Property managers can add substantial value to your investment. Having a company to manage your properties enables you to find the right tenants. This will help your property remain in better conditions in the long-term. Here are several reasons why managers are worth the investment:
Responsible and Long-term Tenants
Even though it is tempting to sign a lease with the first tenant who wants to live in your property, it is not always wise to do so. The reason for this is that some tenants may not be the right fit for your regulations or may end up not being able to pay their rent. By integrating a proper screening process, you will be able to find reliable tenants that:
- Pay their rent on time
- Rent the unit longer
- Cause less damage to the unit
- Cause fewer issues across the board
By utilizing the services of a company with years of experience, you will have access to their knowledge of what warning signs are essential to look out for on tenant applications. Another protection you will get is avoiding lawsuits and scams caused by doing the screening process inconsistently. By avoiding these issues, you will lose less of your profits on common pitfalls caused by inexperience.
Fewer Costly and Time-Consuming Legal Issues
Experienced landlords are aware that one difficult tenant can cause extreme financial and legal issues. A skilled property manager knows pertinent changes to laws regarding landlord and tenant and will guarantee you’re not exposed to any possible lawsuit. But you should also realize that local laws are not all the same. These laws combined with federal law include several areas including:
- Tenant Screening
- Safety and Conditions of the Property
- Lease Addendum
- Terminating Leases
- Managing Security Deposits
- Rent Collection
Avoiding a single lawsuit can help you save you a great deal of capital along with time wasted in court proceedings.
Shorter Vacancy Gaps
A manager can assist you with performing three essential tasks that will have an impact on unit vacancy gaps:
- Improving and preparing the property to be rented. The company should be able to suggest valuable ideas to maximize your rental revenues and enhance your property.
- Learn the best possible rental rate that will be a balance between a great profit and not having a delay from vacancies. To determine the appropriate price, having a local understanding of the industry and access to relevant rental rate tools is crucial in determining the right amount to charge for rent.
- A manager with many years of experience can market your property efficiently. Those who have been in the industry for a long time have a lot of ads and an understanding of what is important to say and include in an advertisement to get a large list of applicants in a short period. Also, they will be able to get better advertising rates since they are already doing advertisements on many properties at once. Finally, they know the ins and out of sales and have a skill in closing deals successfully.
High Retention Rate
Having a high rate of tenant retention is valuable because it causes less loss in profits due to vacancies. If your property has a high tenant turnover rate, it inflates your costs because of the many cleanings, changing of the locks, and paint touch-ups or minor repairs required to attract new tenants. Also, there are several costs associated with attracting new tenants including marketing, screening, and selecting the best possible tenant. It can be entirely averted if a tenant is content and wants to extend its lease for multiple years.
A company with a positive reputation will have an established tenant retention success rate. They will make sure your tenants are happy in their long stays in your properties. However, these need a consistent and systematic approach requiring the company with substantial experience to manage tenant retention rates well.
More Organized Rent Collection Process
How you manage rent collection and troublesome tenants can have a positive impact on your success. On the other hand, it can result in your failure as a property owner and landlord. A timely monthly rent collection is vital to maintaining consistent cash-flow. You should also make it clear to your tenants that it is non-negotiable. If you hire a property manager, a natural barrier between you and the tenant should be in place while allowing them to be the enforcer of your policies without making exceptions for excuses. They are also able to evict tenants who have not paid their rent or have violated terms in their lease agreements.
If you are not careful, your tenants will take advantage of you. Make sure they’ll get used to following all of your lease’s requirements. Property managers can deal with it easily because tenants think enforcing the lease’s terms is just a part of their job, so they have no choice. Most property managers know that it is far easier to manage someone else’s portfolio than their own.
Eviction process laws exist and differ for each state or city. Not abiding by these laws can cause you thousands of dollars. The right company knows eviction laws and has a clear process on how to get the best possible outcome under the circumstances. If you have an expert managing your property, you’ll never have to deal with evictions.
Tax Preparation Assistance
You can better understand which deductions you are eligible for claiming and also organize the required forms to make those claims if you have a property manager helping you. Also, property management fees are tax-deductible, which creates an additional benefit for hiring a property manager.
Reduction in Maintenance & Repair Costs
Having efficient maintenance and repairs keeps your tenants happy while simultaneously protecting your investment. If you can take advantage of the services of a highly qualified property manager, you will also have access to their seasoned contractors and repairmen who have been proven with high-quality work. This will save you a substantial amount of capital that you would spend hiring an independent contractor yourself. Companies get discounts due to the volume of work they order and also know how to supervise the work.
Increase Your Property Investment’s Value
Preventative maintenance can be achieved if there are systems in place that can detect maintenance issues earlier before they get worst and cost you hundreds of dollars. This requires protocols for maintenance checks with detailed documentation. The company should also provide suggestions and advice regarding possible upgrades and modifications. Furthermore, they should be able to explain how these changes will impact your property’s rental value, maintenance cost, and insurance prices.
Personal Benefits for Property Owners
Sometimes, one of the deciding factors property owners take into consideration are several personal benefits. Some of the most common personal benefits include:
- They won’t have to deal with emergencies even in the middle of the night which is the cause of stress. Other headaches are caused by handling tenants who damage their properties, chasing down rent, faulty vendors, scams, and extensive and daunting paperwork.
- They don’t need to be near their properties all the time, so they have more time to spend on other things like investing, hobbies and family. Additionally, they can live and travel without worrying about tending to their tenants’ needs. If they have an ideal property management company helping them, it will not matter if they live far from their property. Some landlords live miles away from their property. They merely collect their checks every month without even setting foot on the property.
- Free up more of their spare time to invest in new projects. Investors can focus more on their other businesses and generate even more revenues than they would if they were only focused on managing their properties.
By conducting careful research, you will be able to assess which company offers the services you need and has pricing that you can afford. To learn more about typical fees associated with working with property management companies, keep reading our detailed guide. In the next guide, we’ll discuss property management fees.