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Should You Hire a Professional Property Manager for Your Real Estate Investments?

Posted on by questadmin
Estimated reading time: 3 minutes

One of the great things about a self-directed IRA is that there are many different investments you can hold in your account. (You are actually permitted to hold the full range of investment types in any IRA, but accounts offered by traditional custodians such as banks and investment brokerages are more restrictive than they need to be.) One particular type of investment– real estate – can provide the savvy investor with just the right risk/reward ratio they’re looking for.

Unfortunately, holding real estate as an investment isn’t nearly as simple as holding publicly traded stock or mutual fund shares. Holding real estate comes with the burden of making sure that the property is always adequately maintained, that the tenants are honoring all the terms of their lease agreement, and that all taxes and other fees relating to the property are being paid on time. Some real estate investors handle these issues themselves, while others prefer to hire a professional property manager. Here are some factors to consider if you’re faced with that decision.

What’s the Nature of the Property? Whether or not you need to hire a professional property manager will depend in part on the type of property you own. For example, a multi-family apartment building or a multi-unit office structure will require much more attention than a single condominium unit where the building already has an on-site superintendent. You may need a professional manager to be able to provide adequate services to your tenants.

Are You Handy? When something breaks or otherwise requires attention on your property, how comfortable would you be making the repair yourself? The more skill you have with basic and intermediate repairs, the less likely it is that you’ll decide you need professional management assistance.

Are You Close To Your Property? Regardless of how comfortable you’d be doing the repairs yourself, travel to and from your real estate investment needs to be easy. For example, if you live in Illinois, but own an investment condominium in Florida, you’re not going to be able to do even the simplest repairs yourself.

Do You Have Time? Even if you have the skills to repair and maintain your property, and are close enough to do so whenever required, would it fit into your schedule? Depending on the demands that are placed on your job by your career, your family and any other projects or activities you’re involved in, you simply may not have the opportunity to make the repairs on a timely basis.

Do the Finances Make Sense? How much is your time worth to you? You should approach this question from two perspectives; a purely financial perspective, as well as how much you value your free time. If hiring a professional property manager costs less than the value of the time you’d spend maintaining the property yourself, then doing so might be a smart financial decision. If you’re considering hiring professional assistance, you’ll also need to be sure that you’ll have enough liquid resources within your self-directed IRA to cover those management expenses.

Regardless of what you decide, make sure you’re working with a self-directed IRA custodian who has extensive experience in real estate holdings, such as Quest Trust Company.