Investing in rental properties is undoubtedly a great idea, especially if you look to turn a profit and save some money on your tax returns each year. Yes, owning a rental property is one of the great sources of additional income; however, it also comes with the added responsibilities of property management.
One of the biggest mistakes most landlords make is overlooking the benefits of working with a property management company. There is no question that some landlords prefer to manage the property alone—which is not bad—however, vulnerable risks lie within, primarily if we talk about time and money.
From property upkeep, repairs, and marketing, managing one property can be challenging for first-timers without the help of a professional. That is why hiring an experienced property manager can add great value to your rental property investments and may be the best way to reap all of the benefits of having rental properties. Here is why:
What are the benefits of working with a property management company?
Whether you are handling single-family rental houses, multi-family apartments, or responsible for an entire condominium or village, you need to be aware of the various problems that you can encounter in handling such properties. Property management can throw up numerous challenges that can be costly financially, emotionally, and time-wise.
A professional property management company will prove to be invaluable.
Transparent, effective, and ongoing communication is essential in every relationship. As property management involves a lot of communication, you as a rental owner should recognize how important this aspect is.
Tenants and rental property owners should always know how to reach each other. Since communication is not always easy, working with a property management company fills the gap in broken communication, especially in addressing all property-related concerns.
In addition, working with a property manager allows you to keep informed about your property. Property management companies provide a secure communication channel, like an online account, that keeps you as a property owner updated on property activity, including vacancies, leasing, maintenance, inspections, and financial reports.
Whether you live a few blocks from your rental property or hundreds of miles away, property management companies can monitor the activity of your property on your behalf.
Comprehensive marketing and advertising
Marketing your rental property is a big part of being a property owner. When your property is vacant, it means that the income is lost. Some property owners assume that proper marketing is too time-consuming and expensive if you want to do it right. The tendency is that they choose to forego marketing their property, hoping the right tenants will come their way, which can be costly.
That is why marketing your rental property effectively is critical, as it attracts dependable tenants and fills your vacancies quickly. With a property management company, you can rely on the company’s skills in rental marketing, including writing rental ads, taking high-quality photos, and hosting open houses.
In a nutshell, hiring a property manager with marketing experience can help fill your property sooner and reduce the time it sits vacant.
As a rental property owner, you know how essential leasing is for your business. A lease is a legally binding agreement between the landlord and the renter, and it addresses the rules, policies, and conflict resolution procedures for living in the rental property. It is crucial in every rental process as it defines tenant and landlord responsibilities.
Knowing how critical leasing is, you need to make sure that you can carefully record everything in writing, and working with a property management company can help you make it happen. Property management companies can provide you with a leasing agent who manages the leasing process with your approved tenant.
At the same time, they can help you with rents, deposits, and any fees collected according to local legal and financial regulations and recorded in your account.
Cost-effective and reliable maintenance.
Working with a property management company can help you in many ways, especially if we talk about decreasing maintenance costs. Maintenance is a necessary expense in owning rental property; knowing how it can impact your return of investment, timely, cost-effective repairs, and upkeep is one of the ways property management companies can provide value.
Property maintenance is one of the selling points property management companies offer. Property management companies have an in-house maintenance team who will keep the property in good working order, from minor fixes to major replacements.
Tapping on a property management team is a much cheaper option than hiring externally. Some companies may also come with discounts for maintenance services, primarily if they work with a regular service provider or employ an in-house maintenance staff.
No question, you venture into the rental property business with a goal to maximize your income and minimize your expenses. With so much to think about managing one property, from the rent collection process to maintenance and so much more,, sometimes it is hard to handle property accounting by yourself.
On the other hand, working with a property management company allows you to streamline your accounting process. Property management companies can keep track of your income and expenses, as most companies have a centralized accounting system to offer.
Property management companies’ all-inclusive accounting systems also let you access comprehensive reporting, itemized statements, and other documentation, keeping your property management financial information organized.
When we talk about benefits, a property management company can provide a lot of things on your end. To put it briefly, working with a property management specialist allows you to skip late-night emergencies, evictions, chasing down rent, damages, paperwork, having to find contractors, and other tedious and time-consuming tasks. This means that you have more time to focus on yourself and target more goals to invest in other properties.
How a property management company sits in between you and your tenants
If you have been handling your rental property for a long time, you probably do not know what a property management company has to offer. Yes, you know that they handle your property on your behalf, but have you ever learned all they have to offer?
One of the main purposes of working with a property management company is to help you save time and effort. But before hiring a property manager, you need to know the scope of their work, especially between you and your tenants.
Thorough tenant screening and selection.
Screening and managing tenants are some of the core responsibilities a property management company can provide. Property management companies typically run credit checks, contact rental references, background checks, and other processes to find the best tenant for a rental property.
Property management companies usually have written criteria for potential tenants that outline the qualification for a rental applicant. Written criteria allow the owner and the tenant to have standard criteria to evaluate for each possible tenant.. Depending on the company, some may also choose the first qualified tenant while others will select the best suitable from a handful of applicants.
However, property management companies not only handle the screening and selection, but also draft leases. If necessary, a property management company is responsible for making amendments for leases, especially for disclosures and special lease provisions.
Timely rent collection.
Property management companies remove the stress when collecting rental fees for your tenants. Companies usually set up a system for collecting rents to ensure an optimal cash flow, ensure monthly property expenses are paid, and strictly enforce late fee policies.
