by Peter Nelson December 7, 2017 Which property management model works best for you
Many DIY landlords consider the pros and cons of going with full service property management versus having us find a tenant and then the owner takes over the management. There are several issues to consider and we will try to distill the big ones here.
The ‘lease only’ option
Let’s start with the option of having the management company find the tenant and hand the lease and security deposit over to the owner to continue to manage. There are several advantages and disadvantages to this option.
Money — the savings from not having to pay a management fee every month — is always the most compelling reason for this option. But there are others that contribute as well.
- Money — an owner can save $100-200/mo. or more by managing the property himself or herself.
- More control — the landlord can meet the tenants and directly interact with them (this can be good or bad, depending on the landlord)
- More focus — with just one or a handful of properties, the landlord can give more focus to the rentals
- Maintenance — the owner has more control over repairs and remodels by selecting materials and contractors.
As with anything, there are two sides to the coin. Here are some of the offsetting reasons for not adopting the ‘lease only’ option.
- Time — it takes time to manage a property and doing it ad hoc often results in stress or poor performance
- Legal — navigating the myriad of landlord-tenant laws increases the risk of liability
- People skills — having the skill set to deal with difficult situations or difficult tenants to avoid costly mistakes is not something most owners possess
- Maintenance — it seems things always break at the most inopportune time!
We are sure there may be other advantages/disadvantages to the ‘lease only’ option, but the ones listed above are the most common.
The ‘full service’ option
With rents escalating and lifestyles getting busy, many owners are seeing the luxury of being able to afford to have someone else take over the management of their rental(s). Here are some advantages and disadvantages of this option. Naturally, many of the pros of one are the cons of the other, and vice versa.
With the ‘full service’ option the owner is essentially buying time. But there is more.
- Time — you free up time for more productive or enjoyable pursuits
- Legal — by shifting the responsibility to a PM firm it reduces the owner’s liability
- Maintenance — the landlord does not have to get called out on the eve of a major holiday to fix something
- Stress — a lot of the worry is taken out of the equation by handing it over to a professional
- People skills — a good PM firm will have the people skills to deal with difficult situations/tenants to avoid escalated costs
Outside of the cost of paying a property manager, there aren’t too many other disadvantages.
- Cost — part of each month’s rent goes to the PM firm
- Less control — the firm is making most of the decisions
In summary, property management is not for everyone, or every landlord. If a landlord possesses the attributes listed below then self-management can make sense. But in most instances we recommend the ‘full service’ option.
Attributes an owner should possess before considering self-management:
- Good people skills
- Flexible schedule with time
- Knowledge of (and interest in) landlord-tenant laws
- Some working knowledge of building systems
At Full Service Property Management we are here to help owner-landlords make the best decision. Feel free to contact us to discuss your situation.