There’s a reason why so many experienced real estate investors agree that a good property management (PM) company is worth their weight in gold. Yes, they’ll take a cut of your rental revenue, but there is no doubt that a proven management team will add substantial value to your real estate investment.
Here’s why hiring a property management company can make you a more successful real estate investor:
- More personal benefits for real estate owners
- More free time. For a real estate investor, time is money. Your time would be better put into better use doing other things than micromanaging a property. Moreover, you’ll have more time left to spend with your loved ones.
- More freedom. When you have enlisted the services of a competent property management firm, you have more freedom. You don’t have to worry about tenants and property inspections.
- Less stress. By hiring a specialist, you won’t have to deal with having to find contractors, paperwork, damages, chasing down rent, evictions, late-night emergencies, and other tedious and time-consuming tasks.
- Opportunity to invest in properties in the most lucrative markets. A good property management company assures real estate investors that the daily landlord’s demands are met regardless of where they are. In addition, it allows you to buy properties outside of your own geographic region.
2. Fewer costly and time-consuming legal problems
A troublesome tenant can cause many problems both legally and financially. With a good property manager, you are rest assured that you are not leaving yourself vulnerable to a potential lawsuit because a good manager is armed with the knowledge of the latest landlord-tenant laws.
The laws include those at the federal, state and local level. These laws govern:
- Rent collection
- Handling of security deposits
- Terminating leases
- Lease addendums
- Property safety
- Tenant conditions and screening
3. Ability to get high quality tenants
To be successful as a real estate investor, having high quality tenants is key. But to have them, you need to have an effective tenant screening process. According to Own It Detroit, an experienced property management company has the right tenant screening tools.
With the right tools, they are able to get tenants that:
- Generally cause less problems
- Cause less wear and tear on the unit
- Rent the property longer, and;
- Pay rent on time
This kind of expert screening takes knowledge, time, skill and intuition. An experienced property management company has been in the business for a considerable amount of time. As such, they’ve probably seen thousands of applications and know how to sniff out the bad ones.
4. Shorter vacancy cycles
As a property owner, it’s inevitable that you will experience some vacancy at some point in time. The goal however is to ensure the vacancy cycles are short. A property manager will help you achieve this by doing three things:
- Effectively marketing your property. Poor marketing skills means few people will see your ads. A seasoned property manager has written hundreds of ads and understands where to advertise and what to say. Also, they are able to negotiate better advertising rates because of their ad volume.
- Determining the best rent rate. Aim too low and you’ll be leaving money on the table. Charge too high and you risk sitting on a vacancy for months. Determining the best rent rate requires access to rental rate tools, data on recently sold comparables, and knowledge of the local market. An experienced PM will help you determine the optimal price for your rental property.
- Improving and preparing the property for rent. You need to make sure your property is ready before showing it to potential tenants. While its current state may seem okay to you, you should nonetheless let a PM take a look. By doing this, the PM may be able to suggest some cosmetic improvements. These improvements may help increase the price of rent and therefore maximize income.
5. Lowered costs of repair and maintenance
Repair and maintenance costs can quickly eat into any landlord’s income. Thus, it’s important to keep these costs low. An experienced PM company has obviously been in the business for some time, and likely have a vetted network for licenses, bonded and insured contractors with track records for quality work and competitive pricing.
Leveraging on a proven PM company also helps avoid potential liabilities as a result of shoddy work associated with unlicensed contractors. A good PM company will also help you:
- Adopt cost-effective purchasing processes
- Decide who does the maintenance work
- Ensure comprehensive maintenance planning
- Communicate with residents about maintenance problems, and;
- Budget for maintenance expenditures
6. An efficient and coordinated rent collection
How rent collection is handled can make or break an investor’s ability to achieve their financial goals. By hiring a proven PM, a real estate investor puts a buffer between themselves and the tenants, allowing the PM to enforce the terms of tenant’s obligations like paying rent.
Investing in real estate can help you build long-term wealth and good monthly cash flow. But day-to-day management isn’t for everyone. Leaving it to the pros can be well worth the cost if you don’t want to be responsible for all the details of your real estate investment but still want a rent check at the end of each month.