The biggest mistake rental owners make when hiring a property manager Skip to Main Content

The biggest mistake rental owners make when hiring a property manager! It’s not what you think…

What is the biggest mistake rental owners make when hiring a property manager? It’s actually not what you might think. The more obvious answers might be hiring a company with a bad reputation. Maybe hiring for cheap fees over quality, not making sure they are licensed, and many other things. But no, this issue is far more critical and is the culprit for most failed rentals. And by a failed rental, I mean a rental that is prematurely sold off because the owner gave up on it. It became too much and too frustrating. Before giving up on a rental, watch this video.

I believe the more critical issue and mistake property owners and property managers make actually goes both ways. What I mean by that is the owner and the property manager make the same mistake. Ultimately though, it is the property manager who is to blame for allowing this to happen. And it’s something that should be addressed well before any of the other challenges I mentioned are even considered. 

So what is the biggest mistake when hiring a property manager? 

The biggest mistake is when the property owner and the property manager do not understand each other’s roles and responsibilities. In order for a rental to be successful, it’s absolutely critical that the property owner and the property manager understand what they do. Why is this important? Well imagine watching an NBA basketball game where the owner of the team comes onto the court. He starts calling plays, and even grabs the ball and tries to score. Well that would be crazy right? Could you imagine the confusion, frustration, ineffectiveness, potential accident, injury, and who knows what else. Seems crazy in this example, I know. But the same thing happens every day in property management. Let me explain.

When a property owner is managing their own rental (DIY Owner), they are taking on two separate roles. The role of the property owner, and the role of the property manager or landlord. They do it all. The role of the owner requires they manage the mortgage & financing, makes sure insurance is in place, and approves larger financial decisions (this is the NBA team owner role). Their role as a property manager and landlord (or the NBA team coach with their players) requires that they advertise, find and screen quality tenants. Requires that they execute and renew leases, enforce the lease. They also do the bookkeeping, collect rent, hire vendors, oversee maintenance, approve most repairs, do inspections, handle security deposits. They make most decisions for the property as the relate to the tenants and overall “NBA Team performance”.

Do you know what position you are playing? what’s your role?

When the property owner decides it is time for hiring a property manager, they should also recognize that they are now removing the burden of being the landlord, and placing it on someone else or on a company whose team will now have that role. At that point, at the moment the property owner signs that property management agreement, they are no longer on the bench or on the court. They are now able to free themselves from that burden, and allow it to be done for them.

Just like the NBA team owner can fire the coach if they don’t like how things are going, the owner can fire the property manager. But the problem lies in situations where the property owner tries to get on the court and score points. They want to screen tenants, handle maintenance, inspect their unit when it’s occupied, even meet and talk with the tenants. This creates confusion to the team, the tenants, and everyone involved. It is not clear who really is the landlord, and who is in charge. 

Ok, so who is the landlord?

You see the title “Landlord” is where a lot of people get mixed up. But when we understand who carries that title in the relationship, we can start winning the rental game. 

I recently bought a house in Virginia, and it is being managed by a property manager out there. Even though I have personally managed rentals for over a decade, and our teams around the country manage thousands of rentals, I willingly took off my landlord cap and placed it on the property manager out there. And seriously, I’m really happy I don’t need to carry that weight and responsibility. Now I might not like every little thing or decision they make. But I recognize that they have their way of doing things, and as long as it’s within my threshold of what I see aligns with my end goals and priorities, I’m good. 

Consider this if you are thinking about hiring a property manager. A great property manager does not want a property owner to carry any of the burden of being a landlord. And similarly, a great property owner wants to empower a great property manager to do their job to the best of their ability. So ultimately they save money with less stress and they can enjoy the experience. 

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