Potential real estate investors should study carefully the decision whether to purchase a rental property. Investment properties come with an added responsibility on the part of the owner. Maintaining and managing a property will exhaust significant amount of time and effort from the landlord on a consistent basis. This makes property management a skill that not many income property owners are willing to learn or adapt to. Here lies a dilemma for property owners if they should be hiring a professional property management company or not.
Professional property management companies provide real estate investors with a set of services that rids property owners of the responsibility of managing their properties. The services provided by these companies include marketing, financing, occupancy, and management, among others. Here is a list of some of the specific responsibilities which a professional property manager would take over:
- Determining the best rent level for the property based on the local competition and the current state of the real estate market in the area.
- Developing marketing strategies and proper advertisement to ensure that occupancy rates will always be high.
- Understanding financial statements that show profit or loss from the property’s rental operations.
- Communicating with tenants to understand their needs and how to improve the state of the property (within reasonable limits) to suit the needs of the tenants.
- Drafting lease agreements, collecting rent from tenants, and dealing with eviction processes.
- Cleaning the property after tenants and making it look presentable for new ones.
- Performing regular checks on the rental property and evaluating the need for repairs and maintenance.
- Contracting a repairs and maintenance company that can deal with all repairs swiftly at the convenience of the tenant.
From the list above it is fully clear that professional property management experts provide property owners with various important services. For owners, this makes hiring such professionals highly tempting and in many cases worth it. Thus, evaluating the pros and cons of hiring a property management company as an owner would be advisable.
Pros of Professional Property Management
1. Experience in the Real Estate Market
Property managers have unparalleled experience in the real estate market compared to property owners. Investors and landlords that are new to the real estate market would probably benefit from the learning experience provided by property managers the most. Making mistakes when it comes to your rental property can prove to be costly for inexperienced owners. Property managers have all the contacts, know all the legalities, and are aware of all the frameworks of the property rental market. Working with professional property management means that your rental property will be more competitive compared to the properties of other owners who are managing everything by themselves. They are bound to make silly mistakes, while your property manager will not.
2. Multiple Properties? No Problem
The most common clients of professional property management companies are actually real estate investors who own more than a single property. The reason is that these owners find it very hard to manage so many properties even if they have enough experience in the market. Therefore, they hire property managers that will take care of every detail in every property they own. That way, these multi property owners can relax and profit from their rentals without having to break a sweat. Or alternatively, they can spend their time and energy strategizing about their next move in real estate investing. Property managers might also be able to maximize profit.
3. Management of Tenants
Probably the toughest job that most real estate investors encounter is managing the process of choosing tenants and then dealing with them. Owners who list their properties could receive tens of applications from potential tenants. However, landlords are not very experienced in the industry to tell the bad tenants from the good ones simply based on applications. A property manager deals with these issues without facing any difficulties by studying a tenant’s financials, recommendations, and legal situation. Property managers also deal with any issues tenants have after they have moved into an income property, something that most property owners dread.
Cons of Professional Property Management
1. Extra Costs for Owners
Hiring a professional property management company means that an owner has to pay a significant amount of money for the services. For property owners who will be dependent on the rental income to pay off their mortgages for example, it is best to manage the investment property on their own, at least in the beginning. Owners who have multiple properties pay a monthly fee per property, which means paying a huge amount of money for property management. The price that comes along with these services is certainly a downside and might not always be commensurate with the benefits they receive.
2. insufficient Attention to Details
Property managers get negative reviews mostly for not being too detailed in the tenant screening process, the repairs, or the cleanliness of the property. Owners are more detail oriented when it comes to their own property. It is the truth that a property manager will not care about the property as much as its owner. Property managers deal with this job as a business transaction and nothing more; they will not go the extra mile to better it. For property owners, it’s their investment and a source of income that gives it an emotional attachment.
Yes or No for Professional Property Management?
When it comes to hiring a professional property management company that will provide experience, less stress, and more time for real estate investors to engage in other activities, then the answer has to be YES. The list of services provided by these companies make the amount paid by the property owner seem irrelevant because property managers ensure a degree of success for your investment. All investors looking to become professionals in the real estate market must learn from the best, and hiring them is the fastest way. To get more tips on how to deal with your investment property, check out the rest of Mashvisor.