Property Management Companies
Why Hire A Property Management Company for Your Rental Investments
Should you hire a property management company? Any real estate investor asking that question is most likely fed up with managing her own rental units, screening tenants, and dealing with leaky toilets and complaints about loud music. But will a property manager eat into your profits? The dilemma can induce uncomfortable 3 am nail-biting sessions. Worse, it can keep you from hiring a company to manage rentals until long after you should have, causing unnecessary stress and work.
What is a Property Management Company?
A property management company exists to do the actual work of running a rental unit or units. Real estate investors often buy properties, then manage, fill vacancies, and perform upkeep tasks themselves. As a business grows, the owner may hire an in-house property manager or building manager to deal with day-to-day tasks. A property management company is a viable alternative. These companies are independent contractors whose area of expertise is managing rental properties.
What Does a Property Management Company Do?
A property manager does all the day-to-day, non-investment things that keep a rental property running. Those include interacting with tenants, interviewing prospective tenants, managing repairs and contractors, and keeping units filled. Property managers also collect rent and can handle unpleasant tasks like evictions, keeping the investor free to work in her area of core competency: investing.
Property Manager vs Building Manager
Should you hire a property management company or a building manager? That depends on the size and nature of your rental business. That said, a property manager will outdo a building manager in a couple of key areas. First, property management companies remove the hassles of acting as an employer. Second, property management companies often carry a wealth of knowledge and experience that a lone building manager simply can’t provide.
When to Hire a Property Management Company
The question, “When should I hire a property management company” comes down to how much work you’re willing and able to do yourself. Below are a few key flags that can show you’re ready for professional rental help.
You have a lot of rental units. A real estate investor with several units may find a property manager takes a lot of work off her shoulders. As the number of units grows, hiring, firing, and managing multiple in-house building managers may prove both difficult and costly.
You don’t want to manage your own rentals. Investors drawn to real estate by the potential income are often frustrated by the details of running a rental business. A property management company can solve that by leaving the investor free to focus on the business itself.
The cost doesn’t bother you. Most property management companies charge between 5% and 10% of the total rental revenue. This is often more cost-effective than running the front end of the business personally. It’s also usually cheaper than hiring in-house building managers or property managers as employees.
Your rental business has grown. Some investors start out happy with fixing the occasional leaky faucet and collecting rent from a few tenants once a month. As a business grows, many owners find significant relief after hiring a property management company.
You’re in an affordable housing program. The complexities of participating in affordable housing programs make them prime candidates for property management companies. An experienced company will bring expertise to the affordable housing game that ensures all the protocols and rules are followed.