Looking to lease your rental property? Whether you're brand-new to the real estate world or have been around the block a couple of times, you likely know the first major decision you'll need to make is—do you self-manage or hire a property manager?
New homeowners often chomp at the bit when they see this simple equation:
Profit = Rental Income - (Mortgage + Expenses)
Unfortunately, that formula is a bit misleading, and it leaves out the time, money, know-how, and responsibilities necessary to turn a true profit. Marketing your property, screening tenant after tenant, chasing down payments, staying on top of maintenance—it's a lot for a homeowner to handle.
Overwhelmed property owners may look for someone to manage the nitty-gritty aspects of property management for them, and they turn to property managers. Homeowners know they won't make as much using these services, but they realize time is money and pass off the responsibilities to a third-party professional. Sometimes that works out really well, and sometimes it doesn’t.
Well, to make things a bit more interesting (we promise it's for the better), we'd argue there's a 3rd option: Nomad. Nomad helps you maximize your rental income and lower your vacancy risk, all while offloading the stress of self-management—but it's not quite a property management service.
The details matter, and that's why we're here to help you choose the best option for leasing your property. Remember, there's no universal one-solution-fits-all option when it comes to property management—you'll need to analyze the options, weigh the pros and cons, and make the best decision for you.
What Are Your Options?
Homeowners who decide to self-manage their rental property do everything on their own. They market the property (take pictures, write descriptions, create online listings), screen tenants, manage the lease agreement, maintain the property, deal with any tenant issues such as delinquency, and more.
Self-managers abide by the saying, "If you want something done well, do it yourself," but at a cost. It takes time, money, and know-how to maintain a successful rental property. Everything takes more time than you'd expect, and it's incredible how many itty-bitty tasks you need to do (and do well).
For example, you'll need professional, high-quality photos for your listing to compete for tenants. However, if you're not a photographer, you'll need to (a) hire a professional or (b) buy/rent a camera and learn how to shoot top-notch photos—both of which take time and money. The same can be said of marketing your property, screening tenants, finding and negotiating lease agreements, legal issues, routine and intensive maintenance, and more.
If you're excited about all the nuts and bolts of owning and leasing a property, self-management might be right for you. If you have the time, talent, resources, and desire, it's the best option for managing your property. However, if even one of those criteria is missing, you'll likely be better off with Nomad or a property manager.
If you don't find the day-to-day self-management life appealing, a property manager can take a lot off your plate. Property managers typically charge around 10% of your monthly rent to manage your properties, but each one varies on the services they offer and the prices they charge. The relationship is often all-or-nothing, meaning you can’t pick and choose what you want them to do for you and get a lower price.
Property managers live and breathe real estate, so they understand the market and all the nitty-gritty details of property management. However, the good ones usually oversee many properties, meaning your property is never the top priority.
Unfortunately, there can be incentive misalignment between landlords and property managers. See, property managers aren't trying to maximize your income—they're trying to maximize their income while offering a good service—it's just business.
Some property managers will give you unrealistic market rent estimates to get you to sign the dotted line, but then they drop prices to bring in tenants. Why? Because they make a percentage of your monthly rent, and what's the difference between 10% on $2,000 and $1,750? Not very much for them, but it's a lot for you.
Plus, they don't get paid more for bringing in high-quality tenants. A paying customer is a paying customer, even if the long-term value of your property suffers as a result. Property managers often make a good deal of their income off leasing tenants (due to the fees they charge you), so they actually don’t mind when tenants come and go quickly. This allows them to re-lease the property to a new tenant—thus, generating more income.
Exceptional property managers are out there, and they make owning your property almost completely hands-off. However, finding them is the tricky part. With so many companies and services (and their quality varying from superb to downright sloppy), it can be a headache finding a property manager you can trust.
Nomad offers rental property owners a flexible, more certain, and more profitable way. You just submit your property information to Nomad, and we’ll get back to you in 24 hours with a free guaranteed rent estimate. When you sign a 2-year lease with Nomad, we handle all the logistics of your property, and you get a paycheck every month, no questions asked.
We'll handle marketing and leasing (optional), filling vacancies, and collecting rent. If we don't re-lease your property after the first tenant...well, that's not your problem—you get paid on the 10th of every month anyway. This incentivizes Nomad to keep your rental occupied with high-quality tenants who'll care for your property like it's their own.
If you're a handyman and want to manage maintenance and repairs on your own, go right ahead. Or if you have a guy (or girl) that you like to work with, hire them to do it for you. And if you don't want to think about it at all, Nomad will work with their partners to ensure your property is maintained. This flexible option saves you money and let’s you stay more engaged with the property and tenant.
Try out the Rental Income Calculator to see what earnings you can expect with Nomad versus doing it all yourself.
Nomad is for property owners who want to maximize their income with a hands-off approach. If you want to screen tenants, market your property, collect rent, and the like, then Nomad probably isn't right for you—but if you want to maximize your rental income while taking a backseat for 2 years, then take 1 minute to request a free guaranteed rent offer.
Below is an example of how property managers can hurt your leasing process. This landlord hired 2 different property managers to lease their property—these 2 managers created over a month of unnecessary vacancies due to incorrect pricing. Once Nomad took over, we used our experts and algorithms to pinpoint the right price point—and the property rented just 2 days later.
This illustrates the difference between Nomad and most property manager's pricing strategies.
What Matters Most to You?
