and other legal issues.
Property Management Firm
Every savvy entrepreneur knows that it’s better to work smarter, not harder. And sometimes it’s just good business to have a professional do something that you don’t want to do. For instance, some of the responsibilities that you can expect your property management company to take over include:
- Finding new tenants
- Advertising/marketing
- Delegating repair and maintenance duties
- Collecting rent
- Setting rental rates
Some of the benefits that come with going this route include:
- Higher-quality tenants: They use rigorous screening processes to cull the reliable tenants from the bad.
- Shorter vacancy cycle: Experienced companies, like RAM Real Estate Asset Management, have effective strategies to attract new tenants as well as a time test tenant retention policy to keep existing ones happy.
- Fewer legal issues: The property managers at RAM are always up-to-date on the latest laws in the real estate industry. This knowledge ensures that your property – and how it’s ran – is legally compliant, shielding you from frivolous lawsuits.
- Less responsibility: You won’t have to handle as many tasks as before, giving you more time and freedom to invest in other things.
There aren’t many disadvantages to hiring a property management company, but one of the biggest is cost – you will either be charged a flat annual fee or anywhere from 8 to 10% of the monthly rent.
At the end of the day, the decision to become a landlord or hire a property management company is up to you. No matter what you decide, you must take the necessary steps and adopt effective strategies that bring about your long term success.
