If you are the owner of a rental property, by now, you have realized one thing: successfully managing an investment property is a lot of work. When you began your journey to become a property investor, you probably thought getting a rental property mortgage was the hardest part. But now, you know that financing a rental property is easy compared to the rigor of making the property profitable.
Owning rental property is not just an investment. It is a business, and businesses need professionals. But landlords tend to forget this. Every landlord needs a team of professionals – lawyers, accountants, and handymen – to make their investment work. But, probably, the most essential professional a landlord needs for rental property success is the property manager.
The property management company is an ally who can help a property investor’s assets succeed with the least effort. They take the guesswork out of managing a rental by providing the following benefits:
1. Managing costs and improving profits
There are four things a property management company does to make a rental more profitable and less costly to operate.
Lower operational costs
Because they have experience with managing properties, they are familiar with the repair and maintenance issues most likely to occur. They also have a team of qualified experts who can fix problems at short notice. Because they have several properties under their management, they can get discounts on supplies. These drive down the overall cost of maintaining the property.
The type of tenants that a property attracts determines how much income the owner will generate and the risk of damage to the property. High-quality tenants pay the rent on time and are more likely to look after the home. A property management company can find those types of tenants via a thorough tenant screening process. Because they have experience dealing with tenants, they know what to look for to spot potential problem tenants.
Lower tenant turnover
By keeping the property in the top shape and only renting to the best tenants, the property manager reduces the number of vacancies in the property. Since good tenants rarely want to vacate a home where they are comfortable, the manager can achieve lower tenant turnover. This creates a steadier stream of income for the owner.
High-quality tenants are more demanding in what they want in a rental. But they are also willing to pay more for those things. By properly maintaining the home, a property manager gives these types of tenants what they ask for and can charge higher rents in return.
2. Managing tenant-related issues
One of the hardest parts of being a landlord is dealing with tenants. But property managers have the tools and experience to handle tenant issues with minimal fuss. They relieve the owner of the stress of managing tenants by:
Implementing a tight rent-collection process
If tenants feel they can be late with rent-payment, they will be. Many landlords do not know how to navigate this issue, and because tenants are consistently late with payments, landlords cannot meet their obligations to lenders. Property managers know how to collect rent when it is due. They will also establish rules for dealing with late payments.
Enforcing the terms of the lease
Another area where investors have problems is enforcing the terms of a lease. Tenants will sneak in unauthorized pets and occupants, or disregard conditions explicitly spelled out in a lease if they can. Property managers know how to discourage such behaviors or deal with them decisively.
Handle all communications with tenants
Tenants can and will call a property owner at odd times over minor problems. But having a property manager looking after the property saves the investor from such intrusions.
3. Marketing the property
A property manager must advertise effectively to thrive in this industry. It is a critical component of investment property success. The quality of marketing not only determines the speed with which vacancies are filled, but it also influences the quality of prospective tenants who apply to rent the property. There are many sides to marketing a rental property, and the process is often very time-consuming.
4. Dealing with regulatory issues
Finally, several laws guide the ownership and operation of rental properties. Without expert guidance, investors can quickly run afoul of them. A property manager can help the investor:
Avoid costly legal issues
There are myriad legal guidelines around the use of a home as a rental property. Several consumer protection laws outline how landlords may approach tenant-screening, lease agreements, security deposits, rent collection, evictions, and other aspects of the landlord-tenant relationship. Property managers can help landlords avoid problems with the law.
Avoid overpaying taxes
Investment property profit is often made via tax-deductions. Property owners who don’t know the deductions they are legally allowed to make will overpay in taxes. This can make the investment unprofitable or reduce the profits an owner makes. Property managers have the knowhow to guide the investor on how best to approach taxes, thereby making more money.
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