Hiring a property management company can be great, or not.

One of the biggest decisions you'll make as a rental property owner is whether you should hire a property management company. Many owners manage properties on their own or with the help of an employee, or family member.  But sometimes problems or just "life" gets in the way, and that's when a property management company might make sense.

Property management companies can be a huge benefit, but the wrong company can be an expensive mistake. Carefully review the factors discussed below to determine if hiring a property management company is the right move for you.

What Does a Property Management Company Do?

Management companies deal directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions. Plus, a good management company brings its know-how and experience to your property, giving you the peace of mind that comes with knowing your investment is in good hands. Finally, a management company is an independent contractor, so you avoid the hassles of being an employer.

When Should You Hire a Property Management Company?

Although hiring a property management company has many advantages, using one can be sometimes be expensive. When interviewing a company, look for hidden fees and charges.  Consider the following factors to determine if hiring a property management company would be a good decision for you.

You should consider hiring a property management company if:

You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you're likely to benefit from a management company.

You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar.

You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.

Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote, especially if landlording isn't your day job. And if you prefer to spend your time growing your investments, including searching for new properties, arranging financing for renovations, etc, then a management company may be a good way to spend your money.

You're suddenly inundated with management tasks. If your property inventory is growing, at some point you may find that you need help to manage everything properly. At that point, it might make sense to hire a management company.

You don't want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You'll have to handle payroll and deal with a host of other legal requirements and considerations. But, because a property management company isn't your employee (it's an independent contractor), by using one you avoid the hassles of being an employer.

Your property is part of an affordable housing program. If you participate in an affordable housing program, (like Section 8) things can get complicated. Usually, in these programs the landlord receives financial benefits, which may be in the form of a grant, low-interest loan, or tax credits, in return for agreeing to rent at least part of the property to tenants earning below a certain income level. In order to continue receiving the assistance, the landlord must comply with a complicated set of rules. With so much at stake, it's often worth hiring a property management company that has expertise and experience with the particular housing program in question.