If you’ve recently acquired a new rental property, you might be wondering what your management options are.
Traditionally, landlords have hired property managers to take on the day-to-day tasks of managing a rental property: screening tenants, preparing leases, and contracting out maintenance tasks.
Today, however, there are many nontraditional ways to be a landlord. For instance, some landlords don’t live in the same city they invest in. Others are house hacking a duplex, renting one side while living in the other. Still other landlords are managing short-term or medium-term rentals or renting by-the-bedroom in their own primary residence.
A group of landlords as diverse as these requires management options that suit their needs. Fortunately, there are multiple management options available. The best approach for you depends on your investing strategy, resources, and personal preferences.
Below are three different ways to manage your rentals in 2022.
#1 Property Management Company
One popular option among larger landlords is hiring a property management company.
A property management company is an independent contractor you hire and pay a monthly or annual fee to receive management services.
Property management companies typically have both salaried employees and contracted vendors/contractors. Together, these people use their knowledge and expertise in real estate to manage your properties. Some team members might focus on tenant screening, while others are agents that can show your units and fill your vacancies. The company might hire outside contractors to complete specialized maintenance tasks like servicing utilities and appliances.
If you choose to go this route, you will negotiate a contract with the property management company. This contract decides which tasks you would like the company to take responsibility for and which you’d rather do yourself.
Pros
Property management companies are reliable, well-oiled machines. Their employees are experts at their jobs, and companies usually have insurance to cover any potential liabilities.
If your contract is thorough, you could have very few day-to-day rental tasks on your plate. This makes property management companies a good option for landlords working a day job, caring for a family, pursuing a degree, or those who own hundreds of units. This option also makes sense for remote landlords.
Cons
Property management fees are expensive, as quotes can be between 8 to 12 percent of your monthly revenue. Management companies also frequently charge additional fees for tenant placement, evictions, or renewals.
#2 Individual Resident Manager
If a property management company is off the table, you might consider hiring an individual resident manager.
A resident manager, or property manager, can be either a current tenant who occupies one of your units or an outsider offering their services and expertise. This person works individually to collect rent, screen tenants, show units, and contract maintenance tasks. However, property manager duties can include any tasks you want done and that your resident manager agrees to take on.
Pros
One benefit of an individual resident manager over a property management company is that this person is exclusively dedicated to your properties. They don’t have other clients, and they can be extremely responsive to your tenants’ needs. Most resident managers also live on-site or nearby, so they are available in case of emergencies.
Cons
If you hire a resident manager, you are ultimately responsible for their actions. Their mistakes or bad calls come back on you, legally or otherwise.
Another drawback of this option is that since independent resident managers don’t work for a larger management company, they won’t have access to the same kinds of resources. They also might lack specialized knowledge and expertise, as they operate as a generalist manager.
#3 Property Management Software
Your final management option is property management software.
Property management software for landlords offers a cloud-based solution to everyday rental tasks.
Most platforms offer a variety of tools and features, including online rent collection, lease signing, tenant screening, renter’s insurance, financial reporting, listing syndication, maintenance management, and more.
Pros
Property management software is the only option that allows you to manage your units entirely independently, if you choose to. Software for managing rental properties is also very cost-effective, as basic access is available at low cost or free.
Property management software is also a great option for landlords who live in another city but still want to be involved in the day-to-day tasks of managing their rentals. This is a great strategy, as your renters can still know you personally.
Cons
Using software doesn’t mean you can’t also hire a manager or management company. However, if you are managing your properties alone, you won’t have the help of other employees to shoulder your daily rental tasks. Thankfully, many property management software features are automated, so you can save your time and energy for the tasks that matter.
Conclusion
Every landlord must contend with the various management options available to them. By carefully considering each of the above three options, you can choose an approach that is well suited to you and your rentals’ unique needs.