In my experience as a property owner and real estate investor, if you have the time, resources and property management expertise, managing your investment properties and rental portfolio yourself can be an effective way to achieve your desired financial goals when building your investment property portfolio.
Why? Because self-management gives you absolute control over the whole property management process. Here are some of the benefits of managing your own property portfolio:
You save money on management fees: Let's say you have a rental property portfolio worth $1 million dollars. If you outsource property management to an agency, they will usually charge somewhere between 2-5% of the total property value on a monthly basis to manage your investment for you. That could equate to anywhere between $20,000 and $50,000 per year in property management fees. By managing rental properties yourself, this fee is eliminated and instead is replaced with a combination of direct rental income cashflow and increased property value which can be reinvested into other investment properties or simply taken as profit. As you can see, this creates substantial passive income.
You have complete control over tenant screening: When managing rental properties yourself, you oversee the tenant screening process and can reject applicants who don't meet your required rental standards. Not only does this prevent headaches but it also means more rental income since you don't have to pay the property management agency for letting a problematic tenant into your investment property. This saves both time and energy when finding new tenants because there's no need to outsource background checks and rental applications. You can handle tenant screening yourself in a matter of hours, rather than having to delegate it to someone else and wait for their response. This means you become more effective at finding and attracting the best tenants, which leads directly to higher rental cash flow.
You have complete control over property maintenance: When managing rental properties yourself, you ensure that maintenance tasks are completed to your standards and no corners are cut during repairs and preventive maintenance. You don't need a property management agency creating liability issues because you understand landlord-tenant laws and can ensure that maintenance work on the rental property follows legal requirements. By maintaining complete control over the property maintenance process, you save money by eliminating property manager fees. This creates a significant advantage since most property management companies charge a percentage of each repair and maintenance bill while taking a substantial profit when handling your rental property. Self-managing your portfolio eliminates these extra costs.
You save money on rental marketing: When managing rental properties yourself, you eliminate marketing fees for tenant acquisition. You also save money by not hiring a property management company to find new tenants. Every tenant turnover typically requires paying an agency for marketing and tenant placement services. This can cost between $500 and $1,000 just to secure one new tenant for your investment property. By managing your own rental property portfolio, you handle marketing and tenant placement yourself, eliminating these recurring fees.
You save money on management issues: With self-managed properties, you handle tenant communications directly. When rental property maintenance is needed, there's no intermediary since you coordinate repairs yourself. If a tenant terminates their lease agreement early, you can quickly begin the tenant screening process because you understand the rental market and property requirements. Property management becomes more efficient during holidays or weekends because you maintain direct control. The property owner handles all these responsibilities, eliminating the need for property management company intervention.
You maintain complete property control: As a rental property owner, you oversee all property operations and can make immediate management decisions. When working with a property management agency, they handle these decisions and might not prioritize your investment goals. Self-managing rental properties eliminates concerns about agency priorities since you maintain full operational control. You avoid the complexity of coordinating with property managers, allowing you to focus on growing your investment property portfolio.
If you have the necessary time, resources and property management expertise, managing your own rental properties can be a highly rewarding experience that accelerates your path to achieving your real estate investment goals.
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