If you’re a DIY landlord, you know how much time and effort it takes to keep a rental property running. But most DIY property managers feel that despite the enormous work their rental takes, at least they’re saving money. However, you may be surprised to learn that might not be the case. When you add up all the overt and hidden costs of DIY property management, sometimes simply hiring a professional can actually be cheaper—as well as far easier.
The Cost of DIY Property Management
When opting for DIY property management, owners take on the role of landlord, maintenance team, administrative assistant, marketer, and more. While a property management company has a whole team of professionals dedicated to each task, DIY landlords have to handle it all themselves. It requires a broad and complex skill set, a can-do attitude, and a lot of time. But it can also take a lot of money. While DIYing may save money on management fees, it also involves many responsibilities and expenses that must be carefully considered.
Time Investment
Managing properties yourself can be hugely time-consuming. You must dedicate time to advertise your property, screen tenants according to complex local requirements, write a rock-solid lease agreement, collect rent, and address maintenance and repairs. The time you put into your rental can be substantial, especially if you own multiple properties or have tenants with frequent needs. When considering the costs of your business, you should never forget to factor in a fair labor wage for the time you put into managing your property.
Advertising Costs
To attract tenants, you’ll need to invest in advertising. This can involve expenses for online listings, signage, and marketing materials. In Portland’s competitive rental market, you need a well-crafted listing with professional photos and expertly crafted copy to stand out from the crowd and attract the best tenants. The cost of creating those listings can quickly add up—and if you’re facing regular vacancies, they’ll add up even faster.
Tenant Screening
Tenant screening in Portland is a complicated endeavor, requiring extra paperwork and legal care. In addition to following local regulations, you must ensure that you’re finding reliable and responsible tenants. Costs can include background checks, credit reports, and application processing fees. With numerous applications, you can quickly face higher costs.
Maintenance and Repairs
As a DIY property manager, you’ll need to budget for seasonal maintenance and repairs. From cleaning the moss off your roof each fall to a malfunctioning HVAC system, these costs can be unpredictable and vary from property to property.
Legal Expenses
Property management involves legal responsibilities such as drafting lease agreements, handling security deposits, and dealing with tenant disputes. You may need to consult with an attorney or legal resources, which incurs additional costs. In case of tenant issues that require eviction, legal fees, court costs, and the potential loss of rental income during the process can also take a chunk out of your ROI.
Hiring a Professional Property Management Company
Choosing to hire a professional property management company shifts many responsibilities from the property owner to the experts. While this option does involve management fees, it also provides a number of advantages and cost-saving opportunities.
Monthly Management Fees
Property management companies generally charge a percentage of the monthly rent or a fixed fee every month. This cost is usually between 8 to 12% of monthly rent, depending on the services included and the type of property.
Recurring Fees
Each property management company can handle its payment structure differently. It’s not unusual for a management company to charge any of the following fees on an as-needed basis:
- Late fees: Just like many landlords charge a fee for late rent, property management companies may charge owners a fee for late monthly payments.
- Tenant replacement fee: If your manager needs to find new tenants, advertising costs can be high. As a result, some companies may charge a tenant replacement or leasing fee to offset the cost.
- Vacancy fee: In some cases, a property manager may charge a vacancy fee to cover the cost of repairs and maintenance when your rental goes unoccupied.
- Eviction fee: Evictions are complicated and often expensive. Legal fees and loss of income all contribute to the difficulty. As a result, some managers may charge an additional fee if your tenants need to be evicted.
- Early termination fee: If you decide to end your contract with your property management company early, your contract may stipulate that you must pay an additional fee.
Whenever you enter into a contract with a property management fee, make sure you know all the potential payments in advance to avoid any unpleasant surprises. But while there are several costs associated with hiring a property management company, the benefits of entrusting your rental to the professionals will almost always outweigh the costs.
The Benefits of Hiring a Property Manager
Hiring a professional property management company can save you time and maximize your profits. In fact, a professional property manager can often ensure your rental gets the best price on the market. With insights into the local rent market and a wide swath of experience in advertising and pricing, Rent Portland Homes by Darla Andrew typically rents homes for 20% more than self-managed properties. This means that the costs of working with a property management company are offset by the additional passive income you make from your rental, without any work on your part.
In addition to saving time, working with a property manager can also save you trouble. A professional can avoid the common mistakes DIY landlords make, from misunderstanding local property laws to failing to maintain a rent roll. These errors can ultimately cost you a lot of money, and with a property manager, you won’t have to worry about them at all.
Overall, working with a company like Rent Portland Homes by Darla Andrew can be a great way to take your rental business to the next level. To learn more about our payment structure and service package, call or text us at (503) 515-3170 or learn more on our website.