Making the decision of whether or not to utilize the services offered by a property management company is often a very challenging one among real estate investors. Many real estate enthusiasts believe in the power and flexibility of the “do-it-yourself” mentality. Then, there are others in the industry that refuse to engage in any investment or associated activity without the assistance of property management professionals. The truth of the matter is, the benefits associated with the collaboration with a property management company far outweigh the interpreted risks. In this comprehensive guide, you will learn what these companies do and the advantages of utilizing one in your investment endeavors.
What is a Property Management Company?
A property management company is designated the responsibility, by a property owner, to maintain the status quo and ensure the appeasement of occupants associated with the property. If the property is not occupied, the company specializes in activities that will eventually lead to the occupancy of said property.
What Does a Property Management Company Do?
A property management company takes on a wide assortment of tasks for property owners/landlords. These companies handle both the day-to-day or routine operations, as well as emergencies that may arise with the property. Each company offers a comprehensive list to their clients that outlines tasks that will be delegated directly to the company and the responsibilities of the property owner. These companies employ their own staff to complete projects. In some instances, they may utilize vendors and other professionals for various projects.
There are basic activities handled by all property management companies. Then, there are companies that offer more comprehensive services. The following outlines the activities taken on and/or offered by the best property management companies offering services on the market today:
- The best companies will offer both full-service property management services as well as tenant placement services.
- All of the most reputable companies specialize in property marketing activities and listings associated with properties for their clients.
- Marketing and listing endeavors of the best property management companies include rental analysis, property consultation and evaluation services, professional photographs of the property, video-based virtual tours of the property, online marketing activities that are syndicated, a showing scheduler that offers 24/7 access, as well as showings that are supervised by agents.
- Tenant placement and tenant management services are a basic specialty among all property management companies. What separates basic companies from the best companies are the services offered in this category. The best will offer comprehensive tenant screenings, preparations associated with leasing, lease signings, move-in evaluations, move-out evaluations, the collection of security deposits, as well as tenant relation services.
- Financial reporting is a very important aspect of managing real estate. The best property management companies will offer monthly reporting with an online portal for tracking and monitoring purposes. In addition to this, property owners will receive epayments and estatements so that they may track all of the monetary aspects of their business. Additionally, year-end tax statements are provided to the owner of the property.
- Lease renewal services are offered by property management companies. The absolute best will provide a comprehensive analysis of the rental property, an audit of the tenant account, and negotiation on leases. Additionally, all leases will be written up, will cover the property owner, and the company will obtain the signatures required for the lease agreement.
- When evaluating property management companies, you will want to use a company that offers the highest level of management services. The best will offer services such as rent collection, the enforcement of leases, coordinate maintenance, around-the-clock emergency services, dispositions on security deposits, access to vendors, surveys, preventative maintenance, and comprehensive care.
What Guarantees are Offered by the Best Property Management Companies?
When searching for a property management company, you should choose among those that offer certain guarantees. The more guarantees offered, the better. The following outlines those that are most beneficial to property owners:
- A guarantee ensuring the top level of customer service
- A Results 1st Guarantee
- A guarantee regarding absolutely zero evictions
- A guarantee regarding the retention of tenants
- Pet Damage Protection
- A guarantee that maintenance will be done right the first time needed
How Do Property Management Companies Find Good Tenants?
When it comes to real estate, the secret to success is the tenant. It is the very core of your investment. A great property management will have a multi-point process to examining and finding tenants.
These companies find tenants by evaluating financial histories, background liens, any judgments against the potential tenants, credit scores, garnishments, bankruptcies, if there is a criminal history, and if the tenant has pets.
The companies also specialize in verifying income and the rental-based history of all potential tenants. Additionally, great companies will also meet with potential tenants, face-to-face.
What Marketing Strategies are Used by Property Management Companies?
There are property management companies that simply post a real estate listing in a paper or similar publication and place a “For Rent” sign on the property; however, great companies take marketing several steps further.
They will utilize robust marketing strategies to ensure that your rental gets the highest level of visibility. They will use special optimization software to assist in syndicating the property to a multitude of rental sites, will use cross-platforms for optimal coverage, and directly respond to all direct inquiries.
These marketing strategies will generate the highest level of activity for your real estate.
How Do Companies Ensure Top Tenant Relations?
