Congratulations on buying your first investment property! You may be able to earn a decent return on investment that can help you amp up your savings.
Be as it may, buying an investment property is only half the battle. To find success, you must properly manage your rental investment. While self-managing a property can minimize your expenses, it requires a great deal of effort, time, skills, and experience. Which, if you’re just starting out, you may not have, especially when it comes to skills and experience.
And that’s where a professional property management company comes in!
In today’s article, we’ll walk you over the reasons why successful real estate investors partner with property management companies.
What is a Property Management Company and What Does it Do?
If you’re just starting out, it’s possible that you may not know what a property management company is and what it does.
Now, a property management company is basically a company that manages an investment property on the behalf of the property owner. Usually, a property owner can choose specific areas in which they require help or fully delegate all their landlording responsibilities to the company.
The following are the services you can expect from a property management company:
Advertise Your Property on Your Behalf
Whether you’ve just bought your investment property and are looking to fill it with a tenant or a tenant has left after a lease, you’ll need to find a new tenant.
Without experience, you may not know how to go about the advertising process and that can cost you in regard to long vacancies. An experienced property manager will have the experience to help you list your property in the right places. This will result in attracting a large prospective tenant pool from which you can choose a tenant.
Screen Prospects to Land the Right One
You must be careful not to rent to the wrong kind of tenant. Difficult tenants don’t pay rent on time, cause negligent property damage, and hardly finish their lease term.
Choosing the right caliber of tenants requires skills and experience. A good property manager will have a tried and tested screening process that almost always guarantees renting to great tenants.
Collect Rent at the End of Every Month
Rent collection isn’t as always as easy as it sounds, especially if you haven’t rented to a great tenant. A difficult tenant will miss or even stop paying rent altogether.
A good property management company will not only ensure tenants pay rent on time every month but will also help deal with any problems that may arise.
Inspect the Property on a Routine Basis
When renting out a property, rental inspections are key. They will help reveal any maintenance issues and check whether the tenant is abiding by the rules, among other things.
As a self-manager, however, you may not know what exactly to look for. A property manager, on the other hand, will have a checklist to help them ensure your property is functioning in tiptop shape.
Respond to Maintenance Issues
At some point, your tenant will have a maintenance issue that they will need promptly addressed. And that can occur at any time, including even at odd hours of the night. A property manager will have the time and resources to respond to any maintenance request at whatever time.
Deal with Complaints from Tenants
Whether it is a pest invasion, noisy neighbors, or anything in between, tenant complaints are inevitable. And when they happen, you’ll need the skills and experience to resolve them quickly and professionally. A good property manager will have dealt with such issues numerous times and will know the best strategy to employ.
Evict Troublesome Tenants
Difficult tenants are inevitable in the life of any landlord. And the process of evicting a tenant isn’t an easy one. You’ll need to have a concrete understanding of the landlord-tenant laws in order for it to be successful. When starting out, you may not have the proper understanding of the law.
Draft a Proper Lease Agreement
Protecting yourself and your investment property is important when renting out an investment property. A good property manager will know the exact terms to include in a lease agreement in order to protect the property owner’s interests.
How Much Does Hiring a Property Management Company Cost?
Of course, there’s a cost involved in hiring a property management company. The cost of hiring a property manager majorly depends on the services you want. Usually, most property management companies charge a monthly fee of about 8% and 12% of the gross monthly rent.
Suppose, for instance, the monthly rent is $1,200. Based on the average management fee of 10%, you can expect to pay $120 in monthly management fees. Besides this cost, there may also be additional fees as well. For example, a tenant placement fee can include advertising costs and tenancy screening costs.
Broadly speaking, the following are the factors that influence the cost of a property manager.
- Location of rental property
- Rental property’s condition
- Type of property
- Size of rental property
- Extent of services
Should You Hire a Property Management Company or Self-Manage?
Self-management can only work if you have the requisite skills and experience. To gauge your suitability, the following are some questions you might want to ask yourself.
- How quickly can you respond to maintenance issues?
- How much time do you have to dedicate to the management of the property?
- Do you have a full understanding of the rental laws?
- Do you know how to market a vacant rental property?
- What will be your tenant qualifying criteria?
Bottom Line
Truthfully, technological advances have made property management easier. But this isn’t to say that managing a property is an easy walk in the park. It’s crucial to look beyond the financial savings that come along with self-managing your investment property.
Your property is an investment, and it’ll be in your best interest to protect it. A property manager can not only take away the stress that comes with landlording, but can also help you maximize your ROI.
Get in touch with our amazing team at East Bay Property Management to make your rental as successful as it can be!
