When you start to look deeper, it’s easy to see that the return on investment for hiring a property manager is well worth the initial cost. In this article we’ll look at the difference between self-management and professional property management, and break down the cost-benefit ratio for property management in Orange County.
If you’re looking to improve your ROI and save yourself a lot of time, our Orange County property management company is here to help. Give us a call at (949) 892-1505. Whether you need an Irvine property manager, Costa Mesa rental management company, or Orange property management service, our team helps landlords reduce expenses, avoid costly mistakes, and maximize profits. Contact us today to learn how professional management can save you money.
Key Takeaways
- Self-managing rental properties can be time-consuming, stressful, and cause unexpected disruptions to your lifestyle.
- Professional property managers reduce stress, minimize risk, and optimize rental rates to increase ROI.
- Partnering with a property management company makes it easy to scale your real estate portfolio.
Table of Contents
Self-Managed Property vs. Professional Property Management: What’s the Difference?
When you’re weighing the pros and cons of self-managing your rental property or hiring a property management company, you need to understand the key factors that set these two paths apart. People often assume the biggest difference is that you need to pay for a property manager, while being a DIY landlord is free. While this couldn’t be farther from the truth, we’ve seen first hand the many ways that these two paths to rental property management differ.
Let’s take a look at some of the differences between these two approaches.
Comparing Key Factors: Time Investment
One of the reasons we hear from our clients as to why they decided to stop self-managing their properties is time. A lot of people enter into real estate investment thinking it will be a passive income source. When you break it down, owning and running rental properties can easily become a full-time job.
You’ll spend a lot of time on things like:
- Marketing your property
- Screening tenants
- Creating lease agreements
- Handling maintenance requests
- Getting vacant units ready for tenants
- Arranging for necessary repairs to properties
- Handling taxes
- Conducting and reviewing move-in/move-out inspections
- Conducting annual property inspections
- Following landlord-tenant laws and regulations at the federal, state, and local level
- Establishing rental rates
- Collecting rent and handling delinquencies
- Managing all emergency maintenance and repairs
Hiring a property management company takes all these responsibilities off your plate, freeing up your time so you can focus on the things that matter most to you. Property managers are responsible for handling everything that goes into managing a rental property, from finding the right tenants for your property to managing ongoing maintenance and repairs. Working with a property management company means you’ll have more time to enjoy however you choose.
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Comparing Key Factors: Skill Set and Experience Requirements
Another misconception we often hear in the industry is that anyone can manage a property. While this is technically true, there is a unique skillset required to be able to successfully manage a property in Orange County.
These skills include:
- Strong communication skills
- Understanding of marketing
- Tech-savviness
- Excellent organizational and project management skills
- Customer service experience
- Knowledge of landlord-tenants laws
- Finance and budget management
- Assertiveness
- Patience
- Flexibility
- Property analysis skills
- Industry knowledge and experience
You may have some of these skills and you may even have some real estate industry experience. But a professional property manager will already have all these skills and have years of experience applying them effectively. They understand the market, have access to resources, make a point of staying up to date on the newest landlord and tenant laws, and often have a full team of professionals supporting them.
Comparing Key Factors: Stress and Lifestyle Factors
Managing your rental property can have an impact on your stress levels and overall quality of life. Sadly, over 88% of landlords report experiencing stress due to renting out their properties. There are various factors that contribute to the stress experienced by landlords:
- Dealing with tenant complaints
- Managing vacancies
- Handling maintenance requests
- Stay informed and compliant with ever-changing las
- Addressing legal issues as they arise
- Managing cash flow
If you don’t live near your property, you can add the stress of promptly responding to issues to that list as well. When you’re a DIY landlord, you have to constantly be available. This can lead to burnout, unnecessary stress, and can have a negative affect on your lifestyle and overall wellbeing.
Alternatively, professional property management companies are in the business of taking on these stressors and unburdening property owners. They’re able to manage everything while you simply enjoy life. While there is a cost associated with property management, many property owners find that the cost is well-worth the return on investment.
Exploring the Cost-Benefit Ratio of Property Management in Orange County
As we mentioned above, there is a cost associated with property management. Most Orange County property management companies’ fees are charged as a percentage of the monthly rent. Typically, you can expect to pay anywhere from 6% to 12% of monthly rent and some have additional one-off costs to consider. At Good Life Property Management, we are competitively priced between 6- 8%, depending on the type of property.
“Eight percent? Why wouldn’t I just pocket that 8% and manage my own property?”
This is something we hear a lot. But to really understand the costs associated with self-management versus property management companies, you need to carefully weigh the costs against the potential benefits. Once our clients really think about the time, money, and energy they save with us, they start to see that 8%—or even the 12% some other companies charge—is actually quite a deal.
Immediate Costs vs. Future Savings
Property management services come with a cost that will have an impact on your cash flow. These may include:
- Monthly management fees (typically 6-12% of monthly rent)
- Leasing fees
- Annual inspection fees
- Lease renewal fees
- Maintenance fees
- Non-CA tax compliance for any landlords who live out of state
While these fees might seem pretty steep, you may see things differently when you look at the long-term gains and future savings that come from professional property management. Let’s take a look at six different benefits that increase your ROI from property management.
1. Reduce vacancy rates
Ensuring that your property has low vacancy rates is essential to a successful rental property. If your property is sitting vacant, you’re not collecting rent which can quickly become a substantial financial burden.
It can be expensive to advertise your property, screen and place tenants, and draft lease agreements. You can reallocate the funds you’d spend on those activities and hire a property management company who is better positioned to handle these tasks.
Additionally, good property management companies in Orange County have a network of tenants looking for rental properties. While it could take you months to find the right tenant for your property, a property management company can have your property leased within a few days or weeks. They’re equipped to help reduce vacancy rates and keep your rental income steady.