Great property management companies will handle all of the communication with your tenants in a highly exclusive manner. They will converse, they will handle inquiries and answer questions, and they will focus on establishing relationships with your tenants. They know and understand that high-quality relationships are absolutely essential in terms of retaining tenants. These relationships are considered to be critical when it comes to you experiencing a return on your investment.
Do Property Management Companies Conduct Inspections?
Yes, many property management companies offer inspections on properties. The best companies actually specialize in these inspections. They will thoroughly inspect all aspects of your property and all of the associated systems.
Once this is done, they will make solid recommendations on any issues that need to be resolved in order to make the property rent-ready.
They will make certain that the property is legally ready for tenants.
They will also ensure that it ensures the optimal level of compliance when it comes to the terms of the lease that is created for your property.
It is best to choose a property management company that offers the highest level of attention when it comes to inspections.
Is Maintenance Coverage Important?
Yes, all rental properties must be regularly maintained. This helps to ensure the overall safety of your tenants and the property, itself. It also ensures that you do not find yourself facing legal compliance and safety issues. You should choose a property management company that offers maintenance coverage, 24 hours a day, 7 days a week. It should include both preventative maintenance and corrective maintenance. It should include a network of professionals and vendors that are both licensed and insured. It is also imperative that you choose a company that offers a first-time guarantee. That way, it is no additional cost to you if the work must be performed again.
Is Property Management Actually Worth the Money?
In short, yes, the amount of money that you pay a property management company is actually well worth it. The truly great companies out there will prove to be worth every penny if they provide the services and value to actually justify the amount that they charge. The secret to determining the value of the services of a property management lies in one area -the minimization of vacancy. In order to determine how much your gross revenue is, take the number of days your property is rented, subtract the vacant days, and subtract the associated expenses. Value lies in your property being rented. These companies specialize in ensuring your rentals are occupied.
How Do Property Owners Pay Property Management Companies?
Property management companies charge property owners to conduct the administrative tasks associated with rental properties and the upkeep of said properties. Each has a unique contract in place that outlines exactly how this is done. Terms may vary from one company to another, but the guidelines are often quite similar.
Generally speaking, most companies charge anywhere from 9% to 50% of the rental income. They may also charge for vacancies. These companies may also charge for additional activities, such as maintenance, credit checks, and accounting.
If possible, it is best to go for a company that has a set rate, but this may not always be possible. Reserve accounts may be required to handle certain types of expenses without consistently burdening the owner.
Dealing with Renters Who Default and Cause Problems
There are cases where renters will default and breach their leases. In some instances, renters may cause problems with the property that could jeopardize its overall safety and value.
In most instances, the company will attempt to work out any issues with the renters directly. In other instances, the situation may need to move through the legal system. Either way, the company serves as a professional third party that helps to ensure a successful resolution to the issue at hand. This makes it exceptionally easy to work through any complications that may arise.
What are the Benefits of Having a Property Manager?
There are multiple benefits to having a property manager handle your rental property.
- Property managers help mitigate your liability. It is not at all uncommon for tenants to try to falsely accuse landlords of less-than-favorable tactics in rent collections, illegal practices in the eviction process, and even negligence when it comes to maintenance. By using a property manager, the professional is able to handle and deflect false claims and other potential liabilities that could negatively impact your business.
- Property managers specialize in seeking out and discovering the highest-quality tenants. By having better tenants at your disposal, your property will be better protected and you will be able to count on the income produced at said property. This makes for a better experience in the real estate business.
- While vacancies are bound to occur, you will find that they are shorter when you have a property manager working for you. They specialize in ensuring that your asset is kept in service at all times. They handle all affairs with your real estate business with the highest level of efficiency and the highest level of urgency.
- By having a property manager on your team, you will find that your maintenance costs are much lower than if you did not have their assistance. These professionals have a comprehensive access to a wide network of professionals and contractors at their disposal.
- When renters leave your property, you will find that they provide you with better reviews if you have a property manager in place. This will prove to be exceptionally helpful if you are seeking to attract high-quality tenants quickly in order to occupy your empty rentals.
Property managers are worth the cost. In fact, you should not pursue any real estate endeavors without the assistance of a property management company. If you choose to do so, you will quickly find that the success that you experience falls significantly below that which you expected. These companies specialize in taking care of you -the client. We here at Pioneer Property Management offer both full-service and tenant placement only services. If you are ready to take your business to the next level, you should contact us immediately by calling the following phone number to learn about our wide array of services: 720-839-7482