Should real estate investors get into property management?
Is it ever worth handling property management, or should it be something real estate investors consciously strive to steer clear of, and how profitable can it really be?
Many getting into real estate investing think self-management as a landlord is their only option. Unfortunately much of this crowd really has no clue as to what it truly involves or is like on a daily basis, what the many pitfalls are and how it can chain them to their rental properties forever and become more than a full time job.
For some, self-managing rental properties can be enjoyable and save them money, but that may be not be the best strategy for many others. All real estate investors should at least build in room in their cash flow and projections to outsource or hire a full service third party property management firm.
As a job property management can pay less than minimum wage or a great deal depending on what you are managing and experience. For those looking for a way to get started in real estate investing but need a steady paycheck taking a property manager gig may not be a bad move. It can provide a basic salary, free rent and great experience.
Others can find it a great extension of their real estate investing businesses. A well-oiled property management system with the right structure can be profitable and there are certainly no shortage of property owners out there today that could really use the help.
By taking on outside clients investors cannot only offset their own expenses and improve cash flow, but can find it become highly profitable. Just be sure to recognize that great planning is needed.
Most real estate investors will find property management only really pays to get into or delivers a reasonable ROI on cash and time if they evolve into it as a side business. Remember billionaire Warren Buffet said he would buy hundreds of thousands of single family rentals if it wasn’t for the management hassle, and seems to prefer the buy/ sell side.