How to Estimate the ROI of a Property Manager

As a rental property owner, you’ll need to account for property management costs and identify the best solutions for your needs. For some, managing your own property can be an attractive way to maintain a positive cash flow. Still, it’s helpful to understand the potential ROI of a property manager. When you compare do-it-yourself property management against other property management solutions, you can decide which option provides the most value based on the cost.

DIY Property Management ROI

Managing your own rental property can be a good choice for some. If you understand all the responsibilities of managing your own property and feel confident in your ability to execute those tasks, DIY property management might be right for you. If you choose to self-manage your rental property, there may be a financial upside. Still, you need to account for all the costs.

Costs of managing your own property

If you choose to self-manage your rental property, you’ll likely still need the support of a few key professionals. Most individuals who manage their own properties will engage the services of accountants and tax professionals. Likewise, you may need to hire professionals to complete specialized repairs or for ongoing lawn maintenance or pest prevention. Carefully factor these costs into your estimated expenses. 

Similarly, you should carefully estimate the costs associated with the tools and equipment needed to self-manage your rental property. You will need to use accounting software, a tenant verification tool, a computer, and internet access. Be sure to account for all mileage, cleaning supplies, and maintenance tools. 

Finally, you must account for the time spent managing your rental property. You may find it quickly becomes your most significant expense.  

What is the value of your time? 

While it may be tempting to see your time as cost-free, you may find that you are underestimating the value of your knowledge, expertise, and time. Consider assigning a specific value to each hour of your time. What do you consider your hourly rate? Is it $30, $60, or $100 per hour? 

Property management responsibilities will fall into several categories:

• Sales & Marketing - advertising the rental
• Tenant Selection - selecting a qualified tenant
• Accounting - keeping track of the books and taxation requirements
• Legal - understanding State and local laws, insurance needs 
• Maintenance - keeping the home in good condition

Estimate how many hours you’ll need to spend completing these tasks per month or year. 

Time is the most valuable asset we have. It’s also the most limited. Carefully consider how much you value your time. What if you could be on vacation, spending time with your family, or enjoying something you love instead of managing your rental property? Does that increase how much you value your time?

Mental, emotional, and physical costs of managing your own property

The cost of self-managing your own rental property can transcend a specific dollar amount. Every rental property presents different challenges. Do you feel prepared to tackle difficulties that arise? What happens if rent isn’t paid on time? Are you familiar with and confident with taxes and insurance? Do you have a plan for handling emergencies? 

Self-managing a property requires finding, hiring, and managing contractors. How will you respond if they don’t show up or don’t complete work in a satisfactory manner? 

Do you consider yourself an organized individual? You’ll need to keep records like initial applications, credit checks, and lease documents diligently. To maintain a positive cash flow, it’s essential that you carefully track and record all expenses. 

Managing a rental property can also be physically demanding. Consider who will complete all of the maintenance requests. You may be required to climb ladders and move through attics or crawl spaces. Maintenance can be difficult and unpleasant at times. If you do choose to hire someone to help with maintenance, even little repairs can add up quickly. Before long, you may exceed your maintenance budget.

Property Management ROI

While property management solutions come with drawbacks and additional costs, it’s essential to understand what they offer and how they can impact your bottom line. 

What services do property management companies offer?

Perhaps most importantly, you need to know that not all property management companies offer the same services. If you explore working with a property management company or individual, compare their offerings carefully. 

Common property management services can include:

• Property evaluation
• Marketing your home- suggest pricing, photos, videos, listings, ads
• Tenant screening- rental history, credit check, background check, referrals, and employment verification
• Rent collection- enforcing late fees, warnings, eviction notices
• Mortgage and utility payments
• Managing tenant communication
• Repair and maintenance services - some may have an in-house maintenance crew, others may hire contractors

How much does property management cost? 

The cost of property management will vary significantly depending on the services being offered, the number of properties you are working with, and the location of your rental property. Property management packages can sometimes start for as little as $200. Most property management services will charge a percentage of the monthly rental value, typically between 6-12%. 

Critically, there are often additional costs and fees associated with property management. So while an initial package may only cost $200 or 6% of your monthly rent, extra expenses can add up quickly. 

Common property management fees to watch out for:

• Management fees (6-12%)
• Placement fees (100%)
• Maintenance Markup (20%)
• After-hours & holiday (+25%)
• Renewal fees ($200+)
• Account set up fees ($500+)
• Inspection fees ($150+)
• Advertising/marketing fees ($150+)
• Eviction fees ($5,000-$8,000)

Carefully evaluate each property management solution for its offers and how much it costs. Be sure you understand what fees may be applied. With careful consideration, you can evaluate property management’s impact on your cash flow. 

What if there is another option? Meet Belong.

Imagine a modern alternative to property management. Would you be interested in a contemporary solution for property management without hidden costs and fees? Belong makes renting your home enjoyable and easy. We’re reinventing and modernizing the traditional home rental experience. 

What’s the difference between Belong and traditional property management?

Belong is changing the way people look after their rental homes by offering tech-forward services with a human heart.

Our smarter, future-ready services include:

• Guaranteed rent every month, regardless of if or when your residents pay
  
  
• Transparent pricing with no hidden fees

• Optimized rental pricing that uses technology and real-time demand to price your home with accuracy

• The Belong app that gives you and your residents access to everything you need, including 24/7 concierge support

• Innovative financial products including the option to spread maintenance payments over the term of your lease agreement

• Access to dedicated landlords insurance to protect your asset (as well as coverage for your residents)

• Integration with the most popular rental platforms (like Zillow and Zumper) to get your home loved faster
  
  
• Modern-day marketing options including video and 3D tours at no extra cost

• Instant access to an expansive vendor network of over 10,000 professionals that can handle everything from routine repairs to home upgrades

...and we're just getting started!

How much does Belong cost?

Our management fee is 8%, and we cap that fee at $599. This fee includes everything that might cost extra elsewhere, like video marketing and move-in/move-out services.

With Belong, no hidden costs means no additional fees:

• 0% Management Fee
• 0% Maintenance Markup
• No Initial Set Up Fee
• No Inspection Fee
• No Pricing Analysis Fee
• Free Photoshoots
• Free 3D & Virtual Tours
• No Advertising Fees
• No Eviction Fee
• No Tax Document Fees
• No Lease Renewal Fee
• No Commitment to Sell

Meet the modern, people-centered solution to property management

Belong is transforming the world of property management to offer homeowners valuable, transparent solutions for their rental homes. We’re proud to provide fair, clear pricing with no additional fees. We combine concierge-level service with modern technology to offer our homeowners a first-in-class alternative to property management. 

Visit our homeowner's page to find out more about how our services are helping people to ditch property management in Seattle, San Francisco, San Diego, Los Angeles, Tampa, Orlando, Jacksonville, Miami and many more.