2. Optimize rental rates
Setting rental rates is as much art as it is science. If you’re new to the Orange County real estate market, it may be more difficult to set the right rental rate for your property. You can’t simply set the rate you “want”—you need to look into the market, see how other similar rentals are priced, analyze how long rentals at specific price-points stay on the market, and use all that data to come up with the best rental rates. Without in-depth industry knowledge, it can be difficult to find the price that is the sweet spot between what people are willing to pay and what you need to make.
Property managers have their finger on the pulse of the rental market. They are experts in knowing how to set competitive prices in Orange County. They can use their knowledge of the market to set a rental rate that will not only attract the right kind of tenant but will also get the best return on your investment.
3. Improve property value
When you work with a property management company, regular maintenance and timely repairs are part of the package. The same can’t be said for some self-managed properties. As mentioned before, if you don’t live close by it can be difficult to respond promptly when issues arise. This can have a negative impact on the condition—and therefore the value—of your property.
A professional property manager will not only schedule regular maintenance, they’ll also schedule regular inspections so they can ensure your property is being well maintained by tenants. These are things that often fall through the cracks when property owners self-manage because they aren’t pressing issues.
Property management companies help to maintain the condition and value of your property.
4. Access to affordable maintenance and repairs
Rental property owners are responsible for managing any necessary maintenance or repairs that are needed. DIY landlords often think they’ll be able to manage all of the repairs themselves but in our experience, most quickly realize they aren’t capable of handling everything from plumbing to electrical issues in the middle of the night.
And if they are relying on professional tradespeople, it can quickly become apparent that they don’t have an established network of trustworthy professionals to rely on.
A reputable property management company, like Good Life, will have a network of contractors who can get work done quickly, efficiently, and often at a better price. So instead of Googling plumbers at 2:00 am, and negotiating prices, you can rest assured that your property manager has someone they can call to help.
This not only saves you time and money, but may also save your sanity.
5. Improve cash flow
Property management companies not only help you reduce vacancy rates by finding tenants, they also help ensure that you’re leasing to reliable tenants who take care of your property as if it were their own.
Property managers understand the Orange County market, the need for thorough—and legal—background checks, and efficient tenant screening processes. They work to ensure that the people renting your property are reliable and will pay their rent on time. This helps to ensure you have a healthy cash flow that allows you to stay on top of your own payments.
6. Save on costly legal issues
There is a long list of federal, state, and local landlord-tenant laws and regulations that are essential for landlords to understand and abide by. It is time-consuming to learn and stay up-to-date on these laws. Unfortunately, one slip up on the part of a landlord can be extremely costly and time consuming.
On the other hand, understanding every law and regulation is part of the job for property managers. When you hire a property manager, you get back the time you’d spend learning these laws and also protect yourself from potentially expensive lawsuits.
Risk Mitigation
One of the most important aspects of hiring a property management company is risk mitigation. We just spoke about how property managers are well-versed in landlord-tenant laws and regulations, but they do so much more to protect your investment. We’ve already touched on some of these benefits, but it’s worth revisiting all the ways a professional property management company can help you mitigate risk, and protect you and your property.
- Conducting thorough and legal tenant screening including background checks, credit checks, criminal record checks, employment verification, and reference checks.
- Providing 24/7 emergency response to tenant issues in order to protect your property.
- Staying compliant with state, federal, and local landlord-tenant laws.
- Implementing a preventative maintenance and inspection schedule.
- Offering guidance on everything from insurance coverage to how to handle difficult tenant issues.
Growing Your Real Estate Portfolio
When you have a single rental property, it may seem feasible to manage it on your own. In our experience, even one rental unit constitutes a lot of management work.
If you’re planning to expand your real estate investments, the scalability that comes with working with a property management company becomes essential. While taking on two, three, or more rental properties might be out of the question for you, a property management company backed by a team of prowl have no problem with the additional work.
Here’s how a professional property management company can help you grow your portfolio:
- Proven systems for managing multiple properties.
- Access to their network of reliable and trustworthy contractors.
- Experience in managing various property types and markets.
- The team and systems needed to handle an increased workload without compromising on quality or customer service.
Partnering with a property management company means you can easily scale your portfolio without being overwhelmed by day-to-day operations when your time is freed up, you can spend your time sourcing new investment opportunities and making informed decisions about your real estate holdings.
Increase ROI and Say Goodbye to Stress with Good Life Property Management
While you have to invest in a professional property management company, it’s clear that the benefits outweigh the cost. In fact, working with a property management company can increase your return on investment and give you more time to focus on building your portfolio, taking a vacation, or doing anything other than stressing over property maintenance and lease agreements.
At Good Life Property Management, we believe life should be enjoyed, not spent sweating the small stuff. That’s why we set out to make property management easy. We service all of Orange County, ensuring landlords in every city receive expert support. Whether you need an Anaheim property management expert, Huntington Beach rental property manager, or Mission Viejo property management company, our team is here to help. We care about you, your property, and your tenant. And we do it all so you can Live the Good Life.
Schedule a call to speak with one of our Good Life experts.
Professional Property Management FAQs
How can I increase my ROI on my rental property?
To increase ROI on your rental property, property owners can improve property value, reduce expenses, optimize rent pricing, and work with a professional property management company.
What type of rental property is most profitable?
Every market is different, but generally single-family homes and multi-family knots are the most profitable types of rental properties.
How does property management benefit property owners?
Property management benefits property owners because they take care of everything from handling maintenance to managing tenant relations so property owners can focus on other things.
Which function of the property manager is most important to the property owner?
While every property owner has different priorities, most property owners prioritize having a property manager reduce vacancies and ensure a reliable tenant on the lease.
Steve Welty
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