Do we need to hire a property manager for 12 units? Currently we have been self-run with no issues for the past 30 years.
So do you need a property manager at this point? Unless there’s been a change in your health or lifestyle or family situation that prevents you from devoting the time it takes to manage your property yourself, probably not.
But let me throw some questions your way:
1. Can you easily afford it? If you’ve had these 12 units for 30 years, your initial mortgages and other costs of acquisition should be nothing more than a bad memory.
2. How much is your time worth to you at this point?
3. Do you want to be able to take a vacation without looking over your shoulder?
4. Could your time be better spent looking for new properties in which to invest your rental income?
5. How much longer do you want to keep up the effort?
6. It’s been 30 years. What’s due to be replaced? Do you personally have expertise in the kinds of maintenance that may be coming? Would it help to have a manager in your corner?
7. Do you have substantial equity in the property? Would you like to have another company’s errors and omissions insurance policy and/or liability policies standing between you and property-related lawsuits? You may have placed your properties in a corporation to prevent tenants from suing and taking your personal assets. But owning an empty corporation (except for a judgment) doesn’t do you much good.
8. Do you have maintenance employees working full time? Or do you have to contract here and there? If you’re contracting, a management firm may be able to have their own in-house team do the work for you for much less money.
9. How much do you really enjoy getting those emergency maintenance calls?
Your answer to any one of these questions could well tip the scales in favor of hiring a property manager. Especially if you can get one for the right price, relative to the services and value provided.
Making the Decision
One thing I’d recommend not doing is this: Making the decision based on what you see in the rear-view mirror. Yes, you’ve had a great experience the last 30 years. But times change. Your life changes. Your lifestyle changes. Your mix of tenants changes. The best course of action for you today may not be the same one that was best ten years ago.
Consider: Neighborhood dynamics aside, your property gets older each year. The kinds of people who rent older properties are a different market from the ones that rent newer properties. Depending on your neighborhood, the older your property gets, the more ‘down-market’ your renters may become. That is, unless you’re making some big renovations to keep the property relevant and current.
The exception, of course, is in very desirable communities and communities that are gentrifying rapidly, in which case the dynamic may reverse. You’re going to be the most familiar with the hyperlocal dynamics of your own property.
You’re also going to have to make some decisions regarding your own capabilities. People change as they get older. We’ve all known elderly people whose decision-making capabilities become less and less sound with age.
In many cases, this sparks a long decline in value of the elderly individual’s property. You may have had 30 years of good decisions behind you. You don’t have any kind of guarantee that your faculties will remain intact going into the future.
If you keep things in-house, and you make a mistake, you have no recourse. You cannot sue yourself to make yourself whole. With a property manager, though, you do have some recourse based on a property management contract, and the ability to be made whole via the property manager’s E&O/professional liability policies. (Note: The link is not an endorsement).
A professional property manager with a good track record is usually less mistake-prone than individual landlord.
In general, though, I am an advocate of elderly landlords beginning to bring in some help as they get older. Indeed, it’s just a good idea for anyone running a business or real estate mini-empire to have someone in their corner – even just to talk them off the ledge or reason them out of a dumb idea. In risky, liability-generating endeavors like real estate, two heads are usually better than one.
Now, of course, you are going to season to taste based on your individual circumstances. Some things I have written may not be applicable to you, or you may already have family taking care of some things a property manager would ordinarily do for you.
One way to answer this question is this: How much property management should you buy? Usually the answer is: as much as you can easily afford!
Now, if you’re on the fence about engaging a property manager – and the fact that you’re writing into AllPropertyManagement.com about it suggests something may have happened to cause you to consider it – that may help crystallize your thinking. Perhaps you don’t need a very broad scope of services at this point, but you can use some help with specific aspects of running your property.
In that case, unload what you can easily afford to delegate, and just expand the scope of the engagement as your needs change.
And if you’re ready to take that next step, this resource might be of some use to you: Choosing the Right Property Manager. You might also be interested in this other Ask A Pro Question: Q: Why hire a property manager?
Writing about personal finance and investments since 1999, Jason Van Steenwyk started as a reporter with Mutual Funds Magazine and served as editor of Investors’ Digest. He now publishes feature articles in many publications including Annuity Selling Guide, Bankrate.com, and more.