Is Hiring A Property Management Company Worth It?
Whether you own one investment property of a slew of them, rental properties tend to come with a host of headache-inducing work that plagues owners. Add on the need to place tenants to avoid vacancy, rental properties never turn out to be a true source of passive income like dividend-paying stocks. So what can be done to alleviate some of the landlord's work? Well, you might want to consider hiring a property management company.
What Is Property Management and What does a Property Manager do?
Residential property management companies specialize in helping real estate owners deal with everything from rental maintenance to tenant screening. Basically, a property manager will oversee your rental property's ability to generate cash flow while dealing with all your tenants' needs. Hiring a property manager can mean as much or as little involvement from you as you'd like. Below are some examples of the duties of a property manager, should you choose to hire one for your personal real estate management needs.
LEASE OUT EMPTY RENTAL PROPERTIES
Leasing out vacant real estate is the #1 hassle of being a landlord, and taking care of that task is one of the best values a property manager can provide. A property manager will do everything from advertising the unit and screening tenants, to cleaning a unit after a tenant moves out. This service provides landlords the ability to ensure their rental properties are filled without ever lifting a finger.
COMMUNICATE WITH TENANTS
Property managers not only help fill rental properties, they also serve as the first line of communication with tenants; whether that's collecting monthly rental income, or addressing maintenance issues in the middle of the night, your property manager will be the one to pick up the call.
MANAGE PROPERTY MAINTENANCE AND REPAIRS
While a property management's fee won't cover maintenance and repairs, a property manager will oversee the resolution of any issues your tenants are having. They'll speak with the tenant and reach out to vendors to provide quotes to landlords, helping to coordinate a repair every step of the way.
INSPECT THE RENTAL PROPERTY
An essential part of securing a great value for your rental property is ensuring that it's kept in tiptop shape. However, it's hard to ensure that if you can't always go and check in your tenant. That's where a property manager can really help. Property managers will go in a landlord's place to inspect the unit, usually going around twice per year. This way, the property owner can rest assured that their tenant is abiding by the lease and maintaining the place to the standard outlined in the contract.
Legal processes, like evictions, are one of the most tedious tasks a landlord can have and we wouldn't wish it on anyone. However, if you do find yourself embroiled in an ongoing law case, property managers can make your life a whole lot easier. A property manager will not only serve the warning notice, but they'll also submit all the necessary information to the judge. Once the case is resolved, they'll show up to at the unit to change the locks and ensure a true clean out of the property.
HELP WITH TAXES
Property managers keep a close eye on all documents related to your properties, so they're a huge asset when it comes time to submit tax documents. They'll provide meticulous accounting records for all the real estate they oversee, allowing regular landlords the ability to tackle tax season without the usual stress.
Are Your Rental Properties Worth Hiring a Property Manager For?
Property managers charge a significant amount of money for their services; around 8-12% of the monthly rental value of the property for general upkeep and an additional amount to place a new tenant after turnovers. With rental properties being a channel to build wealth, you don't necessarily want to waste profits on property manger fees.
So before you jump the gun, here are some things to consider to see if hiring a property manager is the right move for you.
1. What type of properties do you own and what kinds of tenants will it attract?
If your rental property is relatively new and in great shape, you probably don't have to worry too much about maintenance and repairs. However, if you invested in fixer-upper real estate, you could consider hiring a property manager to tackle all the impending issues. Likewise, real estate in a yuppie neighbourhood will most likely mean more hands-off tenants than rental property in a college town.
2. How far away do you live?
Being a landlord is much easier when you're close to your rental property and tenants. How far is too far? Just imagine making the drive over in the middle of a weeknight and you'll know if you want to hire a property manager.
3. How much free time do you have?
Even if you're close to your rental unit, do you actually have the free time to deal with tenants and all their needs? If the answer is yes, the next question is whether spending your valuable free time tending to these needs is even worth it.
The Value Of Hiring a Good Property Management Company
If you've decided that yes, you are in need of a property management company, then read on!
A good property management company is worth its weight in gold when you think about the amount of work that's taken off your plate as a landlord. Just check out some of the advantages you get in addition to all the extra help.
- Your rental properties become streams of true passive income
- Owners benefit from a property management company's wide network of contractors, vendors and knowledge
- Landlords will never have to be "on call" to their tenant
- Owners can maintain privacy between themselves and their tenant
It truly is an attractive option if you can afford the fees, just make sure you're working with a reputable property management company. Not sure where to start? We highly recommend Cadenza Management. They're a team of property management professionals with years of experience handling residential and commercial real estate, dedicated to helping independent landlords like yourself.
Even if you don't go with our recommendation, we implore you to do your due diligence when searching for a property manager. While it may seem like an easy task, finding the right property management company and handing over the keys to your real estate comes with a lot trust and potential risks.
While property management isn't worth the money to some, it may make a lot of sense to others. If you're someone who owns multiple rental units and truly want a hands off, passive income stream, hiring a property manager is probably worth it. At the end of the day, it will likely be a balance between time and money.