Property managers do everything that it entails to manage your property so you can remain just an investor. These tasks range from rent collection to routine maintenance to 3 am emergency calls. Here’s what an investor couldn’t do or would be forced to do without a property manager.
Property Managers Provide Local Knowledge
A geographically diverse portfolio makes you a more resilient investor because you’re no longer at the mercy of a single locality. Weather emergencies, economic downturns, and more can wipe you out if you’re keeping all your eggs in one basket. Luckily, you can use a property manager to watch over investments elsewhere.
A property manager in an area far from home may also be more qualified to take care of your property because they know what it takes to thrive and survive in that area. A lifetime in Houston may not prepare you for surviving a Chicago winter. A property manager also allows you to invest afar when the area you live in is cost-prohibitive, as is the case with New York City or San Francisco.
Property Manager are Experts at Managing Multiple Properties
If you want to scale your investment portfolio, at some point, you’d have too much work to do even if you wished to manage your properties as a full-time job. A property management company eliminates this problem.
Property Managers Know How to Maintain Legal Compliance
Knowing and keeping up with landlord-tenant laws would be plenty for a single property in one place. Add the same requirement for multiple properties in multiple locations, and your passive investment starts looking more like a fulltime job. Luckily, your property manager will already know the landlord-tenant laws, and you’ll be paying them to keep up-to-date and make sure all your properties are compliant. Their experience will also protect you from lawsuits.
Property Managers Schedule Routine Maintenance
Maintenance has more to do with your property than with your tenants, but how your property is treated will impact how your tenants behave. Even the best tenant may need their HVAC replaced in the middle of a heatwave or have a ruptured water main at 3 am. But if you don’t respond right away to emergencies, or in a timely fashion to less pressing concerns, then your tenants are likely not to re-sign. Your property manager will also handle visits to your property to make sure everything is copacetic.
Property Managers Provide Tax Guidance
Your property management company will handle the taxes for all of your properties. They’ll know how to file in a way that’s most in your benefit. They’ll also provide you with monthly income and expenditure reports, so you always know where your money’s coming and going. Lastly, their experience will reduce the likelihood of an audit.
Property Managers Handle Repairs
A quick response helps keep costs down because you can catch a problem before it starts. When it comes to roof replacement, for example, the symptoms of a roof in need of repair (blown off shingles, mold, granule collection, etc.) indicate a roof already in need of replacement. You can replace your roof before it ever shows symptoms just doing so at the 15-year mark, or you can replace it when you catch the signs. Either way, waiting might lead to further damage to your home, like to sheetrock or your electrical system. By keeping up with your repairs, property managers save you money.
A property management company also has leverage when it comes to pricing because it may have achieved preferred status with a manufacturer or distributor and may get volume-based discounts. That’s more savings for you! And less stress as well because a property manager is likely to have relationships with trusted vendors and contractors already.
If something goes wrong, you’ll get pictures, an itemized estimate, and an itemized statement once the repairs are done. You can also set a threshold below which you don’t even need to be contacted about repairs.
Property Managers Employ Others
Being a property manager entails handling bookkeeping, filing taxes, repairs, advertising, and more. Frequently, a property management company will hire employees to take care of these tasks, which is a task unto itself that you would have to do if you were to manage all your properties yourself. Plus, general HR duties.
Property Managers Minimize Vacancy
Your property manager will do everything it takes to find you tenants. You can even have a stipulation in your contract that if you find the tenant yourself, you don’t have to pay your property manager any associated fees. This creates further incentives for the company to do its job quickly. Meanwhile, making sure your property manager is paid based on rents collected will incentivize them to find reliable tenants because they won’t be paid if there’s a vacancy.
A property management company can be so efficient they’ll have a tenant screened and approved before the current occupant has even moved out. They’ll also make sure the property is rent-ready by handling all the repairs, remodeling, old appliances, rekeying the doors, or doing any of the things that make a unit more attractive to a tenant.
The company will also take care of marketing, listings, and tours.
Property Managers Screen Tenants
Property management companies know how to screen tenants. A properly screened tenant will reduce your risk exposure. A property management company will conduct a tenant background check thorough enough to include:
- an interview
- credit history
- income verification
- contact references (including past landlords)
- confirmation of rental history
- criminal history
- terrorist and sex offender registries
- pet information
Property managers also know how to pick up on hints of misdirection, misinformation, or crucial omissions during the screening process.
The property manager will collect the security deposit and hold it in escrow so that it never touches your income. The property manager will also know how many month’s worth of rent is typically used as the security deposit in your area so as not to ask for an amount that’s greater than what other, comparable properties are asking. The property manager will know if it’s appropriate to raise rents and by how much as well.
Property Managers also Manage Tenants
A property manager will interact with your tenants to make sure there’s a positive relationship, which makes your tenants more likely to re-sign their lease. By limiting vacancies, your property manager saves you money. Additionally, your property manager will handle any complaints.
Managing complaints is a critical task unto itself because a property manager will have more experience than you in dealing with angry tenants. Tenant quarl can be severe enough to inspire a move or be a real headache. Either way, you want a professional to handle it for you.
Property Managers Can Save You Money
How much it would cost you to manage a property is different from how much it would cost a property management company to manage it. Your time is worth your income by the hour multiplied by the number of hours you’d like to spend on managing your property. Of course, it’ll take more time than that since property management demands a never-ending, around-the-clock commitment.
The property management company will save you money by how well they already do their job and avoid mistakes you might make. The monetary, time, and stress savings will be worth the 8 to 12% fee on the gross collected monthly rent.
Property Managers Collect Rent
Your property management company will handle rent, whether using an online or offline form of payment. They’ll also manage all landlord-tenant communications. That means they’ll take care of missed or late payments as well. Your property management company will also conduct the necessary research to find competitive rent appropriate for your unit.
Property Managers Handle Evictions
Your property management company will handle all eviction related activity, from court appearances to lawyer consultations saving you much stress! Also, they’ll screen potential tenants well enough to reduce the likelihood of having to do an eviction.
Property Managers Know Affordable Housing Rules
If you’re making use of an affordable housing program, you must follow particular rules to qualify and comply with the program. On top of all the other duties of a property manager, this is a lot of responsibility. Leave it to a property management company!
Bottom Line on Property Management
Thanks to their size and experience, a property management company can be crucial to your success. Part of what it takes to succeed as an investor is knowing how to delegate responsibility. One of the most significant decisions you can make is to leave that decision to a professional.