Should I Hire a Professional Property Manager?
apartments.com/Megan Bullock • February 8, 2021
It’s true what you’ve heard — property managers can be an immense help for small-asset landlords like yourself. It’s also true that property managers are a luxury that not all landlords can afford. So before you decide if you can afford one (and need one), let’s dive into what a property manager actually is and what they can do for you.
What Is a Property Manager?
The name is pretty self-explanatory here — a property manager manages property. But what do they do on the day-to-day? A property manager is an employee hired by a landlord to manage the everyday work that goes into a rental property. A property manager:
- Sets the rent for the rental property
- Collects rent from tenants
- Adjusts rent according to competition and market value
- Advertises property to find tenants
- Screens tenants
- Deals with the leasing process
- Handles complaints and emergencies from tenants
- Deals with move-ins and move-outs
- Handles evictions (if it comes to that)
- Schedules maintenance and repairs to the rental property
- Deals with finance and budget aspects
- Keeps things organized and running smoothly
Seems like a lot of responsibilities, doesn’t it? If you’re a landlord, then you’re balancing all of these responsibilities on your own. If things are starting to get hectic, you may want to consider hiring a property manager. Not sure what you want in a property manager? A few qualities will make one stand out from the rest.
Qualities of a Property Manager to Look For:
The most important aspect to consider when hiring a property manager is their attitude. You want someone who is dedicated to keeping the line of communication open, while being able to maintain the property without contacting you frequently with questions and concerns. Their main purpose is to assure you that your investment is being properly taken care of – not only your investment in the property, but your investment in the property manager.
You May Want to Hire a Property Manager If:
- You have too many properties to manage alone. Many landlords can only handle a few properties at a time – so if you’re managing five to ten (or more) properties on your own, you may want to consider gaining the assistance and expertise of a professional property manager. You’ll have peace of mind knowing that your properties and tenants are in good hands.
- You live far from your properties. Do you live more than an hour from your properties? If so, it may be in your best interest to speak with a local property manager who has quick and easy access to the area your rental property is located in. If you’re a long-distance landlord, then you will need to have contacts within the area of your rental property for any maintenance issues or emergencies that arise with the property or tenant. Make it easier on yourself by hiring a local property manager!
- You’re not very familiar with the business. If you don’t enjoy keeping track of every detail of a business, or if you don’t feel secure enough in your knowledge of managing rental properties, then property management probably doesn’t suit you. But that doesn’t mean you can’t own the property – simply hire a property manager who can help you with the parts of the job you prefer not to do (or aren’t comfortable doing), such as marketing the property, screening tenants, collecting rent, dealing with maintenance, etc.
- You’re too busy. Perhaps being a landlord isn’t your full-time job – if you have another career, then you may be too busy to be both the owner and manager of your rental property. Lessen your stress by hiring a professional property manager who can help you keep things in order.
- You have the funds to hire a property manager. There are some properties that you probably don’t need (or can’t afford) to hire a property manager for. But if you feel that you have a surplus of funds to do so without going underwater, then it’s probably a good idea to hire a professional. You’ll feel a weight lifted off of your shoulders knowing that your rental property is being managed efficiently. Property managers or property management companies can charge various amounts for their services. You can expect to pay between 8-12% of the monthly rental value of the property, or you may be charged a flat monthly rate depending on the value of the property.
- You’re struggling to fill your vacant units. We can’t all be marketing pros – and that’s okay! If you’re having trouble filling your units, and you find that they are often vacant despite your efforts, then you’ll likely benefit from the marketing techniques of a professional property manager. They can help you advertise your property and get more tenants interested in and applying to rent your unit.
- If you're still wondering if you should hire a property manager, remember that the most important factor to consider here is budget. If you feel that a property manager would keep you from getting a positive return on your investment (your rental property), then it may be best to continue to do the work yourself. But if you have the funds, and you lack time (amongst other things), then consider relying on the support of a property manager — the choice is yours!
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The Five-Year Rule for Home Price Perspective Headlines are saying home prices are starting to dip in some markets. And if you’re beginning to second guess your plans based on what you’re hearing in the media, here’s what you need to know. It's true that a few metros are seeing slight price drops. But don't let that overshadow this simple truth. Home values almost always go up over time (see graph below): While everyone remembers what happened around the housing crash of 2008, that was the exception – not the rule. It hadn’t happened before, and hasn’t since. There were many market dynamics that were drastically different back then, too. From relaxed lending standards to a lack of homeowner equity, and even a large oversupply of homes, it was very different from where the national housing market is today. So, every headline about prices slowing down, normalizing, or even dipping doesn’t need to trigger fear that another big crash is coming. Here’s something that explains why short-term dips usually aren’t a long-term deal-breaker. What’s the Five-Year Rule? In real estate, you might hear talk about the five-year rule. The idea is that if you plan to own your home for at least five years, short-term dips in prices usually don’t hurt you much. That’s because home values almost always go up in the long run. Even if prices drop a bit for a year or two, they tend to bounce back (and then some) over time. Take it from Lance Lambert, Co-Founder of ResiClub: “. . . there’s the ‘five-year rule of thumb’ in real estate—which suggests that most buyers can buffer themselves from mild short-term declines if they plan to own a property for at least that amount of time.” What’s Happening in Today’s Market? Here’s something else to put your mind at ease. Right now, most housing markets are still seeing home prices rise – just not as fast as they were a few years ago. But in the major metros where prices are starting to cool off a little (the red bars in the graph below), the average drop is only about -2.9% since April 2024. That’s not a major decline like we saw back in 2008. And when you look at the graph below, it’s clear that prices in most of those markets are up significantly compared to where they were five years ago (the blue bars). So, those homeowners are still ahead if they’ve been in their house for a few years or more (see graph below): The Big Picture Over the past 5 years, home prices have risen a staggering 55% , according to the Federal Housing Finance Agency (FHFA). So, a small short-term dip isn’t a significant loss. Even if your city is one where they’re down 2% or so, you’re still up far more than that. And if you break those 5-year gains down even further, using data from the FHFA, you’ll see home values are up in every single state over the last five years (see map below): That’s why it’s important not to stress too much about what’s happening this month, or even this year. If you’re in it for the long haul (and most homeowners are) your home is likely to grow in value over time. Bottom Line Yes, prices can shift in the short term. But history shows that home values almost always go up – especially if you live there for at least five years. So, whether you’re thinking of buying or selling, remember the five-year rule, and take comfort in the long view. When you think about where you want to be in five years, how does owning a home fit into that picture? Let’s connect to get you there.
