So you’re seriously looking into the prospect of owning a brand spanking new property (or even entertaining the thought of purchasing an old one that you can easily flip) and that thought would naturally get you excited about the possibilities and the income it could generate for you. It is an exciting thought, isn’t it? Now, you’re thinking to yourself: How do I do this? Would this be easy to do? Should I get some help and hire a professional property management company or should I just do it myself?
Not all property owners need to hire a professional property manager. However, there are benefits to hiring a property manager that can be extremely helpful, especially for first-time landlords. Here are a few things to consider when getting help from a professional property management company:
● Proximity to your home – the farther your property is away from your home, the harder it could be to manage.
● Number of units – your responsibilities increase with the number of units you own. The more tenants you have, the more issues you could potentially encounter.
● Your experience – the idea of just winging it and learning as you go can be careless and your mistakes can be very expensive. Hiring a pro can help you make better and more practical decisions.
● Time – ask yourself if you have the time to manage your property all by yourself. If you have a full-time job, managing a property by yourself would not be feasible as it would entail a lot of time and attention.
First-time landlords would need all the help they can get. And even if you’re no longer new to the game, you can admit that a few extra helping hands would definitely make your life easier. Good property management companies are not hard to find – but you must do your research very carefully. Some would boast of extremely low fees and certifications, but have hidden fees or couldn’t deliver.
After careful consideration, the next thing you have to ask yourself is if you can afford a property manager and if the cost is worth it. For you to be able to answer that, you have to know how much it costs to hire a property manager and what services should you expect.
Depending on the company you hire, they can either charge you a flat rate where you pay a specific amount every month regardless of how much your property earns. Or they could charge a percentage rate where they get a percent commission from your total earnings for the month.
The major services offered by a good property management group would be a combination of tenant placement and property management. Tenant placement is when the company finds a qualified tenant for the property. Property management is when the manager is tasked to enforce the terms of the lease, manage the operations from day to day. There are companies that only do one of each and there are companies that do both. The latter is pricier but more efficient in the long run since it is more streamlined due to the company being involved at the onset of the process.
Services vary depending on the company you hire. But if you’re looking to find an overview of the cost, here are some of the basic services that you can expect to find:
● Tenant Placement fees or Finder fees – this is basically how much it will cost for the company to find tenants for your property. They could be flat rate or commission based, too. And they vary between companies.
● Property Management fees – this is basically how much it will cost for the company to enforce the terms of the lease and manage your day to day operations. You can expect these services:
● Tenant move in – the company will be responsible for going over and enforcing the terms of the lease, inspecting the property before the tenants move in, scheduling the details of a tenant’s move in, and collecting tenant fees like the first month’s rent and a security deposit.
● Collection – the company will be responsible for collecting rent and fees such as late payments and other miscellaneous fees. They should also take care of bookkeeping and monthly or year-end reports.
● Evictions – the company will be responsible for eviction related activities like initiating eviction procedures by initiating paperwork and sending out an eviction notice, representing the owner or landlord in court, and coordinating with law enforcement to evict a tenant and their belonging, if necessary.
● Maintenance and Renovations – the company will be responsible for maintaining the property including indoor and outdoor areas. They could also suggest items for renovation or remodeling. This could mean taking care of the landscape, snow, or trash for outdoor care. Indoor care could include routine inspection and coordinating house/unit repairs, clean up, and maintenance work. They might also suggest areas that need renovation if they think it will maximize the income generated from the property. For example, provisions for a garden plot or covered parking can improve the marketability of the property to help entice more tenants.
● Tenant move out – the company will be responsible for tenant move out arrangements like unit inspection, return of security deposit, and aftercare activities such as unit cleaning, repairs, re-keying, and preparing the property for new tenants.
Other services would include:
● Legal Services – adhering to all local, state and federal laws and advising the owner/landlord about these laws or referring them to a qualified attorney.
● Inspections – adhering to safety codes and providing regular inspections or coordinating mandated building inspections.
● Accounting – some property management companies provide accounting services as well to make it easier for the owner to understand and execute tax-related activities.
Look for a company who has your best interest in mind. One that is aligned with your goals and your vision. Take your time researching and getting good recommendations. Scour the internet for good reviews and success stories. Your diligence will pay off when you find the perfect fit for your property management needs.