Once the rent is paid, property management companies will deduct the portion of the rent that goes to them (management fee) and other miscellaneous charges, such as repairs. Keep in mind that most companies always include a statement with the deposit that itemizes any expenses incurred during a specific month.
To sum up, property management companies usually have a specified property accountant and an attorney who will assist them when tenants refuse or neglect to pay rent.
Ensuring a rental property’s care throughout the lease term takes a lot of effort. Thus, tapping into a property management company to help can be very beneficial.
One of the key roles of a property management company is to oversee the property’s care. They conduct seasonal inspections, especially for maintenance issues, as well as routine checks to make sure the tenant is satisfied.
In addition, a property management company can also conduct move-in, periodic, and move-out inspections, including documentation that determines the needed maintenance and repairs to maintain your property’s value and avoid costly repairs in the long run.
Strict and complaint evictions
The real deal about the rental property business is that things don’t always go as hoped. Sadly speaking, it is not unusual to have tenants that leave damage to your rental property, pay their rent late, or worse, do not pay at all. And it is quite a hassle to manage this kind of dispute.
In addition to collecting rent money, tenants follow-ups, and inspections, property management companies can help you initiate eviction proceedings when needed. Property management companies can assist you in creating paperwork to start an eviction, sending out proper notices, representing property owners in court, and facilitating tenant removal
You still need to be available after your tenants move into the property. Ideally, you still have to be available for your tenants 24/7, especially when issues may arise.
With this said, if you want to skip the hassle of attending to your tenants around the clock, property management companies can assist you with this matter. Property management companies can handle emergency maintenance calls and attend to every tenant’s call for requests and questions.
Remember that an irritated renter will get much more upset if they have to leave messages or play phone tag to receive help. Thus, having a property manager to act as a buffer against this situation means less stress for you.
Every decision you make as a rental owner has the potential to cost or save them money in one way or another. Yes, no question that hiring an experienced property management company that would handle your rental management might cost you money, but its benefits can undoubtedly outweigh your capital investment.
How a property management company keeps you in compliance with all local, state, and federal laws
A property management company ensures the day-to-day responsibilities of a rental property. The scope of their work covers scheduling maintenance, conducting inspections, creating work orders, screening and selecting tenants, and collecting rent. However, there is also another important role that a property management company serves and that is to ensure that they keep their clients in compliance with rules, laws, and guidelines associated with real estate ownership.
One of the key elements of successful property management is complying with laws and regulations set forth by your state and federal oversight. Being compliant with local, state, and federal laws for real estate is essential, as it protects you and your tenants, especially if legal disputes arise.
In certain situations, you may benefit from your personal lawyer’s assistance, whether for representation in a lawsuit or simple advice, but working with a property manager can help you comply with legal situations. Here is how:
Discrimination in rental property
Let’s face it. Discrimination is still rampant even today, and it is sometimes apparent in landlord-tenant relationships. There are laws that cover this unjust treatment.
Property management companies can help you avoid situations of discrimination in the rental property process. They can keep you in compliance with the legislative provisions that cover discrimination, such as the Americans with Disabilities Act, Federal Fair Housing Amendment Act, and local fair housing laws.
They also ensure that your renting and advertising practices are not discriminatory and your property itself complies with all of the regulations and building codes.
Laws for providing a safe environment
As a rental owner, you need to make sure that the property is safe for Living.
From appliances down to floor covering, you need to make sure that these are in acceptable condition. Aside from that, you also need to ensure that there should be no safety hazards, and the property must be free of insect infestations at the very least.
Some states require a landlord to include disclosures in a legally written document concerning a safe environment in one rental property. But with a property management company, you can skip the hassle of providing these disclosures, for they can give you the right statutes and regulations with this matter.
Laws about the right to privacy
No questions asked; tenants have their right to quiet enjoyment and benefit from living in a home without being disturbed. Once a tenant has possession of a rental property, you, as a landlord, may not interfere with this right.
There are already federal laws that protect a renter’s right to privacy. Under the law, if you wish to visit, you must inform the resident 24 to 48 hours before their visit and do so at a reasonable time. And lucky for you, a property management company can help you stay on track with this federal law.
Laws about eviction
Every state has laws that regulate the eviction process. Before evicting a tenant, you need to know that you must go through the legal eviction process. Yes, every state has different guidelines, but keep in mind that you must give the tenant a termination notice before filing an eviction lawsuit.
No doubt that the process above takes a lot of time, but a property management company can help you re-evaluate your rental business’s eviction policies and seek legal counsel from professionals in landlord-tenant laws.
Although drafting a lease and taking care of the documentation process falls under the landlord’s responsibilities, it is still essential that your lease document is in compliance with all local, state, and federal laws.
Given that a property management company works on behalf of the landlord, the responsibility of drafting and writing documents with transparent terms and conditions falls upon the manager. In creating lease documents, you need to be aware of state laws, as some states require that you include details such as security deposit and other minute details in the legally binding lease agreement.
To sum everything, you need to know your rights and obligations as a landlord, which could limit your liability exposure. There will always be situations that may require some knowledge of the law and how it pertains to property management. Knowing that there are a lot of local, state, and federal laws that cover rental property management, it is always a good idea to seek help with professionals like property management companies.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.