Investing in Commercial Real Estate can be a full-time business. There are so many things to do, from making repairs to showing off vacant spaces. For some, hiring a property manager is a no-brainer. However, for those who are not sure if they really need the extra expense, I’ve gathered a list of pros and cons that you can consider when making this decision.
To start with the pros, the most obvious include the extra help and task specific expertise that a property manager can lend. If you own multiple properties, you may run into issues where you need to show a prospective tenant one property while making minor repairs at another. Instead of spreading yourself too thin, you can delegate one of the tasks to your property manager. In addition, there will be times when an experienced property manager can recommend solutions that would not have otherwise occurred to you.
It can also be helpful to have a property manager when you are working a full-time job and investing on the side. Indeed, in these instances, it’s almost a necessity. New commercial real estate investors typically underestimate (usually significantly), the amount of time required to manage commercial real estate. Repair calls, rent collection, tenant relations, and government regulations create issues that must be addressed immediately and often requiring a significant amount of time.
While there are some really great reasons to hire a property manager, there are also downsides to keep in mind. For example, you must pay your property manager, which may not be feasible, depending on the property’s net income. Hiring a poor property manager could also cause problems, as repairs may be fixed incorrectly or tenants may have a bad customer service experience. Therefore, it is essential that you do your due diligence if you hire a manager.
Another con is the detachment from your property that comes with hiring a property manager. You may feel obligated to let your manager take complete control, especially if they are experienced. Yet, this can almost be disappointing to someone who prefers to be more hands-on with their investments. It is also a good idea to know what is going on with your properties, but you will naturally know a little less if you are not the one handling each situation. While you could choose to remain involved, it does defeat some of the purpose of hiring someone.
Clearly it is not a cut and dried decision. There is a lot to think about when it comes to hiring a property manager. Make sure you take the time to really consider the ramifications of each choice and decide which option is best for your situation.
