If you’re reading this article, you likely own rental properties, also known as single-family rentals (SFRs) or investment properties.
Imagine a stress-free life where your property is taken care of, rent checks roll in like clockwork, and your weekends are yours again. That’s what a professional home property management company can do for you. They can handle the time-consuming elements of owning and operating a rental property, ensuring that your investment thrives and your peace of mind soars.
Of course, there are trade-offs that come with hiring a property management company.
The main drawback is that they will typically charge you first month’s rent for finding you a qualified tenant and they will usually want to be paid 10% of your ongoing rental income over time. The other trade-off is that they will likely be managing multiple rental properties, potentially near yours, so they could have a conflict of interest if they end up with multiple properties up for rent in the same neighborhood, at the same time. The third risk is that they may not treat your rental property with the same care and concern as you would.
Despite these drawbacks, managing rental properties can be time-intensive, so for many people hiring a property management company is the right decision. Of course, if you want to scale your rental portfolio to more than a handful of properties, you will have to use professional property management because you won’t be able to do everything yourself.
Ready to learn more about professional property management? Let’s dive in an explore what they can offer.
Time-Saving
When you use a professional property management crew, you generally can worry less and relax more. This is because you don’t have to be the person to field 2am calls about a busted pipe. Similarly, you won’t have to coordinate with repairs with service technicians.
In particular, when a property comes up for rent, either because you just bought it or because a tenant moved out, the process of listing and marketing the property takes time. Likewise, it takes time to show the vacant property to potential renters, to collect applications, and to process them. Processing applications can involve everything from calling landlord references to checking credit scores and criminal history records. It can also involve verifying a potential renter’s employment history.
Thankfully, property management companies will handle all of this legwork for you.
Likewise, once a tenant moves in, they will handle communication with the tenant and make sure that your property is well-maintained during their tenancy. Meaning, you just watch the property cash flow, which is an incredible feeling.
Legal Knowledge and Expertise
Navigating the complex world of real estate laws and regulations can be like walking through a legal labyrinth. Thankfully, property management companies are well-versed in local real estate laws.
In particular, they can help you with handling situations like these in a professional and legal manner:
- Tenant screening – The tenant screening process typically involves background checks, credit checks, reference checks, employment verification, and more. It’s critical to collect the right paperwork and to comply with Fair Housing Laws during this process.
- Lead Paint Disclosures – If you own a house built before 1978, in many states you will have to supply the tenant with a Lead Paint Disclosure to sign and a booklet from the EPA titled, “Protect Your Family From Lead in Your Home”.
- Lease negotiations – During a tenant’s stay, there will often be moments when you have to refer to the lease to handle a situation. A common occurrence is when a tenant wants to move out early.
- Repair requests – Usually, repairs will be your responsibility to pay for as the property owner. However, there are situations in which the tenant may be responsible, such as if the damage will intentional or outside the scope of normal wear and tear.
- Evictions – In the unfortunate instance that you have to deal with an eviction, you’ll need to file eviction paperwork with the court to proceed. In this situation, a property management company will usually have an attorney on staff who can handle this process for you.
Property Maintenance and Inspections
Regular property maintenance and diligent inspections are key to preserving the value of your rental property. In most cases, it is best practice to do a walk-through of your property every six months. Because most leases are for 12 months, this means that property inspections will sometimes occur while tenants are occupying the property.
Typically, a property inspection involves having a member of your property management company visit your rental property while the tenant is home to look for signs of any maintenance that needs to occur. Common findings during property inspections are small leaks that the tenant may not have noticed or a loose faucet or cracks in the sidewalk that might need to be filled.
If your property is located in a neighborhood with a HOA (homeowners association), then regular inspections can also ensure that your tenant is complying with any association rules that need to be followed. Common HOA rules involve maintaining the exterior of your property so that is in good condition.
For a self managed HOA, staying on top of these tasks can be especially challenging. Utilizing a professional property management company can simplify this process significantly.
Rent Collection and Financial Management
Depending on the terms of your lease, rent will usually be due between the 1st and the 5th of the month. Rent payments that are received after this date will usually be subject to a late fee.
A professional property management team can help your tenant to set up automatic payments and track when payments are received. They can also handle late payments, if necessary.
When repairs occur, a professional property managers will also track and categorize these expenses. This is helpful, because you can see where your run costs are the highest, and thus, you can potentially improve them over time. For example, if your appliance repair costs were high in the previous year, you might consider purchasing new appliances when you see them for sale at a large discount around Memorial Day or Black Friday.
Best of all, a professional property manager will usually send you a completed Profit and Loss Statement (P&L) at the end of the year. This statement can make your bookkeeping very simple come tax time. If you’re using a tax CPA, they will also appreciate it.
Learn More About Home Property Management
As described above, using a professional property management company has both pros and cons. I’ve tried both approaches over time. However, the main upside for most people is that a professional property management will take care of the day-to-day operations of a rental property, saving you a lot of time.
However, property management companies are businesses, so you will pay them for their time and service. Understandable, this will reduce the net income that you make from your rental property.
Of course, if you decide to move out-of-state or own a lot of real estate, then hiring a professional property management will be non-negotiable. You will need one!
Was this article helpful? If so, ask your questions or share your thoughts in comments below.