Hiring a property management company is a major decision in the real estate investment market, but it’s one that makes sense on many levels. Letting a professional company handle the day-to-day management of your properties frees up your time and makes investment property owning stress-free. It may even increase your profit margins.
What Do Rental Management Companies Do?
Should I use a property management company? How will it benefit me? Is it worth the cost? Before you can decide if you want to use a property management company, it’s important to understand what they do. Quality local property management companies handle a wide range of duties related to managing investment properties, including:
- Marketing vacant rentals
- Finding and screening tenants
- Handling leases and related paperwork
- Performing background checks
- Checking credit history
- Verifying previous landlord references
- Verifying employment
- Collecting security deposits
- Collecting rent
- Providing monthly financial reports
- Fielding calls from tenants
- Performing maintenance tasks
- Handling the eviction process when necessary
Essentially, the property management company handles every aspect of managing your rentals and your tenants, saving you time and energy. You get the full benefits of owning investment properties without the hassle.
Who Benefits from Using Property Management Companies?
Not sure a property management company is right for you? Hiring a management service is beneficial for a variety of investment property owners. Some people who benefit from the service include:
- Property owners who live far from their rentals.
- Investors with multiple rental properties.
- People who want the investment but don’t know a lot about management.
- Experienced investors who want more freedom, less stress and more time.
- Owners who want a hands-off management approach.
- Owners who don’t want to hire and manage their own staff.
- People with limited time or patience.
- Investors who don’t want to wade through the legal aspects of renting properties.
In other words, almost any property owner benefits from using a property management service. New investment property owners get the expertise of professionals to handle the workload and ensure the operation complies with all applicable rules and regulations.
Experienced property owners appreciate the opportunity to expand operations or simply reap the financial benefits without extra work. Let’s look at some of the specific advantages you get as the property owner.
Managing a rental property comes with many legal concerns you may not have considered when you purchased your property. Filling a vacancy takes more than just choosing a person to live in your rental. State and local landlord-tenant laws regulate the things you can do, from selecting tenants to handling inspections or initiating the eviction process.
Fair Housing laws also come into play when filling your vacancies. Because the laws can vary depending on the situation, it’s important to understand the rules and regulations that apply to the location of your rental unit. Failing to follow those laws can mean fines and other consequences. You may find yourself in court if you break the laws.
Instead of trying to sort through laws and legal terms, let a professional property management company handle it. An experienced company is knowledgeable about local law. Their job is to follow the law to the letter, so your investment properties remain in compliance.
Changes in those laws can also cause a problem for owners. Do you have time to keep up with housing law changes? A professional property management company stays current on housing laws, so they can adapt how they manage your properties to stay in compliance.
Vacancies cost you money because you lose your steady income stream. It takes time to advertise your rental, post signs and screen tenants. Your time is valuable, so you lose even more by handling these tasks yourself. Hiring a property management company eliminates all that work on your end. A quality company uses strategic marketing strategies to attract the right kind of tenants to your properties so they can fill them quickly.
A property management company’s screening and selection of tenants works to an owner’s advantage. A property management company has the tools and experience to choose the right tenants for your property. With experience evaluating applications, they know what to look for and what to consider a red flag for a potential problem tenant.
They have access to background and credit checks, which let them eliminate poor candidates based on those qualifiers. Property management companies often fill vacancies much faster than you can on your own, which gets that income stream flowing again.
The mountains of paperwork never seem to end when you own rental properties. From leases to monthly expense and income reports, you’ll spend a chunk of time completing paperwork if you manage your own properties. Completing those forms accurately, correctly and in a timely manner is crucial. Documentation must be organized and accessible should you need the paperwork.
If you can’t stand the thought of sitting at a desk to complete the paperwork, consider hiring a company instead. Property management companies take over the responsibility for that paperwork. They create lease agreements and ensure they are completed and filed properly. They handle documentation on all aspects of your business, so you have the records you need.
If you’re new to owning investment properties, you may not realize how much goes into the operation. Just a few of the skills needed include marketing, legal knowledge, maintenance, repair, conflict resolution and financial experience. Having expertise in all those areas is rare. You may feel comfortable in some areas but lack expertise in others.
In truth, no one person can be an expert in all these fields — that’s why you need a team of experts behind you. When hiring a property management company, that’s what you have: someone will skills in every aspect of property management.
