If you are in the real estate business, I highly recommend hiring a third-party property management firm to do the job for you. Many might tell you this is a costly investment, and they won’t be wrong. The management fee is dependent on multiple factors, such as the number of rental units, property conditions, required resources, skills, etc. generally, management firms can charge around 10% of the monthly rent, along with maintenance, leasing, and renewals leasing fees. Despite these added costs, real estate owners swear by property management firms and their services.
This article will discuss the reasons you need to invest in property management and make your life easy. Let’s get started!
1. Better Quality Tenants
One of the significant reasons you need to invest in property management is tenant screening. The tenant screening process is extremely complex, and if you don’t have sufficient experience in the real estate world, you are bound to select bad tenants that won’t leave your property easily. Property management firms have screened multiple rental applications and can easily identify the red flags and prevent you from rental scams.
Property managers run a background criminal check and credit check and obtain all information necessary to ensure you get renters that pay on time and cause fewer problems.
2. Lower Maintenance Costs
Property management firms have contacts with all vendors needed to maintain properties. You gain access to licensed, insured, and recommended vendors that offer invaluable discounts due to the volume of services required, something which isn’t possible by searching and hiring third-party vendors individually for each repair and maintenance job. This can save you a lot of money and help you maintain the value of your rentals.
3. Shorter Vacancies
A property management firm ensures your rentals don’t stay vacant for long. They do this by bringing their skills and experience to the table. For instance, if you market your property yourself, you probably won’t find a potential applicant for months, whereas a management firm can find one in a few weeks. They have marketed hundreds of properties and know what renters want. They can also get you cheaper rates for both online and offline ads.
Property management firms also prepare rentals for sale by partnering with interior designers and vendors to transform your home with cosmetic improvements.
Management firms also help you appropriately price your rentals. Pricing too low can make you lose on monthly rent, whereas pricing too high can leave your rentals vacant. Property managers are aware of the market demand and use professional rate tools. All of these services help ensure there are shorter vacancies.
4. Dealing With Defaulters
A property management firm will be more experienced in handling defaulters than in-house property managers or landlords. The issues could be as minor as not paying rent for a few months or having been involved in a criminal issue. You might be required to hire a lawyer or go to court. A property management firm will handle all these situations and save you the stress and money involved.
5. Bookkeeping
Bookkeeping is one of the most tedious parts of real estate, and it can get complicated very easily if you manage more than two properties. A property management firm will take care of all documents and invoices to minimize taxes and ensure you are not cutting corners that can get you in legal trouble. Moreover, all repairs and improvements on a rental are tax-deductible; thus, a management firm will take care of all receipts and keep your tax statements itemized so there are no errors.
6. Efficient Rent Collection
As stated above, property managers are aware of the market demand and know how much your property is worth and thus will help you price your rent adequately, not too high or low. Besides that, another reason to invest in property management is efficient rent collection. Real estate is a business; if you self-manage your property, you are bound to develop a close relationship with your tenants and give them leeway when it’s time to pay the rent.
Management firms collect rent on time and become a buffer between the owners and the tenants. This allows them to play the bad cop instead of you when it’s time to collect rent, handle evictions or listen to complaints.
7. Lesser Turnovers
The better the management, the lesser the turnover rate. Rather than decreasing the vacant time, landlords should be focused on enhancing maintenance so tenants are satisfied and willing to stay permanently. Not only will you save up on lost rent but also on cleaning costs, repairs, and locks when tenants change.
8. Maintaining Value
According to these Chicago property managers, by hiring a property management firm, you can maintain the value of your rentals through regular maintenance. Firms follow a strict maintenance schedule on top of regular inspections to ensure no serious problems in the future. Maintenance is not only part of the equation but also tenant complaints. No matter how big or small, tenants prefer their issues are resolved quickly and efficiently. The higher staff numbers ensure response time is rapid and responsive.
Regular maintenance and routine inspection include lawn care, fixing appliances, plumbing issues, and other preventive maintenance.
People who are not comfortable with hands-on management in the real estate business should invest in property management firms. You will save time, money, and effort and increase your passive income.
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