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Years back, a small real estate investor, who also happened to be an attorney, contacted Evernest about property management services. Up to that point, he had managed his properties on his own. However, as an attorney, he realized his time spent self-managing was worth far more elsewhere.
That’s the value of property management vs. self-management; more time and fewer headaches.
But working with a property manager isn’t all rainbows and butterflies. Self-management and working with a property manager each have benefits and drawbacks.
So below, we’ll evaluate the pros and cons of each option. We’ll also look at the situation from a resident’s point of view and discuss why the right property manager is ultimately better for your residents.
Let's dive in!
What is Self-Management When it Comes to Rental Properties?
“Self-management” means that you handle all the day-to-day operations your rental property requires. That includes everything from collecting rent to receiving and reviewing applications to handling maintenance. If you self-manage, you’re officially a landlord — meaning you own the property you manage.
Self-Management Pros
Self-managing your rental property offers plenty of benefits that appeal to hands-on investors. It’s a chance to roll up your sleeves and gain firsthand experience, giving you control over every decision and the opportunity to build meaningful relationships with your residents. Plus, the cost savings can be a big draw, especially when you’re just starting out. Let’s explore some of the key advantages.
Learn By Doing
A lot can be learned about real estate investing and management by “getting your hands dirty” in the management process. Self-managing your properties can help you better evaluate property managers later if you decide to hire outside support. It can also help you become a property manager if that’s your career goal.
More Control
You completely control your properties when you self-manage. You can create your business processes, decide how maintenance/repairs are handled, review applications, speak with residents, and pick the software solutions you want to utilize. If you don’t like delegating to others or prefer to maintain oversight on your property, this is a huge plus.
Closer Resident Relationships
Cultivating strong resident relationships can be fulfilling in its own right. From a business perspective, getting to know your residents helps keep them around longer since they’ll have a positive view of you, their landlord. In the long term, maintaining a positive relationship with your residents can also mean stable income.
Cost Savings
Self-managing your rental property removes the need to pay a property manager. This can be helpful at first, but as you’ll see, the money you save self-managing will soon be eclipsed by other factors.
Self-Management Cons
Self-managing your rental properties can be rewarding, but it’s not without its challenges. From late-night emergencies to staying on top of complex legal requirements, managing everything on your own can feel like a lot to handle. While it’s a great way to stay in control and save on costs, it’s important to consider the time, stress, and expertise it takes to do it well. Let’s break down some of the biggest hurdles you might face when self-managing your properties.
Time
Handling several properties on your own is possible if you're diligent about the properties you pick and the processes you create. However, you’re only one person. There’s a limit to how many properties you can handle, even if you’re the greatest self-manager in the world.
Stress and Inconvenience
There are ways to reduce the impact your property management has on your personal life. But there is always the chance your resident has a pipe burst at 2 a.m., meaning you have to climb out of bed and handle it.
Knowledge Base
Yes, you learn on the job. But you still have to learn those hard lessons. Some of these can take a long time to master. As a result, you may not get the greatest potential returns out of your properties through self-management for a while.
Legal Compliance
There are tons of laws and rules to follow, from the Federal Housing Act to Tenant Rights to state and local laws. Breaking these can open you up to costly lawsuits and reputational damage.
What is a Rental Property Manager?
A rental property manager is a professional or company hired by a property owner to oversee a rental property’s daily operations and maintenance. Their primary role is to act as a liaison between the property owner and the resident, ensuring the property runs smoothly, is well-maintained, and generates steady cash flow. Property managers specialize in handling time-consuming responsibilities, allowing owners to take a more hands-off approach.
While the responsibilities of a property manager can vary depending on the agreement, some of the most common duties include:
Marketing: Listing the property, advertising, and hosting showings to attract tenants.
Tenant Screening: Conducting background checks, verifying income, and assessing rental history to find qualified tenants.
Lease Management: Preparing and enforcing lease agreements to ensure legal and financial compliance.
Rent Collection: Collecting monthly rent payments and managing delinquent accounts.
Maintenance and Repairs: Coordinating routine maintenance, addressing repair requests, and managing emergencies.
Inspections: Performing move-in, move-out, and periodic inspections to ensure the property remains in good condition.
Compliance: Ensuring the property adheres to local housing laws, safety codes, and fair housing regulations.
Accounting and Reporting: Managing budgets, expenses, and providing regular financial reports to the owner.
When working together with a property manager, a property owner typically handles:
Major Approvals: Approving significant expenses or major renovations.
Insurance: Maintaining homeowner or landlord insurance policies.
Taxes: Handling property-related taxes, though a property manager may provide income and expense summaries for filing.
Oversight: Staying informed about the property's performance and overall condition, even if not involved in day-to-day management.
Property Management Pros
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Many property owners quickly realize the immense value of hiring the right property manager when they aim to grow their real estate portfolio and maximize returns. Here are some compelling reasons why partnering with a property manager is a smart investment.
