This blog was designed to share my knowledge of when it might be best to use a local or national property manager. Everyone has different goals with their property and portfolio so you want to make sure you are finding the best fit for your interests. When it comes to selecting that property management company, one of the fundamental decisions you'll face is whether to go with a local firm or a national company (however, since Chicago is very unique and a tough city to manage in, most of the National players have packed their bags and left, which will limit your options drastically). Each option comes with its unique set of advantages and drawbacks. Understanding these can help you align your choice with your investment strategy and operational preferences.
This choice affects not only the management efficiency of your investments but also their profitability. Let’s take a look at some of the pros and cons of each, tailored to the unique aspects of the Chicago real estate market and beyond.
The Pros of Local Property Managers:
Deep Local Market Knowledge:
In general local property managers have an important understanding of the markets they operate in. This means they're typically better at setting competitive rent prices, marketing properties effectively based on local demand, and complying with specific municipal regulations and legalities (this is especially important in Chicago and Cook County due to the RLTO and CRTLO).
I can’t stress enough how Chicago's real estate landscape is very unique! This is one of the most charming and fascinating things about living here but can make investing from out of state complicated without the proper help. With variations not only between different neighborhoods, but individual blocks and also between the city and its suburbs. Local managers bring an understanding, from the luxury condo market in the high traffic Loop or Lakeview to the family-oriented rental homes in Orland Park or Frankfort. Just crossing a train track or choosing the wrong side of a park here can significantly impact your investment decision.
***As a side note, this is by far the number one thing I see out of state investors get wrong. I’ve seen it time and time again where a group of professional investors raise money to buy eight, maybe even nine figures worth of real estate here in the city and end up selling it for a loss a few years later. Investing in Chicago is not the same as investing elsewhere. Don’t fall for an attractive looking cap rate based on a low opex ratio! It’s like a mirage, you will never reach it!
Personalized Service and Accessibility:
Local firms often provide a more personalized touch, crucial in a city known for its diverse tenant base. This can mean better tenant relations and more hands-on problem resolution, particularly important in neighborhoods with unique challenges and opportunities.
With Chicago’s drastic weather changes, strong wind, and potential for tornados in the suburbs, it is great to have a trusted team of individuals that will take care of your tenants if the situation of a busted pipe or broken AC unit occurs. Having team members with boots on the ground in your location can be huge when it comes to any potential issues. A larger company may outsource maintenance and other things like lock outs. A local company often takes a lot of these things in house and has someone ready and trusted to send them out as quickly as possible so they don’t have to rely on a third party.
Strong Local Networks:
In general, local managers usually have well-established relationships with area vendors, contractors, and tradespeople, potentially lowering maintenance costs and improving service speed. Local managers also often have the network and knowledge to recommend other companies if they are not the best fit or you fall out of their service area.
Chicago-based managers are no different to this rule, with local Chicagoland property managers you can assume quicker response times and potentially lower costs for repairs and maintenance, crucial in older properties common throughout the city since many buildings are well over 100 years old.
The Cons of Local Property Managers:
Limited Resources:
Smaller local firms might lack the advanced technology and extensive personnel resources that larger national companies boast, which can be a setback when scaling operations or handling complex, multi-property portfolios.
Be sure to check out their website and ask questions about what property management tools and software they are using. We have created a resource going over our top 5 tools in the industry you can check out for reference.
Geographical Limitations:
If you plan to expand your investment portfolio across different regions, a local firm may not be able to manage properties outside their base area or “area of service.”
Expanding your property investments to other regions outside Chicago and its suburbs might require additional management resources, as local firms may not cover areas beyond their established locales. In this case a national property management company might make this process more seamless than hiring more than one management company.
The Pros of National Property Managers:
Extensive Resources:
National firms are larger and more likely to offer robust resources such as advanced or proprietary property management software and specialized staff teams for a variety of locations, which can be advantageous for investors looking to leverage data analytics for properties scattered throughout and beyond Chicago.
Be sure to ask a company you are considering what resources they have and describe your growth goals with your portfolio. Ask for reference cases of how they helped others accomplish what you intend to do!
Multi-market Presence:
If your investment strategy includes properties outside of Illinois, national companies offer the convenience of managing all these properties under a single umbrella, which can simplify operations significantly.
National companies have the advantage of a broader geographical footprint, which can be a tremendous asset if you own or plan to acquire properties in multiple regions outside of Chicago and the Chicagoland area.
Standardized Practices:
With their larger scale, national property managers often employ standardized management practices that ensure a consistent level of service across all properties. This can be a major advantage in maintaining quality and operational efficiency, regardless of property location.
Please note that this doesn’t mean that smaller companies don’t have this but it is far more common and necessary across the larger scale practices! You get a lot of fly by night, mom and pop type smaller managers that will change policies and procedures depending on the property making things more complicated for you and themselves.
The Cons of National Property Managers:
Less Localized Service:
While they operate on a larger scale, national firms may lack the local insights that are critical in a city as economically and culturally diverse as Chicago, potentially leading to a disconnect in strategies tailored to local market demands. Selecting a property management company who doesn’t the local market well (especially in tough to manage cities - like Chicago) can have a devastating impact. I’ve seen it countless times where owners had to sell at a loss because an inexperienced property manager destroyed their portfolio.
Less Personal Touch:
National firms typically manage thousands of units across several different markets. Although not always, this typically means less personalized care and more of the big box feel (ie being treated like a number). This may be fine but if I’m trusting someone with my biggest asset, I want the time and attention I feel I deserve.
For investors in the Chicago area, the decision between local and national property management companies should consider both the scale of your investments and the specific characteristics of the properties. Local firms offer invaluable insights into Chicago's complex market and provide personalized services, while national firms bring standardized practices and the ability to manage diverse portfolios across different regions. Also, never forget to do your due diligence and read their reviews before you make a decision!
If I can help in any way, or if you have questions about finding the best property management fit for your needs, please feel free to reach out. I'd love to talk about it. Contact us at Landmark Property Management. Our expert property management services ensure that your investment properties are managed efficiently, helping you maximize your returns while minimizing stress. You can also view our frequently asked questions here!