A property management company staffs a wide range of experts in all areas of managing rentals. They have marketing gurus who know how to find tenants for your properties. They have dedicated maintenance and repair people, or they have access to reliable, professional companies in those fields. They have accountants who handle the financial aspects of your business.
You could hire an accountant, lawyer, repairmen and other experts in various fields, but you’ll likely pay a lot more for those individuals than you would hiring a property management company. You get access to the connections of the property management company.
These companies are experts, so they often work with related service providers to handle every aspect of managing properties efficiently. Those connections can mean discounted rates on services, which makes the upkeep of your properties more affordable.
Offer Professional Tenant Services
Quality services keep your tenants happy. Happy tenants stay put longer, which reduces vacancies and ensures you a steady stream of income from your rentals. If you have a full-time job, a family and other responsibilities, you aren’t always available to field calls from tenants or rush over when a maintenance emergency happens. As a business relationship, it’s sometimes easier not to personalize your dealings with tenants.
A quality property management company handles those tenant interactions and services on your behalf, saving you time and presenting a consistent, professional image. Round-the-clock answering services to accept calls about emergencies ensure your tenants have someone to help without waking you up in the middle of the night. Get peace of mind knowing they’re taken care of without compromising your sleep, family time or other responsibilities.
Fast, professional maintenance is another primary component of the tenant experience. Whether it’s a true emergency such as a burst pipe or a minor inconvenience, tenant satisfaction increases significantly when those issues are addressed immediately.
If you can’t drop everything to handle those issues, consider hiring a company that can get there fast. Having a professional to handle the repairs and maintenance ensures they get done correctly, which further enhances your reputation and saves you in the long run.
Enjoy Hands-Off Management
Some people prefer a hands-on approach, but others prefer to keep investment properties as income without the actual management aspect. Dealing with conflicts, difficult tenants and the day-to-day tasks takes a great deal of time and patience, and it can add stress to your life.
Hiring your own staff is an option, but you then add the work of managing other people, which comes with its own set of difficulties. The management aspect of owning rental properties is even more challenging if you don’t have a background in managing people and operations.
A property management company lets you take a hands-off approach to handling your properties. You still have decision-making powers. You always get to decide what happens with your properties. However, you eliminate the headaches that come with being in charge. Someone else can handle those issues that inevitably pop up throughout the day.
The hands-off approach is particularly beneficial when conflicts or difficult situations arise, such as tenants who are late on rent, break the lease terms or is complained about by neighbors. No one wants to handle a midnight call for a noise complaint.
The eviction process is another tricky situation you may not want to handle yourself. Property management companies have seen and heard things you could never imagine. That experience comes in handy when they must deal with your tenant issues in a professional way. You’ll be glad to have the company in your corner should an issue arise.
Handle Long-Distance Management
Managing properties becomes more complex when you don’t live near your rentals. Whether you live on the other side of town or the other side of the country, that distance takes you away from your other responsibilities every time you need to address an issue, collect rent or inspect the property.
The further away you live, the greater the difficulty in managing the property. If you live in a completely different area from your rental, it’s simply not feasible to travel to the location for those routine issues.
Using property management services lets you handle those long-distance properties without racking up the miles on your vehicle or taking up all your waking hours. Your tenants get a much faster response when someone local handles maintenance and emergencies, which keeps them happy.
Knowing you have a reliable option with the property management company can open up the range for purchasing new properties. Instead of limiting yourself to properties in your immediate vicinity, you can expand those search parameters to find additional property options farther away.
Manage Multiple Properties Easily
Owning more properties gives you increased income, but it also multiplies your workload. Keeping track of paperwork, responding to maintenance requests, tracking rent payments, handling complaints and keeping units full becomes much more difficult as you increase your investment property ownership.
That workload is even more difficult if your properties are spread out in different geographical areas. Not only do you have more responsibilities, you have added driving time to slow you down.
Hiring a property management company lets you expand your investment portfolio without bogging you down with additional work. You get consistent management across all your properties, and you don’t see an increase in your responsibilities since the company handles them for you.
All your tenants get the same great service without you feeling like you’re shortchanging anyone. It’s a cost-effective way to expand your business without the need to hire and manage your own staff or spend every waking moment handling the workload yourself.
Unless you can devote yourself to property management full time, you likely need a little help getting things done for your investment properties. Every aspect of having a rental takes time. When you have investment properties as a side income, those tasks cut into your daily schedule.
