Renter’s insurance policies are valuable tools for both tenants and landlords. Today, we’ve asked Tom Hotaling to join us for a discussion on tenant insurance. Tom is an insurance agent with an...
Should I Self-Manage or Hire Professional Property Managers?
For many property owners, the first and most critical question is whether to go down the self-management or professional management route.
Unfortunately, there's much more to being a property investor than purchasing a property, filling it with residents, and waiting for the rent payments to roll in! Those who buy a property and self-manage in the hope of passive income may be surprised at the amount of work required to operate a rental when reality sets in. From organizing tradespeople to legal obligations and needing to be by the phone 24/7, a self-managed property is far from a passive investment opportunity.
However, how you operate rental properties ultimately comes down to the level of involvement you are willing to take on in administering their property. In this blog, we'll examine the difference between professional property managers and self-managers, the obligations involved in property investment, how a professional manager can help, and a case study from MHN Properties.
What's the Difference Between Self-Managed and Professional Management?
"Who" manages your property can make a big difference in your returns! While many DIY landlords believe that not hiring a professional means saving money, they could be losing profits instead.
A Self-Managed Property
A self-managed property in San Antonio means the property owner undertakes all duties expected of a landlord in Texas regarding their property.
Self-management may be cheaper in terms of not paying property management fees and providing the property owner with experience. However, it can also be high-stress and incredibly time intensive (particularly during unexpected issues such as maintenance emergencies). Therefore, self-management can also become more costly in the long run.
In addition, a self-managed property would not be considered a passive investment and requires extensive knowledge of federal and state legislature, rights, obligations, and financial literacy.
A Professionally Managed Property
A professionally managed property means that professional property managers administer rental property operations. In this case, a property investor would purchase a property and then put it in the hands of a management group. The management group will act on behalf of the property owner undertaking all duties ranging from marketing to maintenance.
A professionally managed property would make the property a passive investment and is a great way to ensure everything complies with all laws and best practices. In addition, experienced property managers know how to optimize returns for your investment!
However, property owners must pay for the service of a property management company which is usually a percentage of the rent collected monthly.
The Benefits of Working With a Professional Property Management Group
Now that we have an overview of the two approaches to property management let's look at some of the fundamental areas property managers can assist property investors.
Tenant Insurance Requirements
Landlord insurance coverage is fundamental to protect your property and income. Plus, if something happens on your property, you don't want to be held liable for any damages that may be sought.
However, did you know many renters don't enroll in renters insurance? Your landlord policy doesn't cover tenants or their belongings if something goes wrong in the rental home. So, how can owners make sure renters have the coverage they need?
Excellent property managers know to enroll residents in liability insurance—which is one of our standard procedures at MHN Properties.
Compliance With Landlord-Tenant Laws
Property is a complex field of law governed by state and federal statutes that intersects with the contract, family, health, and sometimes even criminal areas of law.
Without a clear understanding of the relevant statutes, property owners risk making mistakes that violate resident rights. For example, mistakes could happen during the screening process, the lease handling, or even the general management of the property.
Experienced San Antonio property management professionals understand the relevant laws and how to follow them in each circumstance.
Marketing and Tenant Placement
You may have purchased a beautiful property in a pristine location. Still, without the right marketing strategy, you may experience longer vacancy times or place renters that aren't the right fit for your property.
Professional photographs, compelling copy, and setting the correct rental rate are just a few of the duties involved in securing a resident pool. A thorough screening process and background checks are also required to secure high-quality residents. Property managers know the market, how to set rental rates, and the key traits to look for to connect with quality renters.
Property maintenance involves more than just fixing something once it's broken. Maintenance is as much preventative as it is reactionary. Therefore, routine maintenance and prompt repairs from trusted professionals can increase property values and keep long-term residents.
Professional property managers maintain a strict and effective maintenance schedule while responding quickly to any emergency maintenance issues that may arise on a 24/7 basis.
An MHN Properties Case Study In Policy and Procedure
When rental property owners solicit the services of one of the best property management companies, they ultimately secure their policies and procedures, which have been tried and tested across multiple properties and property types. Therefore, there's no guesswork when relying on professional property managers.
As a final point, we'll examine an actual case study of how MHN Properties established policies and procedures to help secure a net positive for an otherwise unlucky property investor:
- At MHN Properties, we onboard all residents with an extensive orientation to equip them with the tools to deal with unexpected issues such as how to protect rental units during storms. Therefore, our residents know how to wrap pipes, keep heating on, and turn off the water at the source to prevent flooding.
- In one instance, during intense winter weather in San Antonio, we had one resident who did not follow the instructions and instead turned off the electricity and left the apartment to flood for days.
- Due to our policy of enrolling all residents in liability insurance, we collected all documentation, including insurance documents, orientation documents, proof of damage, images, a copy of the 100-page lease, rules, and regulation documents.
- As a result, the insurance company wrote a check for $28,000, which was used to re-habit the property and get new residents in there with a rent increase—all within the month.
While it's tempting to believe self-management saves money because you aren't paying a property manager, a property manager's experience, procedures, and expertise are invaluable to your success!
Put Your Property in the Hands of Professional Property Managers Today
While self-management may save a little bit of money and provide a learning experience, it can also be a more costly and active way to invest—almost like having a second job!
Professional property managers in San Antonio have the suitable systems and policies to reduce risk, protect your property and increase profitability. Contracting a professional management company also offers unmatched peace of mind regarding legal issues and obligations as a property owner.
Contact a team member today if you'd like to learn how MHN Properties can help make your property as safe and profitable as possible. We're happy to walk you through the entire process and look forward to working with you soon!