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Do You Need a Property Management Company?

Jerry Norton

Aug 8, 2024

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Whether you have one or several rental properties in your real estate portfolio, the goal is to earn monthly cashflow — and keep expenses low that would reduce that cashflow.

So here’s the question: who will be managing your real estate investment?

Will you take the time to maintain the property, do the repairs yourself, find and vet tenants, and collect rent? 

Or would you rather someone else do it all so you can turn your real estate business into a passive endeavor?

There’s many advantages to having a property management company, but it’s not without its drawbacks.

In this article, we’ll walk you through important questions to ask so that you can determine if a property management company is right for you and your real estate investment. 

What is a Property Management Company?

A property management company is a paid service that will handle all aspects of your investing property or properties.

This includes:

  • Finding and managing tenants, including keeping an up to date rent ledger 
  • Maintaining the property inside and out
  • Addressing any necessary repairs
  • Collecting monthly rent
  • Handling an eviction 

Sounds pretty great, right? 

With the right property management company, you can rest assured that your investment is taken care of. 

Advantages of a Property Management Company

That’s the biggest advantage of utilizing a property management company — it gives you more time to do what you love, which may be turning your attention to other forms of real estate investing.

If you’re wondering how the property and its tenants are doing, you can simply check in with the property management company — no visit to the site necessary. 

Disadvantages of a Property Management Company

The primary disadvantage of a property management company is the cost associated with it, which we’ll discuss next. 

It’s services and additional fees can eat into your monthly cashflow, reducing the amount of income that you originally expected to receive as an ROI on the property. 

So this brings up the question…

How Much Does a Property Management Company Cost? 

The cost associated with a property management company will depend upon several factors, including:

  • The size of the property itself
  • The location
  • The number of units 
  • Their involvement 
  • And more

If you want a property management company to maintain the property, it will cost less than asking a property management company to do that as well as manage tenants. 

It's important to keep in mind that some property management companies charge flat rates, while others charge a percentage. 

For example, a management company may charge between 8% and 12% of the property's monthly rental value. 

In some cases, there may be added fine print fees, including cancellation fees and term renewals.

Property Management Companies: Questions to Ask Yourself

As you weigh whether or not to use a property management company, ask yourself the following questions: 

  • Do I want to manage the property, including its upkeep and tenants, myself?
  • Do I want to handle repairs myself?
  • Am I willing to earn less monthly cashflow?
  • Do I want this to be an active or passive investment? 
  • Are there reputable property management companies in my area? 

The Bottom Line: Property Management Company

Choosing a property management company all comes down to your specific real estate investing strategy. 

A property management company comes with great advantages, but also great cost. 

Ask yourself the questions in this article to help you decide whether or not a property management company is right for you and your real estate business.