If you have a lot of time on your hands, years of experience in the local Philadelphia rental market, and a willingness to be on-call for your tenants 24 hours a day, you are likely well-positioned to successfully manage your own rental property.
Not a lot of landlords have the time, resources, or knowledge to effectively lease, manage, and maintain their investment homes, however. The rental market and the legal landscape has changed dramatically over the last few years. Even if renting out your own property seemed like a no-brainer 10 years ago, it’s not quite that simple today.
When you’re a rental property owner with a full-time job of your own, family responsibilities, or other passions that don’t include clogged toilets, chasing down rent payments, and learning the latest fair housing laws, you will have a better investment experience if you hand over the management responsibilities to a qualified Philadelphia property manager.
Here are some of the reasons you shouldn’t manage your own investment property.
Liability Risk and Errors are Common
Even experienced landlords make common mistakes when they try to manage their own assets. Unfortunately, those mistakes can be costly. They can cost you tenants and they can cost you money. They can also get you in legal trouble.
Here are the mistakes self-managing landlords most often make:
- Pricing the property incorrectly
- Not understanding fair housing laws and how they apply to your marketing, screening process, and management systems
- Not screening tenants thoroughly
- Misunderstanding security deposit laws and what can be deducted from the deposit
- Deferred maintenance
- Hiring unlicensed vendors
- Losing tenants
Professional property managers have made most of these mistakes already. We’ve learned from them, and we have perfected systems and processes that will protect you from costly errors and keep you out of trouble.
There’s a lot of liability when it comes to renting out a property. When you’re doing it on your own, your risk level goes up.
You Need to Know the Philadelphia Rental Market
How closely do you follow the Philadelphia real estate and rental markets?
When you want to rent out a property, you have to know what properties similar to yours are renting for. You need to understand demographic changes that might occur from year to year. You need to know what tenants are looking for, and whether it’s a competitive market for you as an owner or a competitive market for the tenants who are looking for homes.
The benefit of working with a professional property manager is that we understand what homes are renting for, what tenants want in a property, and how to market to a wide pool of well-qualified prospects.
This nuanced knowledge can help you save money on long vacancies and incorrectly priced homes. When you know the market, you can decide what types of improvements and updates to make so you can attract the best tenants.
Property managers make this part of their process. If you’re managing on your own and you don’t have the time to really dive into how the rental market is performing and what’s happening in the sales market, you’re going to be at a disadvantage when it comes to renting out your home.
Maintenance Costs Can Feel Unsustainable
When you manage your own rental property, you’re at risk of paying top dollar for maintenance and repairs.
Your vendors are busy. You’ll have to wait for them to schedule you, and then you’ll likely pay full price for what you need, whether it’s a simple drywall project or a big plumbing issue.
You can save money when your property manager is helping to maintain your home. Most property management companies get discounts from the best vendors and contractors in the area. This is because we provide them with a large volume of work, so they provide us with wholesale prices. When you are an individual landlord, you pay more for plumbers, electricians, landscapers, and even handyman services.
There’s also the risk that unlicensed vendors can provide. Perhaps you’ll cut a few corners in order to save some money on repairs. That could put your property at risk, however, especially if the workers you hire don’t carry insurance of their own. If someone falls off a ladder, guess who is liable?
Tenant Relationships can be a Challenge
Every landlord has heard one or two horror stories about tenants that didn’t pay rent or those who broke their lease. Maybe you’ve heard about lawsuits involving dog bites or property damage that went well beyond the security deposit.
You can’t be too careful with tenants, and that’s why a rigorous screening process must be in place.
When you manage your own home, you often don’t have access to the nationwide credit, eviction, and criminal background checks that you need. You might not have the time to verify income and employment, and you might feel uncomfortable calling current or former landlords to perform reference checks.
Tenant screening is essential, however, and you have to be willing to invest the time and resources into a detailed, fair-housing-compliant, screening process. If you can’t, you will need a property manager.
If you’re worried about the cost of professional property management, there’s good news. You’re actually more likely to lose money if you manage on your own. One month of vacancy will often pay for a full year of professional property management. Avoid that vacancy cost, and you’ve already paid for your professional services.
You really have to think about whether you’re a landlord or an investor.
Landlords will muddle through while leasing and managing their homes. They’ll respond to maintenance when they can.
Investors, however, recognize the value of professional management and prefer to be hands-off. They know it earns them more and costs them less.
We’d welcome a conversation about the value of professional rental management. Please contact us. TCS Management is a full service property management company headquartered in Philadelphia, Pennsylvania, also serving Harrisburg, PA, Cherry Hill, NJ, Wilmington, Delaware and the surrounding areas. We focus on single-family and multifamily residential property management of homes, condos, townhomes, and apartment buildings.
