When you come to think about it, there are basically just two types of landlords: the hands-on landlord and the absentee landlord. The first type of landlord does everything, from screening tenants, being the point of contact for the apartment, collecting rent, and making sure that all units in the apartment are occupied, or at least mostly occupied. Absentee landlords, on the other hand, understand that there is a lot of headaches involved in managing apartments, and so they hire a property management company to do all the work that hands-on landlords do.
What is a property management firm? It is a third-party company that you pay to manage your property. If you search for it online, you will see that there are many property management companies all over the world. However, you can narrow down your search by typing in your local area.
If you know anything about managing rental properties, then you already know how much of a hassle it can be. The most problematic areas are the ones that involve screening tenants, collecting rent and maintaining the property.
Do you have rental property? In our experience, it is always best to leave the nitty-gritty details of management to the people who do it for a living. Aside from making sure the rentals are collected on time and that the renters will not go about randomly vandalizing your property, property management companies are involved in ensuring local ordinances are followed and that real estate taxes are paid on time.
Advantage of Property Management
So, in a few short words, the main advantage of hiring third-party property managers is that the property owners can sit back and just track rental money coming in. The managers do everything, even marketing your property.
Of course, there is a price to pay for convenience. Property managers typically charge eight percent to twelve percent of the monthly rent plus expenses, although there are those that charge a flat fee per month.
When it comes to hiring a property manager, it is important to be clear about the language in the contract. There is a big difference between rental value, rent due, and rent collected. Among the three, property managers have the most incentive if they are paid based on the amount of rent they collect for a given month. As you go out and hire a firm, negotiate to pay based on rent collected and give incentive when the monthly expectations are exceeded.
Entering into a contract with a property manager is a partnership that can potentially increase the rental value of your property in percentages you did not even think possible. However, you need to work with and enable your property manager to do it by providing the necessary resources.
In conclusion, convenience and the possibility of increasing your property’s rental value are the two main reasons for hiring a property management company. We are pretty sure there are other reasons, but these are the BIG ones.