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