If you’ve recently started out in the real estate business, own a few rental units, and think you’re saving money by not hiring a property manager and doing everything yourself, think again. Half of the appeal of investing in the real estate market is the passive income it yields. Maximum financial reward for minimum effort. Everyone has the time to be a landlord for one property, even two. But once you have a handful under your belt, the workload can become a bit overwhelming.
Owning real estate shouldn’t be a job; it should allow you to live life on your terms, give you the freedom to enjoy life when and wherever you wish. But you can’t do that if you’re spending all your time managing your properties. Whether you have just four or five properties or an entire empire, it’s best left to the experts. You’ve heard the phrase “Jack of all trades, master of none”? Don’t be Jack. By hiring a property management company to work for you, you’ll gain access to a team of people with a wealth of experience, advice, and guidance to help your property portfolio flourish. Outsourcing is sensible, practical, and leaves you with more time to live your life to the full, which is, after all, what investing in real estate is all about.
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10 Tasks a Property Manager Will Take Off Your Plate
If you’re not sure what the basic benefits of hiring a property manager are, here’s a big list of areas in which they can help you and your real estate business:
- Setting the right rates: Pitching your property at a competitive price is vital for every landlord. Too high and you won’t fill the space, too low and you won’t be making money. A property manager will know the micro market, local area, and current rental rates, enabling them to correctly value your buildings’ worth and price the units accordingly.
- Marketing and advertising: Every day your property is empty, you’re going to be losing money. The greater exposure, the more likely you are to find tenants. A property manager can assist you in creating a good, coherent marketing strategy that will develop a brand for your real estate business, establish a reputation, and boost tenant interest. The company’s connections mean your manager can advertise property in a myriad of effective ways — from classified ads to signs, flyers to a hotline that tenants can call to find out more information.
- Complying with housing regulations: Landlords are subject to many state and federal laws, and it can be rather confusing to work out exactly what your responsibilities are. A professional property manager will be able to talk you through everything: paying taxes, discrimination laws for tenant screening, and what certificates you need. But be warned that you are still liable if your property manager gets into legal trouble, so make sure they know what they’re talking about!
- Finding good tenants: Property management companies generally find higher quality tenants because of their superior, more rigorous screening process. These people often sign longer term leases, inflict less wear and tear, and cause fewer problems. And whilst you may find yourself drowning in applications, a professional property manager can work through prospective applicants quickly and easily, using a comprehensive screening process to ensure you get the best tenants possible.
- Collecting/depositing rent payments: A strict rent collection process is crucial to your financial success. A monthly collection ensures your cash flow, and by creating and maintaining a stringent collection schedule, your tenants will quickly learn what is expected of them. Having a property manager collect for you also allows them to act as a buffer between you and your tenants, so you don’t have to chase up late payments or listen to complaints.
- Providing customer service: If you’re not a people person, it may be best to have someone else deal directly with your tenants. A positive, smiley, helpful property manager will be able to build up a rapport with your tenants and placate any problems or complaints they may have with practiced ease. A company will also ensure there is always someone available for tenants to contact, even when you’re off on that two-month cruise around the Caribbean.
- Maintenance and repair: Let’s be honest. No one wants to be woken at 3:00 a.m. because a pipe has burst in a rental unit all the way across town. When things inevitably go wrong, your property manager will be able to step in quickly and efficiently to deal with it. Remember, your tenants are going to want problems solved as soon as possible, and delays can lead to complaints and affect your reputation. Thanks to their wealth of experience in real estate, property managers can also suggest preventative maintenance before a problem has even occurred, keeping your tenants happy, saving you money before the issue get bigger, and raising the value and quality of your properties overall.
- Managing vendor relationships: When you do require maintenance or repair done on your property, it can be quite a hassle to get the right tradesmen for the job. A good property manager will know reputable, reliable, licensed workers and have good relationships with them, ensuring tasks are undertaken quickly, professionally, and at the right price. They should also have an established policy for vendors to prevent any problems when the workers enter the property to conduct the work, protecting you from litigation. Once the work is finished, they will be able to check the workers have completed it to a high standard.
- Allowing you to invest in properties further away: As your property empire grows, you may wish to begin looking for investments outside your immediate area. If you sign a contract with a state or nationwide property management company, you can rest easy knowing your properties throughout the state or country are being looked after to the same high standard as you enjoy in your own town.
- Maximizing profitability: If you intend to live and make profit solely off the revenue from your real estate business, you need to spend time looking for new investments rather than looking after your old ones. Once you’ve got a few properties under your belt and have rented them out, you’re probably ready to expand. But how can you do that if your time is spent dealing with tenants, addressing problems, and collecting rent? With these day-to-day tasks handed over to your property manager, you’ll have far more time to scour the market for that next great investment.
Sounds great, right? We think that hiring a property manager is a no-brainer because of all these great attributes they will bring to your business. Aside from all these practical functions, a property manager will also improve your life in other ways by:
- Reducing your stress: Because, let’s face it, being a landlord can be stressful. All those tenants, all those potential problems. You don’t need to deal with that. By hiring a property manager, all those fiddly little details become their problem, leaving you to focus on what really matters — expanding your portfolio and enjoying life.
- Freeing up your time: You got into the real estate game to make money and leave behind that boring desk job, right? So don’t spend your days dealing with whatever problem your tenants or properties are throwing up this week. Spend time with your family, your loved ones. Go on holiday, take up a new hobby. Live your life on your terms.
And don’t forget that hiring a property manager is financially sound. You may feel somewhat reluctant at first to fork out for this service, but it will pay dividends in the long run. As well as providing peace of mind, they are able to maximize your business profits, and most companies charge 4-12% of your monthly rental rate. If you’re paying a higher percentage, you’ll probably be receiving a higher quality of service. Less is not more in this case, and a good property management company can be worth its weight in gold. Don’t skimp on this aspect of your business; it’s not worth it.
Of course, it’s important to do some thorough research before you hire your property management company. Find out about their current vacancy rate, their tenant screening process, their level of experience with properties similar to your own, their personal qualifications, their portfolio, their availability (are they 24/7/365?), their ability to expand as your business does, and the level customer service offered.
Remember, it’s your business. You’re the CEO, the big cheese, the top dog. Don’t get bogged down in the day-to-day running of things. Leave that to someone else, someone qualified and experienced and capable of making you lots of money. As a real estate investor, it’s your job to sit back and watch the money roll in.
Do you use a property manager in your real estate business? Why or why not?
Let me know with a comment!