Property Management. As real estate investors, have we considered it? Yes. Do we know what it entails? Somewhat. Is it a sector of our investment strategy to do ourselves or do we outsource? If you're inexperienced, you need to hire an efficient property management company to do it for you. THEY ARE OUT THERE! Hiring a competent property management company is worth more than its weight in gold, saving you lots of headaches in the long term [especially if you don't know what you're doing].
After all expenses are paid including your mortgage (aka debt service), at the end of each month, it is the PM company that sends you a check for your profits. Property management is simply the daily management of an investor's building. From solving tenant problems, repairs, dealing with contractors/subcontractors, handling evictions, collecting monthly rent payments, advertising and background checks of potential tenants, to turning a unit making it available for new occupants, property management is an all-encompassing skillset.
As a real estate investor, I'd much prefer to outsource--since property management is a skillset outside my sphere of expertise. I'd much prefer looking at properties than spend time advertising for new tenants or doing background checks. Outsourcing frees up my time to do new deals. If I took the time to manage a building myself, I would technically have a J.O.B which would mean a 1099 IRS form and an income.
Outsourcing for a potential property management company comes from asking for referrals, doing your own research and interviewing several companies to find out which one would meet the needs of your property. Which ones are competent vs. those that are not? Do you go with the "mom 'n pop" companies or PMs that handle larger buildings? Only the investor can decide that, depending upon his/her investment strategy. If I bought a 100 unit multifamily apartment building, I don't just turn it over to the management company and forget about it. As the owner, my responsibility is making sure my tenants' needs are met, that they are safe and happy. I make periodic visits every quarter or so, making sure the exterior and interior are intact. No code violations.
Among my other responsibilities as owner is to manage the property management company. Do they have the latest software updates? How is their office setup? Are they efficient/reliable and do they handle tenants' needs in a timely fashion? There is a love/hate relationship between tenants and owners. Some tenants don't understand that the unit they rent is their HOME. If the tenant is long-term, the landlord does everything to ensure their tenants are happy and safe where they live. They keep their units clean and neat. When repairs are needed, or items need replacing, it's done in a timely manner. Good tenants remember those things when the lease is due for renewal. Great tenants are the ones we definitely want to keep, those who deface the units, make trouble for other occupants or are late with their rent payments are the ones who move on.
Either way, when investing in multifamily long-term, these points must be considered, allowing investor/PM ongoing success, a team effort for everyone.