Like is the case with any other investment, rental property investment requires round the clock effective property management. A rental property can only yield returns when properly looked after. This is why it's very important that you choose a good property management company. What does a property management company do? An ideal property management company will work tirelessly on your behalf to ensure that your rental property yields good returns steadily.
The definition of property management is managing of property that is owned by another party or entity. Property management companies work on investors' stead. First of all they ensure that a property is adequately refurbished and is ready for occupancy. Secondly, the property management companies act to source tenants. We all know that tenants are the backbone of any rental property investing business. Without them, your real estate investment simply remains fruitless.
Whichever way you may look at it, property management companies play a very crucial role in the success of turnkey rental projects. Below is a summary of five key roles which property management companies play in turnkey rentals:
- Refurbishment and renovation of a turnkey property.
- Identification and signing of tenants and occupants.
- Administration of projects and rent collection.
- Repairs and maintenance of turnkey properties.
- Public relations and compliance with laws and regulations.
Benefits of Using a Property Management Company
To do it myself or to have a property management company manage my rental property on my behalf? This is a question that many rental property investors keep asking themselves. Well, either of these two ways is correct. Your rental property investment can succeed whether managed by your own self or by a property management company. All that is vital is that it be managed effectively.
Can a Landlord Be a Property Manager
Even though it's quite okay to manage your own turnkey rentals, doing so is not always possible for all landlords. There are a number of situations which call for you involving outside aid. An illustration of this is a situation whereby you've purchased a rental property in a far off place or even a different state. In such a scenario, you'll have to seek help from property management companies because you can't be physically present there to do it yourself. Therefore, in many cases a landlord cannot be a property manager.
What Does a Property Management Company Do
Property management is the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and accountability given for its useful life and condition. Engaging a property management company is indeed a worthwhile venture. What does a property management company do? Far from the fact that they can help you look after distant turnkey rental properties, property management companies also usually have in-depth knowledge of the local real estate market, prices and trends. Years of being in real estate offers them a vast understanding of this field and its dynamics. Such kind of knowledge at the end of the day is beneficial to your rental property investing business.
A property management company does a variety of tasks such as:
- Tenant screening and selection.
- Rent Collection.
- Handling Evictions.
- Property Inspections.
- Maintenance, Repairs, and Remodeling
Involving a property management firm will also save you the stress of worrying about your investment. With a management firm overseeing your project for you, you can get to relax wherever you are knowing that everything is alright. It's reassuring to know that there's someone trustworthy taking care of your property, placing in tenants, and ensuring that all is running smoothly.
Benefits of Using a Property Management Company
What does a property management company do? What is the benefit of hiring them? Well, another reason to involve a property management company is because of the goodwill such companies enjoy with the public. Tenants are likely to trust an established real estate agency as compared to an individual investor. They're therefore likely to agree to occupy your property when a management firm is involved. This is great benefit of using a property management company.
All in all however, you should just stop and consider the perks which come with engaging a turnkey property management firm. You get to have someone who understands the property market and its dynamics. You also get to have someone who knows how and where to source for tenants. Also, someone who knows about property pricing. In addition, you also get one who understands the regulations governing property ownership in a given location. What more can you ask for?
How to Choose a Good Property Management Company
In a growing pool of property management companies, you may be wondering how you can choose the right one. You aren't alone. So many rental property investors are spoilt for choice regarding property management companies. There are so many companies present as of today and to make it worse, they're all claiming to be the best.
Choosing a rental property management company need not be a herculean task though. You can easily choose a suitable firm by carefully making certain considerations. Below is a list of 6 tips to help you choose a good property management company:
1. Do your own research
You want to find a suitable property manager in a given location? Why not go ahead and conduct your own independent research? They always say that the internet is your friend. Yes, the internet is still your friend even in matters finding the best property managers. Take to the net straightaway and search about property managers in your area of interest. You'll be presented with a number of results.
From the results you get, you can be able to identify some suitable prospects. It's vital that you conduct further checks to know who a said property management company really are. Are they effective or reliable? What for instance are clients saying about them in reviews? All these questions will help you make up your mind.
