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Buying and managing investment properties is ultimately a business decision and as such, you should carefully consider whether self-managing a property is better than using a property manager.
Before you can make any investment decisions, you need to understand what goes into managing rental properties.
However, what this formula fails to take into account is the time, energy and much, much more that is required to actually undertake the duties of a landlord or property investor.
The actual formula looks more like this:
You can save time and effort from the equation if you choose to hire a property management company to handle those duties. However, removing time and effort will nearly always make the expenses part of the equation grow larger. You also risk losing touch with your investments by leaving them in the hands of a third party. This usually means less profit for you.
You could try to reduce expenses by self-managing, but without the proper tools and experience this can be extremely difficult, and the time and effort parts of the equation begin to grow bigger. You may end up having the cost of your time and energy outweighing the profit your making.
If you get a property manager to do it, they may typically charge between 7–10% of your rent, per property, per week. To put this into perspective, for a property that brings in $500 per week, you will be paying around $42 per week. That’s $168 per month and about $2,016 per year. An important question you might ask yourself is: “What do these people actually do that I cannot do myself? ”
Now, you need to decide how much value your time and energy is. For a low maintenance tenant, $168 per month might be a ton of money to give someone else to simply deposit a rent check, take photos and arrange a plumber every now and again.
On the other end of the spectrum, if a tenant is late on their rent, constantly complains or does any lease breaking activities, that $168 per month for management doesn't seem to be bad at all.
Another thing to keep in mind is that your property manager is not you. They haven’t invested in your properties, you have. You should be aware that they may not necessarily looking out for your best interests
Although you might be saving yourself the management fees, the cost of time and effort its takes to self-manage could possibly outweigh the profit your making.
Is there a better alternative?
Surely there must be a way better alternative to all this, there is: Using the right apps and cloud software can greatly simplify every process of management, and your tenants and your bank account will thank you for it.
Private landlords may even be more effective than property management agencies, for a simple reason things get done faster, cheaper and better. But becoming an effective self-managing landlord is difficult and requires a lot of time, energy and knowledge. That is why platforms with a balance between managing your own property and automation are swiftly become popular among these smart landlords, and obviously this is where Kitt comes in.
Kitt is a platform for self-managing landlords and investors.
Kitt covers EVERYTHING from communication, rent checking, online documentation as well as property finances and more. Have full control using Kitt to help manage your properties through technology.
Purchasing rental property is a great way to build equity and diversify your portfolio. If you find yourself having to choose between investing your time by self-managing, or your money by using a property manager, come and check out what Kitt’s all about.