A competent property manager like Eagle Property Management adds significant value to your investment properties, which is why many seasoned real estate investors will recommend you hire one. Read on to learn how a good property manager helps you.
For the investment property owner, there are three principal advantages to homeowners’ hiring a professional property manager:
• Less stress – Avoid having to deal with middle-of-the-night emergencies, chasing down rent, evicting people from your property, tenants who cause damage to your property, rental scams, lousy vendors and all the paperwork that goes with each of those.
• Experience more freedom – Live and invest wherever you want with the constraint of needing to be near your properties. Additionally, you can live and travel without the need to always be available for the tenants. Once you have found a good management company, it doesn’t even matter if you live in the same state. Many landlords live in out-of-state or, even, in other countries and simply collect their check every month without ever setting foot on the property.
• Free up more time – Time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties. When you focus on asset management you’re working ON your business, when you manage your own properties you work IN it. Additionally, you have more time to spend with your family or friends doing the things you enjoy.
We will now explore each of these in more detail.
Higher Quality Tenants
You want high-quality tenants. It is certainly possible to get a bad tenant out of your home once they are in, but it’s a real hassle. You are far better off never accepting them in the first place. A thorough screening process is designed to produce reliable tenants, who will:
• Pay their rent on time
• Rent for longer periods of time
• Minimize wear and tear on the unit
• Not bother the neighbors
• Generally be less needy and demanding
An experienced property management company will see thousands of applications and knows how to quickly drill down into each candidate and uncover the facts of their situation. By letting your property management company handle the screening for you, you will also be shielding yourself from rental scams directed at owners or discrimination lawsuits resulting from an inconsistent screening process. This kind of experience takes time, and insofar as it means avoiding bad tenants, scams and lawsuits it is arguably one of the most significant benefits that property management company can provide.
Fewer costly and time-consuming legal problems
Veteran landlords know it only takes one bad tenant to cause significant legal and financial headaches. A good property manager is armed with the knowledge of the latest landlord-tenant laws and will ensure that you are not leaving yourself vulnerable. Each state and municipality have their own laws covering a number of areas, including but not limited to:
• Tenant applicant screening
• Property safety and conditions
• Property maintenance
• Handling Evictions
• Handling Inspections
• Lease addendums
• Lease terminations
• Handling security deposits
• Rent collections
Avoiding a single law suit can more than pay for the property management fees, and spare you both time and anguish.
A professional property manager will know how to keep vacancies to a minimum and keep the rental property occupied with high-quality tenants.
In order to accomplish this, they take steps to improve and prepare the property for rent. Property managers will recommend and oversee cosmetic improvements to the property that maximize your revenues.
Next, they will determine the ideal rental price for your property. This is an art as much as a science. Set rents too high and you are stuck with longer vacancies. Too low and you’re losing money every month that the tenant is in the unit. Determining the optimal price requires knowledge of the local market, data on comparable properties, and access to research tools to establish rental rates.
Next a property manager will take steps to market your property. An experienced property management company has written hundreds of ads. They understand what to say and where advertise in order to get a larger pool of candidates in a shorter period of time. Additionally, because of their volume they can usually negotiate cheaper advertising rates for their clients.
Finally, and this is where their experience really comes into play, property managers are familiar and comfortable with sales. When they field calls from prospects or take them on showings they know what aspects of each property to emphasize and how to answer the most frequently asked questions. This process alone gives a lot of landlords anxiety.
While its easy to see the effects of lost rent, there are other equally serious problems with a high tenant turnover rate. The turnover process involves a thorough cleaning, changing the locks, painting the walls and possibly new carpet or small repairs, not to mention all the effort associated with marketing, showing, screening and settling in a new tenant. This is a time-consuming and expensive process that can often be avoided at the outset by keeping tenants happy and well cared for.
A good property management company will have a time-tested tenant retention policy that ensures happy tenants with long-term occupancies in your properties. These kinds of programs require a consistent, systematic approach, which is where a good property management company will shine.
Tighter rent collections
The way you handle rent collection and late payments can be the difference between success and failure as a rental property investor. Collecting rent on time each month is the only way to maintain consistent cash-flow, and your tenants need to understand that this expectation isn’t negotiable. By hiring a property manager, you put a buffer between yourself and the tenant, and allow them to be the bad guy who has to listen to excuses, chase down rent, and when necessary, evict the tenants.
First-time landlords learn very quickly that, if you let them, your tenants will walk all over you. They have to be trained to follow every part of the lease or deal with the consequences. Property managers have an advantage because tenants realize that they, unlike the owner, are only doing their job and are obligated to enforce the lease terms. Many property managers will tell you that it is considerably easier to manage other people’s units rather than their own for this very reason.
Regarding evictions, there are strict laws concerning the eviction process. Doing it wrong, or trying to evict a “professional tenant” can be a MAJOR fiasco for the landlord. A good property management firm knows the applicable laws and has established a proven process for obtaining the best possible outcome given the circumstances. Never having to handle another eviction can be a compelling reason to consider hiring a property management company.
Lower maintenance and repair costs
Good maintenance and repairs keep tenants happy and preserve the value of your investment which make them a very important part of land-lording. Hiring a property management firm gives you access to both their in-house maintenance staff and their network of licensed, bonded and insured contractors who have already been vetted for price and quality. This can translate into significant savings compared to going through the yellow pages and hiring a handyman on your own. Not only is the firm able to get volume discounts on the work, they also know the contractors and understand maintenance issues such that they are capable of intelligently supervising the work.
Increase the value of the investment
Preventative maintenance is achieved by putting procedures in place that catch and deal with maintenance and repair issues early on, before they grow into larger and costlier problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits. The management firm can also offer you suggestions and feedback on upgrades and modifications, both how they will affect the rent you can charge, as well as their impact on maintenance and insurance.
Assistance with taxes
A property management company can help you understand which deductions you can claim, as well as organize the necessary forms and documentation to make those claims. Additionally, the property management fees themselves are also tax deductible.
These results can only be expected if a management company is competent, trustworthy and a good fit for you, the property owner. A poor choice of a management company can produce many of it’s own headaches which may be the topic of another article.
If you want to discuss what we can do for you, please call our expert property managers.