When choosing between self-management, property management, and Nomad, you'll need to keep your top priorities in mind. What is the ultimate goal of your rental property?
Do you want to make passive income and earn financial freedom? Or do you want to get your hands dirty and learn a new business? Are you fixated on squeezing every dollar out of your rental with sweat equity, or is your time worth enough to hire professionals with aligned incentives?
Answers to questions like these will signal which rental property management option is best for you. Let's look at each of your primary considerations in more detail.
- Self-Manager: Managing a rental property all on your own can be extremely time-consuming. Sure, once you get a tenant in the house and all the paperwork squared away, things will slow down—but then you still have tenant calls, maintenance, back-and-forth commutes to the property and more. Plus, you'll eventually need to re-lease the property and start everything over again.
- Property Manager: Handing things over to a property manager lets you trade money for more time. A property manager (most of them, anyway) will handle all the details of your rental property so that you can kick back and relax. You may need to nudge your property manager every now and then if they're slow to fill vacancies or if they mark-up repairs, but the rest should be pretty hands-off.
- Nomad: Nomad handles every aspect of your rental property. Don't worry about filling vacancies, negotiating with tenants, or collecting rent—we take care of all of it. If you do want to manage your own repairs and maintenance, that's entirely up to you—but it's something else Nomad can take care of for you, too.
- Self-Manager: If you're a mean, lean, rental-property-operating machine, self-management could net you the highest profits—if you’re as good at pricing, marketing, and screening as Nomad. However, if you're not up-to-date on the industry and experienced with everything from marketing to maintenance to tenant management, then you could be missing out on earnings. Plus, your time has real value. If your working time is worth $50/hr, and you're spending 5+ hours on your rental property each month, you need to factor in those opportunity costs.
- Property Manager: Property managers are going to take roughly 10% of your rental income, and that's not even including the fees for tenant placement, maintenance service markups, evictions, early terminations, and more. Yes, property managers know the rental space well, but their prices and fees will eat into your profits. This may be worth it if you find a great one. But remember, property managers aren't trying to maximize your income—they're maximizing their income, and sometimes that comes at your expense.
- Nomad: Nomad helps you maximize your income by working less and earning more. We lose money if we don’t move fast and lease well. So you’ll see that we like to hustle, just like you would—only we’re professionals at this leasing thing. You get guaranteed rent, while Nomad takes care of vacancies, delinquency, certain damages, rent collection, marketing and leasing (optional), and more. Do it on your own, and you'll have to eat all those expenses yourself—go with a property manager, and you'll have to pay extra fees for many of those costs.
- Self-Manager: Everything is on you. Just a single month of vacancies could set you back thousands of dollars, or your entire annual profit. If you get everything just right, you can minimize your expenses and maximize your profits. But if anything goes wrong or off-plan, the costs are on you. If a security deposit doesn't cover damages and the tenant refuses to pay more, then you'll have a potential lawsuit on your hands—and those cost money, too.
- Property Manager: The property management option is the most expensive. You'll have to pay a portion of your rental income, and then you'll be charged vacancy fees, maintenance markups, and more.
- Nomad: With Nomad, you only have maintenance and repair expenses. Everything else is factored into your guaranteed monthly payment, so that number you see on your finalized offer is your profits (once you subtract maintenance). We do better when you do better.
- Self-Manager: You have complete control over who you let stay in your property. You can screen tenants, do the 1-on-1 interviews, landlord references, and guarantee you're getting a tenant that you trust. It takes a lot of time and effort, but it's the ultimate quality assurance. In our experience, too many self-managers skip some of these steps and regret it later.
- Property Manager: Property managers may care less about the quality of your tenant and more about the occupancy of your rental. There's little incentive for property managers to filter tenants scrupulously—they don't mind if tenants come and go because they get to collect additional fees when they re-lease your property.
- Nomad: Since Nomad provides you guaranteed rent (vacancy or no vacancy), we're incentivized to find top-notch residents who'll stay long-term in your rental. Nomad has its own network of pre-screened tenants, making it more likely you get residents who'll care for your property like it's their own. And if you bring your own tenant when you join Nomad, you already know the quality you're getting.
- Self-Manager: If you like to get to know your tenants and create meaningful relationships with them, there's no better way to do that than with self-management.
- Property Manager: When you hand over your rent collection, maintenance calls, and leasing to a property manager, you minimize the contact you'll have with each tenant.
- Nomad: Nomad lets you choose whether you fully engage with your tenants or let us take care of it—with the certainty and ease of guaranteed rent.
- Self-Manager: You'll need landlord insurance and an adequate security deposit to protect your property. Plus, you'll likely need to know a lawyer in case leases are broken and disputes can't be settled between you and your tenants.
- Property Manager: Property managers know the law, and they'll make sure tenants pay for any damage they cause in excess of the security deposit.
- Nomad: Nomad provides Nomad Property Protection to cover any damage in excess of the security deposit up to $10,000.
Which Is Right for You?
There's no best property management option—you have to evaluate and decide which is right for you.
If you want to manage every nitty-gritty detail of your rental property, then self-management will be your best option.
If you want a hands-off approach, personally know a great property manager, and aren’t worried about incentive alignment or vacancy, then property management could be right for you.
And if you want to maximize your rental income, lower your vacancy risk, fill your rental with top-notch tenants, and walk away with a guaranteed paycheck month after month—then Nomad is your best bet.
Get started today by requesting your free, no-obligation guaranteed rent estimate.