By Managing Your Rental Property: Should You DIY or Hire a Property Management Company?
After thorough research, you’ve successfully purchased a residential property as an investment and are now ready to rent it out. To maximise the profits from your property investment, you must attract high-quality tenants and ensure your property remains well-maintained.
There are two ways you can do this: you can take on the job yourself, or you can either hire a professional property management company to manage it for you. Both options have their perks and downsides. In this article, we’ll break down the pros and cons of each approach to help you make an informed decision that suits your needs and goals.
The DIY approach to property management
One of the biggest advantages of self-managing your rental property is the costs you’ll save. However, this advantage may not be worth it if you struggle to handle the responsibilities of managing a rental unit.
Let’s examine what to expect when taking a DIY approach to property management.
|
DIY approach to property management |
Pros |
Cons |
|---|---|---|
|
Costs |
Save money by avoiding property management fees, which are typically 8% - 12% of monthly rental income. |
Lack of expertise may lead to costly mistakes or legal issues such as disputes, evictions and regulatory considerations |
|
Tenant search |
Retain complete control of evaluating and choosing your tenants. |
Tenant screening and handling tenancy agreements can be challenging and time-consuming without proper expertise. |
|
Rental collection |
You have direct control and awareness of when your tenants pay rent. |
Chasing up late-paying tenants can be stressful. It can also be time-consuming if you need to take legal action. |
|
Maintenance and repairs |
You have full control to select third-party contractors to handle any repairs. A long-term personal relationship with contractors can lead to discounts. |
Finding third-party contractors you can trust for repairs can be challenging without prior connections. |
|
If you live near your rental property, you could resolve issues faster than a property management company could. |
If you live far away from your rental property, you’ll have additional travel and time costs to resolve issues. |
|
|
Tenant relationships |
Cultivate direct relationships with tenants, encouraging long-term tenancy and stability. |
Being on call 24/7 for complaints, repairs, and emergencies can be overwhelming. |
|
Record-keeping |
You’ll be aware of your income and expenses and have full control over optimising your rental property income tax. |
Maintaining accurate records can be time-consuming and complicated without experience or proper systems. |
In summary, self-managing your rental property can be worthwhile if you live near the unit and are willing and able to handle the responsibilities. You would be able to save on property management costs and use the money for other investments as well. However, you would need to be prepared to commit the additional time required to self-manage your property.
Professional property management services
Hiring a property manager can be costly, making you enjoy less profits from your property investment efforts. However, having a professional handle the responsibilities that you may not have the willingness or expertise to handle could be worthwhile. Let’s explore further.
|
Hiring a property management company |
Pros |
Cons |
|---|---|---|
|
Costs |
A professional handling legal issues or tenant disputes can save you time and money. |
Property management companies typically charge 8% - 12% of rental income, payable monthly. |
|
Tenant search |
A professional can screen for higher-quality tenants and rent your unit faster, reducing property vacancy periods. |
You don’t have complete control over evaluating and choosing your tenants. |
|
Rental collection |
You benefit from timely rent collection with minimal personal involvement |
Chasing up late-paying tenants can be stressful. It can also be time-consuming if you need to take legal action. |
|
Maintenance and repairs |
Property management companies have a network of contractors, ensuring timely and quality service for maintenance and repairs. |
Limited control over the management of maintenance and repairs may result in decisions you disagree with, such as contractor selection and costs. |
|
You’ll enjoy worry-free maintenance, even if you live far away from your rental property. |
||
|
Tenant relationships |
You won't have to be on call 24/7 for complaints, repairs, and emergencies, giving you a stress-free experience. |
You have less control over ensuring long-term tenancy and stability. |
|
Record-keeping |
Property management companies can provide detailed financial reports, simplifying your financial oversight. |
You don’t have full financial control and rely on the trustworthiness of the property management company you appoint. |
Conclusion
Ultimately, deciding how to manage your rental property depends on what best suits your needs and circumstances. Carefully weigh the pros and cons of each property investment approach, considering your willingness to take on responsibilities and the expertise you can bring to the table.
By choosing the path that align with your lifestyle, financial goals, and circumstances, you can ensure your rental property is well-cared for and delivers optimal returns.
💡 The information provided above is purely for educational purposes.
References
1. Lemmy Homes. (2024). “7 Benefits And 2 Tradeoffs Of Hiring A Property Management Company”. https://lemmyhomes.com/blogs/7-benefits-and-2-tradeoffs-of-hiring-a-property-management-company
2. Optivo Group. (2024). “The Pros and Cons of Self-Management vs. Professional Property Management: Which is Right for You?”. https://www.linkedin.com/pulse/pros-cons-self-management-vs-professional-property-management/
3. Jaz International. (2024). “Real Estate Property Management in Malaysia: Scope, Services, Benefits, and Disadvantages”. https://jaz-international.com.my/real-estate-property-management-in-malaysia/
4. Guest Writer. (2024). “Property management company: The roles and advantages of hiring one”. https://www.iproperty.com.my/guides/property-management-company-57333
5. Shawn Ng (2024). “DIY or get a pro?”. https://www.edgeprop.my/content/1354960/diy-or-get-pro
You may also like
03 November 2024
3 min read