Why hire a property manager for your real estate rental properties
You’ve been in the business of buying lands, building them into rental properties, and right now you’ve got several of these properties under your belt. Are you bucking under the pressure of running and managing all of your property investments at the same time, without leaving nothing to chance? Then you should be thinking of a property manager. A property manager’s job is not incredibly difficult if they know what they are doing, but it covers a vast array of duties that you might not be able to individually oversee.
Property managers find good tenants, they get the tenancy signed, they collect rent, and they check on the properties once in a while. But it goes beyond this, which is what a lot of landlords think when they consider using a property manager for their rentals. This is the reason why many people to manage the properties themselves instead of hiring a property manager. Many investors want to manage rental properties themselves to save money. They think it would be easy to manage the properties and that it made the properties look like they made much more money on paper when I was not paying someone else to manage them. In fact, many investors decide to manage their properties because they do not make that much money on paper, and by cutting management costs they feel better about their investment.
However, property managers are worth every penny. A good property manager will find great tenants, make sure the lease is rock solid, make sure the tenants live up to their promises and take care problems that come up. While many investors feel they can manage their properties, do they really have the time? When they get to a certain number of properties or units, is the time it takes to manage their properties taking away from other money-making activities or family time?
A good rental property should make money whether you have a property manager or not. Sure, it will save you money by managing the properties yourself, but it will also cost you money if you do not know what you are doing or do not have the time.
To manage rental properties, what is required?
There are many tasks associated with managing a rental property. However, most tasks come when first renting a property; once a home is rented there is much less work involved. Here is a break down of the basics of managing a rental property.
What to repair
You need to determine what to repair before a property is rented. A property manager may help you with repairs before you rent a property, but they also may only help with maintenance and repairs after a home is rented. Even before you buy a rental property you should have a good idea of what is going to be repaired and how much it is going to cost.
What will it rent for?
You need to determine what to rent a home for. A property manager will want to get houses rented fast because they collect money based on the rent, and therefore might not be shooting for highest prices. although some might. So, do not blindly take that property manager’s advice.
How to rent a home
Renting or leasing a home is the hardest part of management; at least it should be. If you take time to screen tenants and pick the best tenants it will make you more money and save many future headaches. You have to have to advertise the property, show the home, create a lease and collect money. Don’t pick a tenant because they are the only ones that will pay what you are asking. Don’t pick the first tenant that wants the house because you are tired of showing it. Pick the best tenant and don’t convince yourself a tenant you have doubts about will work out so you can start collecting rent. Property managers should have strict guidelines for who they rent homes too.
Rent collection
When you rent a home you have to make sure your tenants pay on time and charge late fees if they don’t. If you let late rent slide, the tenants will think it is okay and they will keep paying late. They will come through later and later with delayed rent if there aren’t any consequences and may stop paying completely. You have to be strict no matter who is late and what their story is. If tenants get too far behind don’t be afraid to start the eviction process. Starting the eviction process usually gets your tenants attention and they start paying rent. A property manager will collect rent and should have no problem charging late fees.
Ejections
Though it is never fun to evict anyone, sometimes this is what doing as you would rather lose a tenant who is not paying rent and rent the home to a tenant that will pay me than a tenant who is constantly behind. A property manager will handle rent collections and evictions.
Property Calls
Just because you have a tenant who always pays on time and never causes a problem does not mean they are taking care of your property. Always state in the tenancy that your property manager have the right to inspect the property with proper notice. He should check to see that the home is well maintained and that no other repairs are needed. It is possible to destroy a house quickly, but usually, the worst damage occurs over years of time. Some renters who always pay on time are doing so because they don’t want the landlord to see the house. They may be trashing the property or doing something illegal in your home. Property managers should check on your houses, and also once in a while make unannounced visits.
Maintenance
Things will definitely break when you own a rental property and if you want your property always in top condition, then these repairs have to be made. Always factor the maintenance budget in when planning your cash flow.
If there are water issues, roof issues, electrical issues fix them. You do want your house to be safe and well maintained. If you can’t afford to maintain your rental property, you shouldn’t have rentals. A property manager will handle maintenance issues and will check in with you on any non-emergency issues before work is done.
Book-keeping/ Housecleaning
A good property manager will give you a year-end report that has all your tax information, profit, losses, and accounting information. It is advisable to send all my information to an accountant to make sure the expenses and taxes are calculated correctly.
How to find a great property manager
The first step in picking a property management company is finding potential property management companies. By performing a simple web search you should be able to find the largest property management companies, but there are many smaller management companies that may not show up in those searches. It’s a great idea to always ask your contacts in the area who they know. If you know a rrealtor or real estate company, ask them who they recommend for a property manager.
Research:
Property managers will promise great service, but how will you know until you actually hire them and see how they do? Well, you could disguise as a renter, and call the property management company as a potential renter on a house they have listed for rent. If you’re unable to reach them, see how long it takes them to call you back, how knowledgeable they are and how soon they could show the property. When asking questions about the home, ask simple questions that the manager should know. Ask how old the home is, how many square feet it has, how many parking spaces, and the like. This will give you a great idea of their knowledge and service level.
You could also drive by properties a property management company has for rent and see how well they are maintained. As an investor, you will be depending on the property management company to maintain or make sure the tenants are maintaining the property.
When you do chance upon a one-on-one with a property manager or property management company that you’re thinking of enlisting, some questions to run by them are:
How many properties/units do you manage?
What is your specialty? Residential, commercial?
How long have you been in business?
How many people work for you? This will give you an idea of how much they can handle based on how many units they manage.
Do they have a real estate license?
How much do you charge and are there any extra fees for leasing?
If you own rentals it is easy to get sucked into managing them, but it is best to hire a property manager especially if your rental property portfolio has really expanded. You’d not only save yourself so much hassle but indeed will be getting the most of your well-maintained properties.