Newly Built Homes May Be Less Expensive Than You Think Do you think a brand-new home means a bigger price tag? Think again. Right now, something unique is happening in the housing market. According to the Census and the National Association of Realtors (NAR), the median price of newly built homes is actually lower than the median price for existing homes (ones that have already been lived in): You read that right. That brand new, never-been-lived-in house may cost less than the one built 20 years ago in a neighborhood just down the street. So, if you wrote off a new build because you assumed they’d be financially out of reach, here’s what you should know. You could be missing out on some of the best options in today’s housing market. Why Are Newly Built Homes Less Expensive Right Now? 1. Builders Are Building Smaller Homes Builders know that buyers are struggling with affordability today. So, instead of building big houses that may not sell, they’re building smaller ones that will. According to the Census, the average size of a newly built single-family home has dropped considerably over the past few years (see graph below): And as size goes down, the price often does too. Smaller homes use fewer materials, which makes them less expensive to build. That helps builders keep prices lower so more people can afford them. 2. Builders Are Offering Price Cuts and Incentives In May, according to the National Association of Home Builders (NAHB), 34% of builders lowered their prices, with an average price drop of 5% . That’s because they want to be sure they’re selling the inventory they have before they build more. On top of that, 61% of builders also offered sales incentives – like helping with closing costs or buying down your mortgage rate. These are all ways builders are making their homes more affordable, so these homes sell in today’s market. Your Next Step? Ask Your Agent What's Available Near You If you're trying to buy a home right now, be sure to talk to your agent to find out what builders are doing in and around your area. They can find new home communities, as well as builders who are offering incentives or discounts, and hidden gems you might not uncover on your own. Plus, buying a newly built home often means there are different steps in the process than if you purchase a home that’s been lived in before. That’s why it’s so important to have your own agent who can explain the fine print. You want a pro in your corner to advocate for you, negotiate on your behalf, and make sure your best interests come first. Bottom Line You could get a home that’s brand new, with modern features, at a price that’s even lower than some older homes. Let’s talk about what you’re looking for and see if a newly built home is the right fit for you. If buying a home is on your to-do list, what would stop you from exploring newly built options?
Why Would I Move with a 3% Mortgage Rate? If you have a 3% mortgage rate, you’re probably pretty hesitant to let that go. And even if you’ve toyed with the idea of moving, this nagging thought may be holding you back: “why would I give that up?” But when you ask that question, you may be putting your needs on the back burner without realizing it. Most people don’t move because of their mortgage rate. They move because they want or need to. So, let’s flip the script and ask this instead: What are the chances you’ll still be in your current house 5 years from now? Think about your life for a moment. Picture what the next few years will hold. Are you planning on growing your family? Do you have adult children about to move out? Is retirement on the horizon? Are you already bursting at the seams? If nothing’s going to change, and you love where you are, staying put might make perfect sense. But if there’s even a slight chance a move is coming, even if it’s not immediate, it’s worth thinking about your timeline. Because even a year or two can make a big difference in what your next home might cost you. What the Experts Say About Home Prices over the Next 5 Years Each quarter, Fannie Mae asks more than 100 housing market experts to weigh in on where they project home prices are headed. And the consensus is clear. Home prices are expected to rise through at least 2029 (see graph below): While those projections aren’t calling for big increases each year, it's still an increase. And sure, some markets may see flatter prices or slower growth, or even slight dips in the short term. But look further out. In the long run, prices almost always rise. And over the next 5 years, the anticipated increase – however slight – will add up fast. Here’s an example. Let's say you'll be looking to buy a roughly $400,000 house when you move. If you wait and move 5 years from now, based on these expert projections, it could cost nearly $80,000 more than it would now (see graph below): That means the longer you wait, the more your future home will cost you. If you know a move is likely in your future, it may make sense to really think about your timeline. You certainly don't have to move now. But financially, it may still be worth having a conversation about your options before prices inch higher. Because while rates are expected to come down, it’s not by much. And if you’re holding out in hopes we’ll see the return of 3% rates, experts agree it’s just not in the cards (see graph below): So, the question really isn’t: “why would I move?” It’s: “when should I?” – because when you see the real numbers, waiting may not be the savings strategy you thought it was. And that’s the best conversation you can have with your trusted agent right now. Bottom Line Keeping that low mortgage rate is smart – until it starts holding you back. If a move is likely on the horizon for you, even if it’s a few years down the line, it’s worth thinking through the numbers now, so you can plan ahead. What other price point do you want to see these numbers for? Let’s have that conversation, so I can show you how the math adds up. That way, you can make an informed decision about your timeline.
