Property Management Company or self management for my rental property?
Deciding whether to employ a property management company, or to self manage your own rental property is a big decision, and one that shouldn’t be taken lightly.
There are many factors to consider, and I have highlighted a few of the main ones here. Please keep in mind that this list is by no means exhaustive;
1. Physical location of you and your rental property.
If your rental property is in Vancouver, and you live in Toronto, then it’s highly likely that you will want to employ a Vancouver property management company. Sure, everything can be done over the phone or What’s App these days, but when something goes wrong, it’s always a good idea to have boots on the ground. When vacancy rates are extremely low, you can probably rent out your property without even doing showings, but as soon as vacancy rates start to inch up, you will need someone doing physical showings a couple times per week.
Time zones will play a part in this as well. This can be a factor if managing a property across Canada, but plays an even greater role if you live overseas.
2. How much time do I have to manage my own property?
Property Management can be a very time consuming business. It can also be very emotionally demanding when things go wrong. In markets like Vancouver and Toronto at the moment, it is relatively easy to rent out your property since vacancy rates are so low. When the market shifts, as it has in Alberta, it can take months to find a suitable tenant. Be realistic about how much time it will take you to set up the ads, answer the phone calls, show the property, do background checks, sign the leases, do the move in/ out, handle maintenance requests, coordinate with maintenance contractors, etc. Do you really want to be fielding calls and doing showings on a Saturday afternoon?
3. Cash flow
Very often your cash flow position (revenues less monthly expenses) will determine whether or not you can afford to hire a property management company. A typical management fee is 10% of the gross rents on a monthly basis. If you don’t have the spread to pay this, you may want to try self management until you can increase your rents or decrease your expenses, or look at perhaps a more suitable long term rental property. We recommend that you always factor in 10% for management when crunching your numbers, even if you end up pay that to yourself!
Hopefully this article helps a little bit when it comes to deciding whether or not to manage your own rental property. We recommend that landlords and self manage their first 1 or 2 rental properties by themselves just so that they have a good understanding and realistic expectations of what can be achieved. This makes it much easier to manage the property manager!
Interested in learning more about Vancouver Property Management? Check here for our services- Vancouver Property Management
Jan 19, 2017