Despite how difficult it may be to find the right investment property, the harder part is managing your investment property. It takes time and effort and a great number of skills to successfully manage an investment property. That is why so many investors, especially beginner real estate investors, choose to hire professional property management to take care of their property.
The question that remains unanswered is whether or not hiring a professional property management company is worthwhile. We all know how expensive these services can be. So when is professional property management a smart idea? What are the benefits of hiring them? And what are the fees associated with professional property management? Continue reading to find out everything you need to know. Please feel free to leave any comments below and share with us your opinion about professional property management.
The benefits of hiring professional property management
Find the most suitable tenants
The number one thing that every landlord fears is dealing with a tenant not paying rent. Finding responsible tenants that are suitable for your investment property is not an easy task. However, a good property manager will make sure that you find the best tenants based on determined screening criteria. They will do an in-depth research of the tenant’s background. They will examine their rental records, employment, and previous rental experiences to see if they are qualified tenants.
Property advertising at its best
The key to always maintaining a high occupancy rate is marketing and advertising your rental property correctly. Professional property management companies have the ability to reach out to tenants. They have the experienced skills to advertise your investment property on different platforms and real estate investing websites. They know how your investment property listing should look like to attract tenants and what type of information should be included.
They will ensure that tenants will pay rent on time
Having to follow up with tenants and collect rent can be very overwhelming for many real estate investors. Having a professional property management company to handle the task of collecting rent can save you from a constant headache that’s involved. Property managers will not only ensure that tenants pay rent on time but will also make sure they comply with the lease terms. If a tenant is late on a payment or will not pay rent, the property manager will resort to legal actions in order to solve the issue.
Regular maintenance and repairs
Hiring a professional property management company to take care of your property ensures that your property is receiving continuous maintenance and repairs. Property managers are well connected with qualified contractors who can fix any problem in no time.
Since a professional property management company’s job is to make sure that your property is well managed and that all services are provided to tenants, this will mean that you will have a smaller chance of facing tenant turnover. This is definitely a great advantage since your rental property will have a lower vacancy rate.
When is professional property management a smart idea?
1. When you’re investing in multiple investment properties
Managing a rental property eventually becomes second nature to real estate investors. It’s only hard at first until you get the hang of it. The problem is if you own more than one investment property. In the case of multiple properties, managing can become more challenging and time-consuming and hiring professional property management is definitely needed.
2. When you’re a part-time real estate investor
In order for you to manage your rental property correctly, you need to dedicate your full time and attention. So if you’re working a full-time job from 9-5, when will you find the time and energy to manage your property? Professional property management is a smart idea and is worth the money when you are a part-time real estate investor who has another day job.
3. When you’re investing in Airbnb
Traditional rentals are much easier to manage and take care of than short-term rentals. Why? Well, having tenants coming in and going out of your property requires more managing since you will have to make sure that the property is completely ready before your next guest rents it out. For Airbnb rentals, hiring a professional property management company is a must because they will make sure that your Airbnb rental is clean and prepared for the next tenant.
4. When you’re investing in out of state investment properties
For property investors who are investing in out of state properties, managing their property is almost impossible without professional property management. Due to the long distance and traveling costs, property owners don’t have much choice since the tenant’s demands and needs must be met.
5. When you’re a beginner real estate investor
Many people won’t suggest that beginner real estate investors use professional property management services only because of their high prices. However, working with a professional property manager will allow beginner real estate investors to gain more knowledge and experiences in managing properties. After you’ve gained the skills, then you can start managing your property by yourself.
Professional property management fees
#1: Monthly Tasks Fees
Professional property management companies usually take around 7-10% of your rental income as monthly tasks fees. These tasks include collecting rent on time, receiving complaints and maintaining the property. They also make sure that your property stays in shape and perform regular home inspections.
#2: Property Leasing Fees
Professional property management companies not only manage your property but also make sure that your property is occupied by suitable tenants. That is why they charge leasing fees. Leasing fees are associated with occupying your rental. The property manager will have to market your property, screen tenants and check each tenant’s background to make sure the tenants are right. Professional property management companies are also in charge of renewing lease agreements for tenants.
The amount that professional property management companies charge for leasing fees varies. Some may charge a fee per unit rented; others may charge 70-100% of the first month’s rental income.
#3: Setup Fees
When you hire a professional property management company, the first thing you will pay at the beginning of your partnership is the setup fees. This amount is not fixed and is paid only one time. It varies from one company to another. Also, the amount depends on the number of properties you own: the more properties, the more your setup fee will be.
#4: Eviction Fees
When your worst nightmare comes true and you face a tenant not paying rent, then you will have to go through an eviction. It is a long, complicated process that requires having a professional property management company by your side. They will take care of the procedure for you. Of course, in return, there is a cost to pay and this amount depends on the amount of effort they put in.
#5: Late Fees
When your tenant is behind on paying rent, then they will have to pay a late fee. Your professional property management company can either collect 100% of the late fee or collect a portion of it or pass it all to you and not charge at all. It is up to you to double check with your property manager and see how late fees are charged.
A final thought
Hiring professional property management can be costly at times and not worth it and at times, worth the money. There are situations where having a professional property manager is a must so before you reject the idea, think about if managing your rental property alone is possible. If you want to know more about professional property management, visit Mashvisor’s knowledge center for blogs related to this topic and more.
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