Why Use a Professional Property Management Company?

Why Use a Professional Property Management Company? (PPMC)

Professional property management can make owning (and profiting from!) rental properties a hassle-free experience.

For most, the decision to use a PPMC is a simple cost/benefit equation. Not only are they experts at handling properties and tenants, they generally take only a small percentage of the monthly rent in exchange for their services.

In addition to convenience, a PPMC typically earns a property owner MORE income yearly than if they manage the property on their own. How is that you ask? Especially due to the fact the owner of the property wouldn’t charge himself for his managerial efforts unlike a PPMC. This typically happens in three ways, 1) Increased rents received, 2) reduced maintenance costs and 3) proper tenant screening.

A PPMC knows the current rent market very well and will make sure the owner gets the top rent his property can demand.  Owner managed properties are often priced below market because an owner typically doesn’t have the time to do the proper research to determine market rent. This costs the owners hundreds if not thousands of dollars each year. Far more than the small percentage taken by the PPMC.  A PPMC also has enough experience to not become “emotionally involved.” They are polite but firm with non-paying tenants and do not allow a tenant to fall very far behind on rent. This is often not the case with owner managed properties. Falling victim to a sob story or simply not knowing how the legal eviction process works can cost an owner months and months of rent.

A PPMC also receives volume discounts from vendors and suppliers that a typical owner does not. PPMC’s take this savings one step further by having “in house” maintenance personnel, who are significantly cheaper than your typical contractor, repair most if not all issues. These reduced costs put more money in the owners pocket.

The biggest money savings of all is proper tenant screening.  A PPMC has policies and procedures in place that do everything possible to ensure you steer clear of that problem tenant. Criminal background checks, credit checks, rental history, employment verification and budgeting guidelines just to name a few. All designed to chose the right tenant for your property.  Many of these tools are not even available to the average property owner. Owners who manage their own properties often just take the first applicant who applies because they are “too busy” with their regular job. Anyone who has put “that tenant” into their property knows all to well how what an expensive mistake that is. Non payment of your rent is often the lease of your problems. Many owners end up spending thousands of dollars repairing damages to the property, on top of all the lost rent.

Bottom line, when you consider what you get in return—a hassle-free, essentially passive income stream that will most likely make you MORE money under a PPMC, —the decision is a no-brainer for the majority of rental property owners.

While the right property manager can greatly benefit any rental property owner, you might especially want to consider hiring one if any of the following things are true:

  • You live further than a couple of neighborhoods away from your rental property
  • You’re not a home maintenance guru
  • You don’t have at least 10-12 hours per month to deal with tasks related to your rental property
  • You don’t want to have to make yourself constantly available in case of emergency
  • You don’t have a good working knowledge of landlord-tenant law
  • You don’t ever want to have to worry about dealing with difficult or non-paying tenants

Happy Investing

Five Tips for First-Time Landlords

If you tell your friends you’re considering investing in real estate rental properties, you’re likely going to hear a wide assortment of reasons why you shouldn’t do it. Most of these reasons will follow the typical horror story—tenants can make life challenging. They might trash your home, or pay rent late or not at all, they might drive you up the wall with calls at all hours of the night.

While these can be the occasional truth, they’re not the majority. The fact of the matter is, if you do your due diligence, you can end up with a very successful investment and a long-term, qualified tenant. For those new to being a landlord, here are five tips that will help you to avoid the stereotypical nightmares and put you on the path to a smooth riding investment.

Educate Yourself! 
When it comes to being a landlord, you need to go into it with a good solid foundation of knowledge. Understand the industry and the market surrounding you, learn the laws, and figure out what type of tenant will work best for you. Research communication styles and know what red flags to look for in a tenant. It may sound like a lot of work, but a little research before diving in will help keep you from drowning in the long-run.

Get Organized! 
If you’ve never organized a filing system before, you’re going to want to start now. Developing an organization system before a tenant is even in place will help you to avoid any missed payments, overlooked notices, or forgotten maintenance. Putting systems in place when you purchase your first property will help you to ease into managing two properties, six properties, and so on.

Don’t Skimp On Rent!
When it comes to rent collection, don’t overlook a missed payment. One missed payment can turn into six missed payments very quickly, and before you know it, you’re behind on your own bills and having to undergo an expensive and time-consuming eviction process. If you’re not going to be utilizing a property management company to collect your payments, ensure you put an electronic system in place to allow tenants to make their payments easily.

Don’t Be a One-Man Shop! 
While it may be tempting to do it all yourself, understanding when you should outsource a project is vital. In addition to showing the tenant that their repairs are credible by using a licensed and insured professional, outsourcing maintenance and repairs can give you the balance you need in your private life as well.

Never Rent to Family or Friends! 
If you purchased your rental property to incur a monthly cash flow, renting to family or friends could put a damper in this concept. It’s seldom a good idea. Just as they say you shouldn’t loan money or go into business with family or friends, you should probably never rent a property to someone you want to continue a relationship with.

While being a landlord can have its downs, it’s not as scary as the stereotypes make it out to be. Sure, you may come across a bad tenant here or there, but if you’re careful and approach everything with a little bit of caution and a lot of research, you’re going to be just fine in this industry.