Some people go into multi-family investments thinking it will be a breeze. After dealing with collections, maintenance, complaints, and repairs they will soon realize, being a landlord is a lot of work! At what point should you hire a property management company? It is a decision many landlords face.
Do the benefits outweigh the cost? Each situation is different. We have put together some points to consider before you hire a property management company.
What They Can Do:
Market the Property:
They will be able to showcase and highlight the property across many platforms. Property management firms often subscribe to the most effective online tools and your property could take advantage of those tools at their expense. Your property will likely be featured and placed in a more visible location on print and web materials. They will also post signs, list on the MLS, schedule showings, and process applications so you are able to get a more wide range of candidates. This often results in a better tenant for your property.
Tenant Screening:
High-quality tenants vs. low-quality tenants will make or break your investment. Figuratively and literally so don’t skimp on this step. The average person doesn’t have as much experience as a property management firm when it comes to finding the best tenants for your home. An experienced property manager like Clear Property Management LLC will spot red flags a mile away.
Collect Rent:
Your property manager will collect the monthly rent on your behalf and enforce any applicable late fees the tenant owes. They are often paid in a more timely manner as a private landlord is typically more flexible. (read: they are more easily taken advantage of.) Your property management company can act as collections, chasing down rent if need be. They can also handle the majority of the eviction process which can be tedious and possibly result in issues for the owner if not done ethically by state laws.
Raise Your ROI:
They will take a good look at the living spaces and the grounds. They should immediately be able to recommend cosmetic touches and upgrades that will boost ROI. A good property manager will be abreast of what competitive properties are offering as far as upgrades and unique property features as they are in the market daily. Also, they should be able to provide information about taxes including deductions and necessary paperwork for the property. A good property manager will help you maximize your investment by more ways than just rent collected each month.
Manage Maintenance & Repairs:
Your property manager will be able to keep up with maintenance and make repairs you might not be aware of. Experience goes a long way here. Knowing what to look for, as well as the most effective and efficient way to resolve the problem is a skill learned over time. They will receive multiple bids for repairs, ensuring your property receives the best service at the lowest cost. Often times, a quality property manager will have licensed, insured contractors that will be able to give them a better bid than the average person. Reason is because they are doing more volume with this property manager and are willing to give better rates that you as the owner are able to take advantage of.
Why You Need One:
You Own Many Properties:
If you own more than one property or unit, being a landlord can turn into a full-time job. Piles of paperwork, vendor relations, tenant needs, maintenance, accounting.. it will eventually make your head spin. A property manager is the key piece to managing multiple investment properties.
Need Assistance Managing Funds:
The accounting alone on a rental property can turn into a full-time job. If you do not choose to employ a property management company, you should definitely make sure you have a competent accountant running your books. There are many deductions available to property owners.
You Are an Absentee Owner:
You can’t very well manage a property you own in Arkansas if you live clear across the country. Trusting friends to help “keep their eye on it” is likely to end in a dispute with the tenant or your friend. You would be better served to use a reputable and local property management company. Someone who is looking out for your best interest.
When you are ready to hire a property management company, keep in mind, they will likely charge 10-12% of the monthly rental value. Some people would rather keep this money in their pocket, while others see the incredible value in having someone else take care of the dirty work!