What Are The Pros And Cons Of Hiring A Property Management Company?
Hiring a property manager takes the trouble to run your rental properties, but choosing the wrong property manager could have disastrous results. The property manager is responsible for filling vacancies, checking tenants, responding to maintenance requests, collecting rents and any other duties related to your rentals. Many landlords prefer to take these responsibilities on their own, while others do not have time or live too far away to deal with them. If you are assessing whether or not you need to hire a property manager, consider the benefits and drawbacks carefully.
PROS OF PROPERTY MANAGEMENT COMPANIES
1. Experience in the industry
A property management company is likely to have years of experience managing homes. They should have a defined process, depending on how long they have been in the business. Some companies post every step of this process on their website. Most property managers are licensed real estate agents, which means that they also have a background in education. This enables them to know the ins and outs of the market, how to price homes (renting or selling) on the basis of a number of factors, etc.
Over the years, they have dealt with tenant disputes, roommate changes, lease breaks, evictions, and more. These are things that can often be overwhelming to the ordinary landlord, especially if you've never managed a property before. Fortunately, property management companies have dealt with these issues and learned the best ways to deal with them. Property managers have also studied fair housing laws and local laws that may affect landlords and tenants. Some of these laws are very specific, and without reading through all of them, they could easily be broken.
By Oleg. - https://www.flickr.com/photos/olegshpyrko/15400283837/, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=101352444
2. Maintenance Response Time
One of the biggest inconveniences with managing your own property is dealing with maintenance issues. They come up at any time and can often be a bigger problem than you're prepared to deal with. Property managers not only respond quickly to these maintenance issues, but they usually have multiple vendors who can do a job. This saves you the difficulty of having to research different vendors and decide which one is best suited. A property management company is likely to have someone who is a dedicated maintenance manager or a manager with experience in maintenance handling.
3. Frees up your time
Managing an asset is a time-consuming task. You 're on call 24/7, so be prepared to leave your kid's soccer game early to resolve a maintenance issue. You are not only responsible for this, but also for payments, lease issues, etc. It's basically a second job. Hiring a property manager to take on these tasks will free up a lot of your time. It will no longer be your job to take care of broken windows or leaking pipes. You 're going to be able to go about your life without the constant worry of being interrupted.
4. Shorter Vacancy and Tenant Retention
People often think that once a tenant signs a lease for your property, the hard part is over. But that tenant isn't going to stay forever, and at some point you 're going to have to find a new one. Long vacancy periods can quickly reduce your profits when it comes to managing your own property. You want to get a new, qualified tenant into your home as soon as you can, as soon as the current tenant decides to leave.
Property managers are qualified to prepare the home for rent and to do so in a timely manner. They are used to leaving tenants (even at a moment's notice) and will be prepared to start marketing the home and get it ready for rent as soon as the old tenant leaves. They are also qualified to retain tenants. Both you as the owner and the managers want the tenants to be happy and feel like they're in good hands. If they have a good experience at home, they are likely to renew the lease if they plan to stay in the area.
CONS OF PROPERTY MANAGEMENT COMPANIES
The first problem is the obvious cost. Depending on the market, up to 12% of the gross income of the property (gross rent) can be as low as 4 percent. So, you really have to take that into account. Often, however, what people forget is that there is a percentage management fee and, in addition to that, there are leasing up costs. When and if they're going out to find new tenants for you, it could run up to a month's rent or half a month's rent. And those numbers can actually start adding up — that 4 percent all of a sudden is 7 percent if you're making a year-long calculation.
Now, the other thing that might be perceived as a con is the fact that this person is not going to love your child as much as you do. It's just the reality of it. This is your property. It's a completely different kind of relationship when you own something rather than manage something. So, it's just something to keep in mind. Even if the person is a good manager, they might be going that extra mile, but they're not going to manage it or take care of the asset the same way you do.
Property managers are unlikely to involve you in minor tenant issues, maintenance issues, or other trivial matters. This is because they're equipped to deal with these issues, and they've learned the best way to do that. The property managers understand that your property is your child, so to speak, and you want it to be taken care of. However, by hovering over every move they make, their job is made more difficult. If you're someone who needs to be hands-on at all times, maybe self-management is a better fit for you.