The pros and cons of property management companies for rentals and second homes

by Erik J. Martin

Own an apartment building, vacation home, short-term rental, office building, or other property, or preparing to buy one soon? You may want to think twice about supervising that address on-site. Because active land lording and property management can take a huge toll on your time and resources.

Instead, consider hiring a property management company, which can do the dirty work for you.

“A property management company provides boots on the ground, emergency response and a network of people for those one-off issues,” says Mark Ainley, who is responsible for property management marketing and leasing at GC Realty & Development, LLC in Roselle, Illinois.

Property management experts handle tasks like tenant screening, rent collection and maintenance and repairs, enabling property owners to focus on other aspects of their lives or business, according to Shri Ganeshram, CEO/founder of Awning.com, a nationwide Airbnb property management company.

“For example, if you own a second home as an investment but are a busy professional who finds it challenging to manage the property while juggling your day job, you can outsource these responsibilities to a property management company. ey can ensure this property is well-maintained and generates a steady income without sacrificing your time and energy,” Ganeshram continues.

Min Hwan Ahn, a Philadelphia-based attorney, says good candidates for hiring a property manager include landlords who lack the time or expertise to oversee their properties, those with multiple properties or units and those living far from their real estate investments.

“On the other hand, landlords who prefer handson management or have only one property may not benefit as much from this option,” Ahn points out.

Among the advantages of enlisting a dedicated property manager is that you have an expert in the local market with a wider network of resources and referrals far deeper than you likely possess.

“Also, more cities, counties and states are adding or modifying rental laws and restrictions. A property manager can stay on top of these new rules and reduce your risk as the owner,” adds Ainley.

Skilled property management companies are also well-trained to conduct thorough background checks on prospective tenants, “thereby reducing the risk of problematic renters,” Ganeshram notes.

On the other hand, these services can be costly.

“Property management fees are typically charged as a flat fee, such as $125 per month, or as a percentage of your rental earnings. For example, if you charge $1,500 per month on rent for a unit, they may charge 8% to 10%, or $120 to $150 monthly,” Ainley says.

Additional fees for services such as tenant placement or maintenance can be charged separately, so it’s crucial to carefully review a property management agreement before signing.

Furthermore, hiring a property management company means letting go of some control over your dayto-day property operations.

In other words, if you’re a micromanaging landlord, you’re going to have to learn to loosen up and let go of a lot of your responsibilities.

After all, that’s what you’re paying a property management company for.

“ e old adage of ‘you get what you pay for’ has never been truer than in the property management industry. Instead of going with the cheapest option, I highly recommend searching for the highest quality property management company you can find,” advises Jason Marcordes, managing broker for Landmark Property Management in Chicago. “Conduct proper due diligence by reading online reviews, checking websites like Biggerpockets.com, and asking local real estate professionals for referrals.” Be forewarned: A bad property manager could end up costing you thousands of dollars in increased tenant turnover, higher vacancy and expensive maintenance over the long haul, Marcordes cautions.