2. Get referrals
Getting a second opinion will never do you any harm. In any case, it will you make the best possible decision and to avoid pitfalls you would be otherwise ignorant about. Take time and request others to recommend suitable property managers for you. You can ask any reliable source. It's however more advisable to only ask persons who are closely involved in real estate. They are more likely to point you out in the right direction than ordinary people.
In regards to getting referrals, be sure to ask your source about their experience with the property management company they're suggesting for you. Was the property management company reliable? Did they meet their end of the bargain? Would they use them again? These are the kind of questions which you should be asking your sources.
3. Compare different property managers
It's not advisable to settle on a single property management company all at once. Try and compare different property managers to see what they have to offer. You can for example look at information regarding how they advertise their properties, manage their tenants, collect rent, and carry out repairs and maintenance. Once you have such information, pick the company you feel meets your vision for your investment best.
4. Look at property management company's current projects
A company's current involvements will tell you whether they're a suitable property manager or not. What kind of rental property is the management company currently overseeing? Does your property fall within or anywhere close to that category? Ask yourself this kind of questions. Remember, a property manager dealing with your kind of real estate investment is more suitable for you than one dealing with a different type of investment.
5. Check property management company fees
Before you sign an agreement with any property management company, it's in order that you get their terms of service right. You should for example have a clear understanding of what entirely their responsibility is as a property management firm. Likewise, your responsibility as a client should also be clearly spelled out for you.
What does a property management company charge?
Aside from the terms of agreement, you should also have sufficient information regarding property management company's fees. How much do they charge you as an administration fees? Are there any other charges which you'll be billed for in the course of time? Be sure to get clear answers on these and understand their property management fee structure.
6. Establish company's licensing and certification
Before you pen your signature with any property management company, try and establish that it is indeed really genuine. Genuine companies are usually licensed and registered by the concerned authorities. Most states, such as New York, Texas, and Colorado, require property management companies to be licensed real estate brokers if they are collecting rent, listing properties for rent or helping negotiate leases and doing inspections as a third-party.
A property management company in this case should be licensed to practice as a real estate administrator in your given region. Aside from this, they should also be certified and registered with a governing body such as Institute of Real Estate Management. A property manager may be a licensed real estate salesperson but generally they must be working under a licensed real estate broker. Most states in the US have a public license check system on-line for anyone holding a real estate salesperson or real estate broker's license. A few states, such as Idaho, Maine, and Vermont do not require property managers to have real estate licenses.
Property Management Industry Statistics
As rental properties in the US are increasing, it means more will be the demand of property management companies to manage those rentals. The Rental Protection Agency reports that the increasing growth rate of new renters means about 2,654 individuals are entering the rental market every day.
Renter Population Factors:
According to Dmdatabases.com some rental statistics are as follows.
|ALL U.S. HOUSEHOLDS: RENTERS VS OWNERS|
|Renter Occupied Housing||33%|
|Owner Occupied Housing||67%|
|Total Renter Occupied Units||33%|
|Total Owner Occupied Units||67%|
|Total Residents in Rental Household||32%|
|Total Residents in Owner Household||68%|
|16 or More years||10%|
Homeowner rates are falling, renter vacancy rates are in decline, and each day there are more and more people renting. With home ownership out of reach of many people, the cost of renting is rising faster than inflation, forcing even more low- and middle-income Americans to pay a large share of their income for housing. The flip side of the decline in home ownership is a significant increase in rentals and a significant rise in the cost of renting. This all is a good sign for the growth and demand of property management companies.
Should You Hire Property Management Company
As a rental property investor, a property manager has the power to make or break your rental property investment. An inept manager will almost certainly bring your investment tumbling down. For this reason and more, it's always important that you do your best to get the right property manager and get to know what does a property management company do.
You should hire property management companies because of these good reasons:
- If you’re not a hands-on landlord or don't have time to devote, hiring a property management company to manage your real estate investment might be the right choice for you. Property managers will take a cut of your rental income, but they can also help streamline your rental property investing business.
- Experienced property managers see hundreds of applications, so their trained eyes are more likely to notice potential red flags when reviewing an applicant’s paperwork. They will manage the tenant screening process and can improve your chances of landing a reliable tenant.
- Property managers will ensure that the rent is paid on time.
- They will manage your rental property and keep your renters happy. Happy renters means less rental vacancy.
Follow the guidelines above and you'll get to hire the best property management companies.