by Jordan Muela from Property Mangement.com
A competent property manager can add significant value to your investment, which is why many seasoned real estate investors will tell you that a good management company is worth their weight in gold. Here are a few ways that a good property manager & property management company earns their keep:
Higher Quality Tenants
An experienced property management company has seen thousands of applications and knows how to quickly dig for the real facts about candidates and analyze that information for warning signs. By allowing a management company to handle the screening, you will also be shielding yourself from rental scams directed at owners, and discrimination lawsuits resulting from an inconsistent screening process. A thorough screening process results in reliable tenants that: pay on time, rent longer, put less wear & tear on the unit and generally cause less problems
This kind of experience takes time, and insomuch as it means avoiding bad tenants, scams and lawsuits it is arguably one of the most significant benefits a property management company will provide.
Fewer costly and time consuming legal problems
Veteran landlords know it only takes one troublesome tenant to cause significant legal and financial headaches. A good property manager is armed with the knowledge of the latest landlord-tenant laws and will ensure that you are not leaving yourself vulnerable to a potential law suit. Avoiding a single law suit can more than pay for the property management fees, and spare you time and anguish Legal areas to be understood and covered by a property management company include but not limited to:
- Tenant screening
- Lease addendums
- Safety and property conditions of the property
- Terminating leases-Evictions
- Handling security deposits-Inspections
- Rent Collection
Shorter vacancy cycles
A property management company will help perform four critical tasks that affect the time it takes to fill vacancies:
- Improve & prepare the property for rent to maximize revenue
- Determine the best rent rate based on knowledge of local markets & access to rental rate tools
- Effectively market your property on appropriate local newspapers & websites
- Availability to show vacant units & qualify and close prospective tenants
Better tenant retention
While it’s easy to see the effects of lost rent, there are other equally serious problems with a high tenant turnover rate. The turnover process involves a thorough cleaning, changing the locks, painting the walls and possibly new carpet or small repairs, not to mention all the effort associated with marketing, showing , screening and settling in a new tenant. This is a time-consuming and expensive process that can often be averted by keeping tenants happy and well cared for. A good property management company will have a time-tested tenant retention policy that ensures happy tenants with lengthy stays in your properties. These kinds of programs require a consistent, systematic approach, which is where a good property management company will shine.
Tighter rent collection process
The way you handle rent collection and late payments can be the difference between success and failure as a landlord. Collecting rent on time every month is the only way to maintain consistent cash-flow, and your tenants need to understand this is not negotiable. By hiring a property manager, you put a buffer between yourself and the tenant, and allow them to be the bad guy who has to listen to excuses, chase down rent, and when necessary, evict the person living in your property.
Regarding evictions, there are strict laws concerning the eviction process, and doing it wrong, or trying to evict a “professional tenant” can be a MAJOR fiasco. A good property management firm knows the law and has a good process for obtaining the best possible outcome given the circumstances. Never having to handle another eviction can be a compelling reason to consider hiring a property management company.
Assistance with taxes
A property management company can help you understand which deductions you can claim, as well as organize the necessary forms and documentation to make those claims. Additionally, the property management fees themselves are also tax deductible.
Lower maintenance and repair costs
Good maintenance and repairs keep tenants happy and preserve the value of your investment which makes them a very important part of land-lording. By hiring a management firm you gain access to both their in-house maintenance staff, as well as their network of licensed, bonded and insured contractors who have already been vetted for good pricing and quality work.
Increase the value of the investment
Preventative maintenance is achieved through putting systems in place that catch and deal with maintenance and repair issues early on, before they grow into larger more costly problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits. The management firm can also offer you suggestions and feedback on upgrades and modifications, both how they will affect the rent you can charge, as well as their impact on maintenance and insurance.
Key personal benefits for using property management companies include
- Less stress – Avoid having to deal with middle of the night emergencies, chasing down rent, evicting people from your property, tenants who wreck your property, rental scams, lousy vendors, piles of paperwork.
- More freedom – Live and invest wherever you want without needing to be near your properties.
- Free up more of your time – Time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties.
Bottom-line, when you focus on asset management you’re working ON your business and when you manage your own properties you work IN it. Of course, there is a cost to this service BUT a cost you may find invaluable.
Power Property Management's Blog 