There are plenty of responsibilities involved with making sure that rental properties have occupants. Some of these include placing ads, showing properties and answering phone calls. Some owners choose to handle these responsibilities on their own. Others choose to hire a property management company.
A property management company takes care of all of the tasks that are required to successfully lease and maintain a rental unit. They can be extremely useful, but they can also be unnecessary. To decide if hiring a property management company is right for you, consider three main factors.
The Cost Of Property Management
The first component to consider when deciding if property management is the right choice for your rental is cost. The company will inevitably require a monthly or annual fee in order to conduct the work on your behalf. Specific pricing will vary from location to location, but a good rule of thumb is to expect to pay out about eight to 12 percent of the rent each month.
In many cases, these costs are adjustable and will be higher when renters are first taking occupancy. In fact, you can expect a property management company to take anywhere from 50 to 100 percent of the first month’s rent for services rendered — an amount that could prove burdensome for new investors. Conversely, it could free up time for experienced investors to spend searching for other properties and completing renovations.
More often than not, first-time property investors possess zero landlord experience. That’s not to say they couldn’t gain it, however. If they have time and patient, they can easily educate themselves on the type of skills required to successfully manage rental properties. Podcasts, blogs, books, and networking are all fantastic ways to start the process.
Property owners lacking the time or drive to engage in self-education, however, may benefit most from hiring a property management company. Choosing to forgo the company and the self-education may prove costly should a disagreement or dispute arise in the long run.
The reputation of the property management company you’re considering will, in essence, become your reputation in the eyes of your tenants. Some companies boast excellent reviews and stellar service while others leave plenty of room for improvement. Make sure to research which companies have the capacity to take on your rental units and the skills required to do it well.
Regardless of which company you choose (if you choose to go with a property management company at all), an owner should plan on verifying task completion and checking progress until he or she is comfortable with the work being done. If your units aren’t being leased or repairs slip through the cracks, then perhaps choosing to use a property management company will cause more harm than good.