Using your self-directed IRA to invest in real estate can often prove to be a great financial decision. With real estate investments it’s possible to reduce your exposure to the stock market, and potentially gain a strong and reliable source of ongoing income. But there are also some extra responsibilities and burdens that sometimes come with holding investment real estate.
For example, if you’re investing in single family homes. you’ll have to find tenants, make any repairs and conduct whatever maintenance is necessary, clean the home between tenants, pay the taxes and insurance that come due. and manage the income from your tenants.
Because those tasks take tie and money, many investors are more than happy to hire a professional property manager to handle them. In order to determine whether retaining a professional property manager for your real estate investments makes fiscal sense, consider the following questions.
What Services Are You Getting? Not every investor will be looking to use a professional manager for all of their property management needs. Some might only want assistance in finding tenants, while others may wish to seek out help in maintenance and upkeep. A professional property manager will only be worth the cost if they are providing the services that you find most valuable.
What is the Professional Property Manager’s Level of Expertise? As with any service provider, expertise and experience is key. Ask any property managers that you’re considering doing business with to provide you with a list of clients and references, as well as a summary of services they have provided in the past.
How Much Time Would a Professional Property Manager Save You? Once you identify the services that you receive from a professional property manager, you can quantify how helpful those services will actually be in terms of saving you time. Saving 3 to 4 hours per month on property maintenance might be attractive to you, but perhaps not at the rates the manager is charging. On the other hand, you might be willing to pay quite a lot to save yourself 20 hours of effort per month if you have a large real estate portfolio.
How Much Money Would a Professional Property Manager Save You? In many cases a property manager has better connections and relationships to plumbers, electricians, carpenters and other professionals you’ll need to help you maintain your investment properties. How much would these improved rates save you?
How Much Stress And Hassle Would a Professional Property Manager Save You? Remember to consider the indirect savings that a professional property manager could provide. It’s true that your time and money are likely to be the easiest things to quantify, but what about simply avoiding the stress and hassle of having to manage property?
The best way to decide whether it’s worth hiring a professional property manager to help you with your real estate investments is to identify and quantify all of their assistance, and quantify exactly how much you’re willing to pay for it.