Reclaim Your Time
One of the biggest advantages of hiring a property manager is the time you gain back. Many property owners get into real estate to achieve financial freedom, but that freedom can feel elusive if you're constantly handling tenant calls, coordinating repairs, or managing leases.
Leverage Expertise and Experience
A professional property manager brings years—or even decades—of experience to the table. They’ve encountered and resolved common issues like late rent payments, tenant disputes, and emergency maintenance countless times. For example, when a tenant submits a repair request for a burst pipe at midnight, a property manager knows which licensed plumber to call and how to resolve the issue efficiently. Moreover, property managers stay informed about local landlord-tenant laws, housing regulations, and industry best practices, protecting you from costly legal mistakes.
Minimize Vacancies and Retain Tenants
Keeping your property occupied is crucial for maintaining consistent cash flow, and property managers excel at reducing vacancies. They work proactively to ensure tenant satisfaction through clear communication, timely responses to maintenance requests, and property upkeep. Should a tenant move out, property managers can quickly market the unit with professional listings, schedule showings, and onboard new tenants, minimizing downtime between leases.
Enable Scalable Growth
Managing multiple properties independently can become overwhelming. A property manager can streamline operations, making it easier for you to expand your portfolio. This support allows you to focus on acquiring new investments and building wealth without burning out.
Separate Your Investments From Your Personal Life
A property manager shields you from the day-to-day challenges of being a landlord. Say goodbye to 2 a.m. phone calls about emergency repairs or weekends spent fixing appliances or coordinating tenant showings. With a property manager handling these responsibilities, you can focus on what matters most to you.
Property Management Cons
Deciding whether to hire a property manager for your rental property is an important choice that requires weighing the potential downsides against the benefits. While a skilled property manager can streamline operations and increase efficiency, there are several challenges and risks to consider before making this investment.
Additional Costs
Hiring a property manager comes with fees that can eat into your rental income. For smaller portfolios, this expense may outweigh the benefits, especially if your properties have thin profit margins. However, as your portfolio grows, the cost becomes more manageable, often justified by the time savings and efficiency a property manager provides.
The Risk of Hiring the Wrong Manager
Selecting the wrong property manager can result in costly mistakes, such as poorly handled tenant issues, substandard maintenance, or even legal troubles due to non-compliance with regulations. To mitigate this risk, you’ll need to invest time in vetting candidates, checking references, and understanding the qualities that make a property manager effective.
Loss of Direct Control
When you hire a property manager, you’re entrusting someone else with significant decision-making authority over your investment. This could include selecting tenants, setting rental rates, or managing repairs—all of which might be handled differently than you would prefer. For owners who like to be hands-on, this can feel like a loss of control over their property.
Self-Management vs. Property Management: The Resident’s Perspective
Building Resident Relationships Through Self-Management
Managing a rental property yourself allows you to establish a direct and personal relationship with your residents. This can lead to increased trust and loyalty, potentially encouraging longer lease terms and reducing turnover.
Challenges of Being the Sole Point of Contact
However, self-management comes with limitations, especially during unexpected situations. For example, if you’re out of town or managing properties in another state, addressing urgent issues becomes complicated. Residents expect prompt, professional responses to maintenance problems or emergencies, regardless of your availability. If a pipe bursts while you’re on vacation, being the sole point of contact could leave your residents frustrated and your property at risk of damage.
The Advantage of Hiring a Property Manager
A local property manager offers a solution to these challenges. With a property manager in place, your residents always have someone available to address their concerns quickly and efficiently, even if you’re unavailable. Residents usually prioritize quick and reliable issue resolution over personal connections with their landlord, so the presence of a reliable manager can maintain resident satisfaction more effectively.
The Importance of Hiring the Right Property Manager
Of course, hiring a property manager isn’t without risks. An incompetent or inattentive property manager can harm resident relationships and lead to financial losses. To mitigate this, it’s crucial to invest time and effort into finding the right fit. Research the qualities of an excellent property manager, ask for recommendations, and interview several candidates before making your choice.
Final Thoughts: Self-Management vs. Property Management
Self-management is often a natural starting point for new property investors. It’s a great option if you’re working with limited capital or enjoy the hands-on approach of managing your rental property directly. By self-managing, you gain firsthand experience with property operations, including screening residents, handling maintenance, and navigating challenges. These lessons can be really valuable, whether you decide to hire a property manager later or manage a larger portfolio yourself.
However, real estate investing is a business, and like any successful business, growth requires delegation. Managing everything alone becomes more and more difficult as your portfolio grows. At some point, hiring a property manager becomes not just a convenience but a necessity. The fees they charge are an investment in the time you save and the expertise they bring.
If you’ve reached the point where self-management feels like more hassle than it’s worth, or if you’re ready to uplevel your investment strategy, Evernest is here to help. With experience managing thousands of properties for owners and investors, we’re equipped to handle everything. Ready to make your real estate journey smoother and more rewarding? Head to our website to get started today.
