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Should You Hire a Property Manager?

Low interest rates and a bustling rental market in the wake of the recent housing collapse are making this one of the best times to consider investing in rental real estate. But becoming a rental entrepreneur means an ongoing commitment to making sure your property (or, better yet, properties) are maintained and managed properly. Although it may be tempting to simply contract with a property management company, Jason Hartman recommends that the best strategy is usually to manage the property yourself.

Taking on the business of owning rental real estate can seem overwhelming. Some properties, especially those bought in foreclosure, may need a lot of renovation and repair before they can even be rented. And the business of finding and screening tenants can be time consuming and a frustrating. Ongoing maintenance and handling tenant issues will require regular attention. Hiring someone to take care of all these things can relieve you of some of the pressures of dealing with your investment.

But unless you’ve purchased property well out of your local area, or you have numerous ones to manage, making property management a part of your investment business can offer a number of benefits.

You’ll save money. Hiring a property manager costs money. You can generally negotiate with the manager or management company about the level of service you need, ranging from simply handling maintenance issues to never contacting you except to send rent money. But those services don’t come free – and they siphon away a percentage of your rental profits each month.

You gain tax breaks. Just about every aspect of your investment enterprise has some tax benefit associated with it. From your home office to the mileage spent in travel to your property, your expenses related to property management can be deducted. And, some deductions, such as Passive Activity Losses, or PALs, only apply if you play an active role in managing your property, measured in hours per year.

You can hire experts. Choosing to go solo doesn’t mean you have to do everything yourself. Consulting experts in areas such as heating or cooling repair, plumbing or other maintenance issues can make repairs go smoothly and fees paid to these experts are tax-deductible if they are directed toward keeping the property up.

You have better relationships with tenants. One advantage of using a property manager might be that you’re at one remove from tenants, so that difficulties such as evictions are handled by that third party. But being a hands-on owner that tenants can call directly if problems arise also creates loyalty and trust, and allows you to have a first-hand look at what issues really are. This increases tenant loyalty and may help limit problems with vacancy.

No one solution is right for everyone, and as we’ve said, diverse investments in varied markets may require some outside management assistance, especially in more distant areas. But for many rental property entrepreneurs, the path to independence means taking on the job yourself – a strategy recommended by Jason Hartman.

The Heroic Investing Team


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