Are you looking to invest in a rental property or maybe a few in the Denver Colorado Area? This has proven to be a great way to diversify an asset portfolio and an investor will typically find themselves contemplating over the big question:
Why should I hire a property manager when I could manage the property myself?
The answer usually is: it depends. Property managers commissions typically range from 7% and 20% of the gross rent. From a good investors perspective this is a cost to owning the property, just like maintenance, taxes, insurance, and a variety of other expenses associated with real estate investment.
That said, there are several big advantages to hiring a property manager or a property management company. We have listed the top 5 we think should be considered.
- The right property manager will stay up to date on local, state, and federal laws- There are federal rental housing laws such as the Fair Housing Act. And there are state and local laws that vary based on location. Some cities, like Boulder Colorado, require rental properties to be licensed under City law. In Boulder rental properties must pass a detailed property inspection and pay an administrative licensing fee. If these laws are not known and followed the fines could cost as much as the property manager’s fees.
- A good property manager gives the owner more free time. We have all heard the old adage “Time is Money” right. Who wants to pick up the phone at midnight just to heard that a drain is clogged or a stove isn’t working properly? I don’t think anyone would want that. A good property management company will handle those calls and preform routine preventative maintenance inspections to keep these calls from happening. This type of service allows the investor to truly look at this investment as a passive investment just like a mutual fund.
- Good property managers shorten the vacancies. The right property manager is constantly marketing and showing potential tenants the properties that they manage. The investor may not, and probably does not, have the kind of time necessary to devote to showing the property. This means an obvious increase to vacancy time, which means that the owner is not receiving rent for that unit.
- Property managers take care of a lot of administrative work. This is not only a time-saver, but is a must to keep all of the books straight to make sure you are making a return on your investment and your tax information is accurate. The right property management company will keep track of expenses, will handle receipts, and provide monthly, itemized accounting information to property owners. This saves a lot of hassle when it comes time to file taxes.
- Good property managers can increase property values – This is one often overlooked value of using the services of a property manager. If the owner ever wants to sell the property, one excellent selling point in any advertisement is a line like this: “Property management already in place.” This makes it easy for new (and even existing) real estate investors who are looking to enhance their portfolios with good properties that already have sound management.
While good property managers certainly are not free, the advantage that can be gained from investing in their services will create a solid return on investment. Real estate investors who don’t want to have their time monopolized by administrative tasks and management hassles would do well to use the services of a good property management company.
Call 720-839-7482 if you want to speak with one of our property managers about your investment.