Should I Hire A Property Manager for My Minneapolis Duplex?
Owning rental property is easy, right?
After all, once you acquire a Minneapolis or St Paul duplex or multifamily property and stabilize it, turn the keys over to a property management company and rake in the cash, right?
Not quite.
The most appealing part of the idea of property management is not having to find tenants, collect rent, and field maintenance calls. The fact is, those things are a hassle for property managers too, and they justifiably want to be paid for them.
Most property management companies either agree to work for a flat monthly fee or a percentage of rent. If a property has enough cash flow to cover these fees while still leaving a profit, then hiring a management company may make sense.
However, what may not be clear is whether these companies also charge for additional services. For example, most management companies charge a fee of one month’s rent for finding and placing a tenant. If that resident renews their lease the following year, the property manager may charge a smaller additional fee for the extension.
When the property manager fields a call from a resident for service, they may charge an additional fee for calling the appropriate party to repair it. There is often an upcharge of roughly 10 percent for the cost of those repairs, which ends up costing the housing provider more than had they simply taken care of the problem themselves.
What about tenants who don’t pay rent? Isn’t a property manager useful there?
When it comes to dotting the i’s and crossing the t’s of starting the eviction process, a property manager certainly can be.
However, this process usually takes time. And the longer it takes, the more rent the landlord loses. A simple conversation between the building owner and the delinquent tenant about moving out early in exchange for avoiding an eviction on the tenant’s record may expedite a vacancy and ultimately save more in lost rent as well.
Of course, if the delinquent tenant refuses to go after the conversation, an attorney who specializes in evictions will know the eviciton process as well.
Generally speaking, I have three recommendations before hiring a property manager:
- Have experience self-managing in order to recognize appropriate repairs and the costs associated with them.
- Until you have twenty units or more, you may not have the cash flow or economies of scale to warrant hiring a property manager.
- If you’re still interested in hiring a property manager, then ask for full disclosure for every fee upfront. It’s far better to go into any business arrangement with your eyes wide open than to incur excessive costs you weren’t prepared for.