Many landlords are hesitant to hire a property manager because of the price tag. But, the benefits of hiring a professional property management company actually outweigh the cost.
Why Hire a Property Manager?
Rental property owners juggle a myriad of responsibilities on a daily basis. And while many have already made the decision to outsource the job to a professional, there are countless others who prefer to take a DIY approach. These landlords opt to forgo a property manager for a number of reasons, chief among them being cost. But, hiring a property management company actually has more pros than cons.
Not convinced? Here are the benefits of hiring a property manager:
1. They Understand the Law
Managing a rental property requires a deep understanding of the law. This includes federal, state, and local laws. Owners who choose to do things on their own must familiarize themselves with the Fair Housing Act, state Fair Housing laws, landlord-tenant laws, and even local building codes.
More often than not, though, owners lack legal expertise. As a result, they end up violating a number of laws in the process. This exposes owners to potential liability.
In comparison, property managers are already well-versed in the law. They also make it a point to stay up-to-date on the changing laws that might affect rental properties. This includes tax updates, changes to short-term rental restrictions, and more.
2. Better Quality Listings
There are so many listing websites available today that it can be easy for owners to feel overwhelmed with the options. A property manager will know exactly which mediums to use. Beyond that, they can take professional and attractive photos of the property as well as craft persuasive copy that will entice potential tenants. This will help widen the pool of renters. Owners can also find tenants quicker, thereby reducing the vacancy period.
3. Rent to Better Tenants
Owners can’t simply rent out their property to the first person who shows an interest. Not all tenants are good. Some tenants won’t take care of the property and even intentionally damage parts of it. Bad tenants are also more likely to pay rent late and break the terms of the lease.
To weed out the bad tenants, property managers use a careful screening process. They do their research and ask for supporting documents from applicants. They do credit checks, employment checks, and background checks. Property managers can even call past landlords as references. This way, they can pinpoint quality tenants.
4. Set the Right Rental Rate
Owners don’t always know how much to charge in rent. They either end up charging too high, which can scare away potential tenants, or too low, which won’t be enough to cover expenses.
Property managers, on the other hand, can conduct market research to determine what the right rental rate is for any given rental property. They do this by looking at the average rental rate in the area as well as taking into account other economic factors. What owners end up with is a fair rental rate that will still earn them profit.
5. Overdue Rent? No Problem!
One of the hardest things about being a landlord is collecting rent. Most tenants pay their rent on time and in full. But, there are some bad eggs that consistently pay their rent late. Dealing with such tenants can be a pain.
A property management company can take over rent collection duties from the owner and, in turn, ease their stress, too. If a tenant is late on their rent, the property manager will take action by sending a notice. Rent collection is also made easy because property managers will receive the rent money and deposit it directly to the landlord’s account.
6. Better for Vendor Relations
Managing a rental property also comes with maintenance responsibilities. Every now and then, owners will need to seek help from vendors such as contractors, handyman services, cleaners, and other suppliers. But, finding and vetting these vendors can also be burdensome.
Property management companies will either have in-house maintenance personnel or an established relationship with a network of trusted vendors. They can coordinate with suppliers, maintenance workers, and repairmen on the behalf of the owner. In case of emergencies, they also know which vendors are available at a moment’s notice. They do all of this while staying within the owner’s budget.
7. It Keeps Things Professional
Far too often, landlords become too friendly with their tenants. The relationship will then turn personal, and some tenants will take advantage of that fact. Similarly, some landlords might not feel comfortable collecting overdue rent when they have become such good friends with their tenants.
A good solution to this is to hire a property manager. A property manager makes sure to maintain professional relationships with everyone in the business. This includes both the owner and their tenants. Taking a professional approach ensures that managers can make decisions without bias or personal judgment.
8. Evictions Made Easier
Unfortunately, there may come a time when a landlord will have to evict a tenant. Typically, this is due to unpaid rent, though it can also stem from some other lease violation. But, evicting a tenant is not as easy as it sounds.
The laws governing evictions can vary from one state to another. This makes it particularly difficult for landlords who own several properties across many states. But, it is part of a property manager’s job to know the law and manage evictions legally. All the owner has to do is provide support and pay eviction costs (including any associated court fees).
9. More Free Time
Because of the nature of their position, landlords often don’t have a lot of free time on their hands. This is especially challenging for property owners who have 9-to-5 jobs or families to look after.
Hiring a full-time property manager is a great way to cut back on these duties and have more free time. The only things owners will have to do is check their account balance from time to time (for rent payments) and approve withdrawals.
10. More Flexibility With Investments
With a property management company, owners are not confined to a single location. They have more freedom and flexibility to invest in properties outside of their home city or state. This maximizes their earning potential without all the stress of hands-on rental management.
11. Peace of Mind
Finally, when owners hire a property manager, they tend to have more peace of mind. No more worrying about maintenance problems, agonizing over unpaid rent or losing sleep over 3 a.m. phone calls from complaining tenants. Owners can rest easy knowing their property manager has everything under control.
How Much Does It Cost to Hire a Property Manager?
Of course, all of the benefits outlined above come with a price. If owners are wondering how much to hire a property manager, money-wise, it depends. A lot of factors can affect the cost of property management, including location, the size of the property, the type of property, and the extent of services involved.
Some companies also charge a flat rate every month, whereas others charge a percentage of the monthly rent. Generally, though, owners should expect to pay 8% to 12% of the monthly rental rate. It is best to make sure that the contract specifically states that the percentage is taken from rent collected instead of rent due. This way, owners won’t be paying the company if they fail to collect rent.
How to Hire a Property Manager
It is clear that the benefits of hiring a manager outweigh its costs. But, what exactly is involved in the hiring process? Here is a brief guide on how to hire a property management company.
- Determine Needs. First, owners must identify what services they need or want. Are they looking for someone to just collect rent or someone who will do everything? Keep in mind that the broader the scope of work, the higher the fees.
- Do Research. Next, owners must do their research. Look for management companies online and check their reviews, too. They can also ask other landlords for referrals.
- Interview Companies. Before choosing a firm, it is imperative to interview each candidate. Sit down and ask the right questions.
- Check Qualifications. See to it that the company is qualified for the job. Check their licenses and certificates, references, and insurance.
- Iron Out the Contract Terms. Finally, it is time to negotiate the terms of the contract. Make sure the contract details everything, including the scope of work, fee structure, and a termination clause. Owners would do well to consult an attorney to ensure the contract is not unfair.
Should I Hire a Property Manager?
The question of whether or not owners should outsource property management depends on their individual situation. Though it is not always necessary, there are definitely many advantages when owners hire a property manager. It allows more flexibility in terms of investments and time while simultaneously maximizing earnings.
Are you ready to hire a property manager? Find the best one in your area today with the help of Rental Choice’s comprehensive online directory.
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