Most landlords begin property investing with the mindset that they’re going to take care of everything themselves. The idea is that investing in a rental is a hands-off way to make money, and in some cases, that turns out to be true. If you’re renting a single- or double-family unit that doesn’t require much upkeep and you have good, long-term tenants, it’s possible that you could simply collect rent checks that turn you a profit and not have to worry about your property on the regular.
However, most landlords find that there’s more work involved in managing rental property than they originally thought. Many of them eventually contract property management services, which help them in a number of areas. But why would they pay the additional fees? Doesn’t that cut into their profitability?
Motivations for Property Management Services
Property management services may cost a bit of extra money, but it’s well worth it to meet these landlord motivations:
- There’s too much to keep track of. There’s a lot of paperwork and documentation involved in being a landlord. You’ll need to keep track of all of it if you want to be successful. That means you’ll need copies of the lease agreements, a working knowledge of your tenants, documentation of any incidents, and of course, a way to track your ongoing expenses and income. With one or two rental units, this isn’t much of a problem, but if you’re looking to scale your operation, this can get overwhelming pretty fast. A property management service will take care of most of this tracking for you.
- Tenant screening is long and painstaking. Anyone who has ever had a problem with a tenant knows how valuable tenant screening truly is. Taking the time to look at job history, payment history, credit scores, and other factors can help you identify who’s likely to pay rent on time and cause few disruptions, and who may compromise your entire operation. Unfortunately, doing the work yourself is both tedious and involved, and you might stress yourself out reviewing candidate after candidate in the hopes of finding someone worthwhile. A property management firm usually handles this process from beginning to end.
- The landlord is no longer in the area. Most new property managers invest in the city in which they live—or somewhere within driving distance. That way, they can easily drive to handle any problems that may come up. But if you’re forced to move, you’ll need someone in the area to take care of the property—and that’s where property management services come in. With these scenarios, they’re a practical necessity.
- Inspections are complicated. In most areas, when one tenant moves out, it’s the landlord’s responsibility to have the property fully inspected. This usually only takes a day or two, but it can be expensive and time-consuming—especially if you have a full-time job. It gets even more complicated if you find something wrong that needs to be repaired; fortunately, a property management representative would be able to fix things on the spot, or at least put a plan in place to get it fixed.
- Maintenance is annoying. Some properties are newer and better built than others, but almost all properties will require maintenance on an ongoing basis. This may include routine fixes, such as repairs to the roof or damage to the plumbing, but may also include more superficial maintenance requirements like maintaining the yard. Depending on the property, this could take many hours per week—so it’s naturally appealing to have someone else take care of it for you.
- Evictions are a hassle. Evictions work a little differently in each state and region, but they’re almost always a legal hassle. For landlords, they’re a last resort when a tenant has not paid for several months or is actively damaging the property, but it takes weeks to months of work and legal battling to resolve the issue. Most management services step in to handle the eviction process for you when things get rough, sparing you the stress of doing it all yourself.
- Ongoing communication is unpredictable. As a landlord, you’ll be responsible for a number of ongoing communications, some of which are awkward and some of which are unpredictable. Tenants may be angry, accusatory, or flat-out hard to deal with; that’s why the communication angle of management services seems so appealing.
- Marketing and advertising are confusing or stressful. Vacancies are your biggest threat to profitability, so you need to fill your empty unit as quickly as possible. Unfortunately, most landlords aren’t well acquainted with marketing and advertising, and find the process of marketing the rental unit to be confusing—or at the very least stressful.
- Rent is difficult to coordinate. Most modern landlords, especially if they’re working solo or are new to the game, still collect rent through old-fashioned means—a check in the mail. However, property management services may be able to better coordinate and automate rent payments, offering tenants the ability to pay online (and thereby having a better system to track payments). This is convenient and touchless for the property manager, but remember, it’s also beneficial for your tenants.
- There simply isn’t enough time. As you navigate the world of rental property management, you may find that you simply don’t have enough time to keep up with all the requirements. Most of your effort will be upfront work, fixing the property, finding a good tenant, and so on, but the daily and weekly tasks can add up quickly to be a burden. When you find yourself overworked, management services are your best option.
Is It Worth the Cost?
Property management services are more affordable than you might think, though it is true that their monthly expenses will cut into your profitability. Keep in mind that these services will also boost your profitability at the same time, finding you better, long-term tenants, mitigating your risks, and ensuring that your operation runs as smoothly as possible. Because of this, most landlords who do use property management services find the investment worth it.
If you can sympathize with any of these motivations, you may consider property management services for your rental property. Contact Green Residential today to get more information on how we can help you!