Whether you have one property or 100, working with a property management company frees up time in your schedule for other tasks, work, family and recreational activities. In other words, you have a better work-life balance while still reaping the ownership benefits.
How can you save money by spending money to hire a property management company? It sounds counterintuitive, but it’s a very smart financial investment for most rental owners. We’ve touched on many of the money-saving aspects, but let’s dig a little deeper:
- Decrease in vacancies: Fill your rentals faster when you let someone else find and screen the tenants. Shorter downtime between tenants keeps your rental income flowing.
- Lower turnover: A quality management company keeps your tenants happy with exceptional services and responsiveness. Lower turnover saves you money in a few different ways. You keep a consistent flow of cash coming in for the property, and you eliminate costs associated with finding new tenants, such as professional cleaning, fresh paint and minor repairs.
- Maximized rent: Professionals know how to get top dollar for your rentals. Having professional management is a major perk for your tenants, and they will be willing to pay for it. At AHPM, we use in-depth comparative market analysis to ensure your rental is priced right to maximize your income.
- Controlled maintenance costs: When you handle your own maintenance, you may end up in over your head, forcing you to hire a professional. Property management companies often have in-house maintenance or pricing agreements with local contractors to keep the cost of repairs under control.
- Rent management: Stop wasting your time collecting rent and tracking down past due payments. Your property management company handles all the financial aspects for you, including collecting rent. These companies have experience collecting rent from tenants who pay late.
- Financial reporting: Get detailed financial reports on your rental properties to keep you in the loop without spending hours trying to do the finances yourself. An analysis of your investment helps you maximize the property.
Rental properties have the potential for great income, but they come with plenty of responsibilities. When you have to devote more time than you want to your properties, you feel increased stress. Taking most the responsibility off your plate significantly reduces your stress. You have a partner who takes care of the time-consuming management tasks and handles complications that arise. You’ll enjoy rental property ownership much more when you eliminate the stress factor.
Managing properties yourself can severely limit your freedom. You need to be available for unexpected problems, which makes it difficult to do things like take extended vacations. Your personal residence needs to be within driving distance so you can handle problems. The workload of managing day-to-day tasks likely keeps you so busy that you don’t have the freedom to do the things you want.
A property management company eliminates those restrictions. You aren’t limited to a certain geographical region for your own residence. Buy properties in other states or move out of state if the urge strikes. When you have a property management company in place, you don’t have to stick around. Less work on your plate frees you up to do what you want while still having the rental income to fund those activities.
How to Hire a Property Management Company
Learning how to find a good property management company saves you time and money. When you choose an experienced, reputable company, you get peace of mind. Follow these tips when choosing a management company:
- Get referrals: Check with other local property owners to see who they use for property management. Firsthand recommendations are often the best way to start your search.
- Interview potential companies: Don’t just choose a random property management company. Schedule a time to visit the company and ask any questions you have. This initial meeting lets you get a feel for the company and whether it’s a good fit for your needs.
- Ask about policies: Question the company on things like the tenant screening process, rent collection procedure and maintenance policies. Verify how long the company has been in business. Asking questions helps you feel more comfortable with the company and gives you a better understanding of how the company works.
- Get a quote: It’s important to verify the fees charged by the company you choose. Ask for a quote so you know what percentage of your monthly income will go to the company.
- Understand the services: The specific services provided by a property manager may vary from one company to the next. Make sure you know exactly what the company will handle and what you need to handle yourself.
- Talk to other owners: Check on references from other owners who use the service to assess quality. Pay attention to both the things the other owners like about the company and their complaints. Are their complaints major issues or minor annoyances? If you do hear a major complaint, check with other owners to see if they have similar experiences with the company.
- Look for complaints: Determine the reliability of a company with a little research. The Better Business Bureau is a useful resource in checking for those complaints. Be careful not to judge a company on only one complaint. While it could be valid, it could also be a case of a disgruntled client creating problems when there isn’t one. If you see a consistent pattern, it could be an indication that you should choose a different company.
Knowing how to choose a property management company that fits your needs is an essential step in running your investment properties efficiently. If you own rentals in the Central Pennsylvania or Baltimore Metro area, contact AHPM about property management services. We’ll give you a complimentary quote for our comprehensive services to get you on your way toward stress-free investment property ownership.