Owning and operating a residential or commercial rental property is rarely hands-off. Key responsibilities like tenant communications, rent collection, budgeting and bill payments, and coordinating maintenance, all take time and effort.
That’s where hiring a professional property manager can help. But depending on your goals and portfolio, it may not necessarily be worth the cost.
In this blog post, we’ll weigh the pros and cons of hiring a professional property manager as a real estate investor in the Greater Toronto Area.
The Truth About Professional Property Management
Before thinking about whether or not you need to hire a property manager, take time to know yourself as an investor and landlord. For example:
Are you buying your first income property and feeling nervous about the responsibilities? Are you an established investor who is ready to scale up and expand their portfolio? Have you been a landlord for several years and want to reduce your workload?
Outlining your personal and professional goals can give you a greater picture of the exact support you need. That’s important because property management providers can range in services and scope.
On the smaller side, you’ll find independent operators who manage just a handful of buildings. On the larger side, there are full scale corporate operations with portfolios totalling several dozen to even hundreds of properties. Both styles have their pros and cons.
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What Do Property Managers Do?
A property manager is more than just someone who collects rent on behalf of the landlord. In reality, they take on a wide range of duties related to the day to day operation and management of your property. Some offer pre-set bundles or packages of specific services, while others offer a more customizability.
Your Tenant Liaison
One of the most demanding aspects of being a landlord is tenant management. From answering questions to coordinating repairs, collecting payment, chasing down delinquencies, and enforcing building regulations, it’s a lot of work. This is something a professional manager can take on for you.
Sourcing and Screening
Have a vacancy that needs filling? Most property managers (especially corporate groups) have proprietary processes for sourcing, screening, and onboarding tenants, which includes background checks, income verification, and interviewing references.
They can help you fill vacancies faster, reducing lost income and the odds of being stuck with low quality tenants.
Upkeep & Maintenance
Taking care of your investment property is incredibly important, but it can also be time consuming.
A professional property manager can coordinate and manage routine maintenance on your behalf. When something needs fixing, they have a network of reliable contractors and tradespersons on hand who are ready to help; saving you from asking for quotes or deliberating on whether or not to fix things yourself.
What’s the Downside?
Hiring a property manager can make your life a lot easier. However, it’s not without its special considerations: Primarily, the cost.
While exact fees or commission models vary, most management services land between five to fifteen percent of your property’s earnings. That’s a big cut.
There could also be one time fees associated with set up, tenant sourcing, preparing and serving formal notices (evictions), etc.
That said, if you’ve got room in your financial plan for this level of cost, hiring a professional property manager could be well worth the investment. Especially if you want to be as hands-off as possible.
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Do Your Due Diligence
You’re entrusting major aspects of your investment (and portfolio) to a third party, including your equity, returns, and professional reputation. Rather than hire the first management company you hear about, you’ll want to do your research and consider multiple candidates before making a decision.
A great place to start is by asking other landlords for a referral or recommendation. You can also approach industry insiders, like an investment-specialist real estate agent.
When you find a strong candidate, take time to read reviews from their current and past clients.
Get Commercial Real Estate Support
Looking to invest in real estate or optimize your existing portfolio? Get expert advice from Naccarato Group.
Serving both emerging investors and established property owners, our approach is driven by personal relationships and highly analytical research. Tailoring our guidance to your goals, we can advise on a vast range of industrial and residential real estate topics; including whether to hire professional property managers.
We’ll ensure you’re set up for a seamless, low risk investment experience, whatever that looks like for you. Get in touch today.
Ready to invest? Get in touch at christian@naccaratogroup.ca or call (647) 492-6508.
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