It's not uncommon for a real estate investor to ask themselves, "Should I get a property manager?" While there are reasons to go without a property manager—from the desire to save money to a genuine interest in doing it themselves—the right property management service can add value. Here are the top reasons real estate investors should work with a management service.
How Do Property Management Services Help Investors?
Property managers take on the daily tasks of managing rental properties. For instance, they:
- Screen tenant applications, forwarding investors qualified applications if desired
- Meet prospective tenants and show the apartment
- Collect rent
- Respond to tenant questions and complaints
- Perform interior and exterior property maintenance
- Schedule service personnel when repairs are needed
- Shovel snow
- Pursue eviction if it becomes necessary
- Adjust rent to keep it in line with market demand
- Handle move outs and security deposit refunds
- Manage budgets and maintain records
Property management fees cost 5 to 10 percent of the rent revenue, on average. The exact rate will depend on the services needed, level of competition in the rental market, and the management company's experience.
The Biggest Benefits of Working With a Property Management Service
Ultimately, time is money. When investors are spending time responding to the everyday needs of their tenants, they are not using their time wisely.
Real estate investors who have a growth mindset will want to roll over their rental profits to purchase a new property and scale their investment business. When they are kept busy with property management tasks, they do not have the time they need to scout properties, make offers, interview contractors, or complete renovations to bring their new properties into market ready condition.
By using a property manager to take care of the day to day needs of their properties, investors can free up the time they need to grow.
The average real estate investor does not have the experience needed to adeptly manage properties, and may not have the inclination to prioritize meeting renters' needs. In contrast, property managers know what to do to keep residents satisfied, whether it's taking care of maintenance in common areas or quickly responding to phone calls that come in from tenants. By keeping residents satisfied, the management company can decrease turnover in apartments. This increases stability, decreases marketing expenses, and ultimately saves time and adds value for the real estate investor.
Real estate investors who offer affordable housing must comply with a strict set of rules to receive financial assistance for accommodating renters who fall below a certain income level. Since the rules can be tricky to understand, investors should hire a management company that has a track record of managing affordable housing complexes and can be trusted to comply. Failure to follow the rules can result in revocation of the rental assistance.
A property management service is essential when investors do not live near their properties, whether someone has rental property in a different state or simply lives across the city from their properties. It can be very time-consuming to travel to rental properties, run errands and perform maintenance. While real estate investors can deduct mileage for rental-related duties, this is not the best use of their time.
Investors who own multiple properties benefit from hiring someone who will take care of all the properties as well, because it may not be feasible for one individual to spend time at every property.
A qualified property management company will understand what real estate investors need, work with investors to customize the services to their needs and wants, and clearly communicate with the investor, so there are no misunderstandings about rental properties, tasks, and duties. Real estate investors should screen any management companies carefully, then speak with references to ensure the fit is right before entering into an exclusive agreement with a property management service.
Dylan Snyder is a team leader and real estate consultant at The Snyder Group - Keller Williams Realty Luxury Homes. His business is augmented by his high-caliber team of seasoned buyer specialists and a dedicated marketing department.