A good property management company can easily become one of your greatest assets.

What Are The Benefits of Using a Property Management Company?

A competent property manager can add significant value to your investment, which is why many seasoned real estate investors will tell you that a good management company is worth its weight in gold.

Here are a few ways that good property managers earn their keep:

Higher-Quality Tenants

Think of tenant screening as the moat and drawbridge around your castle. It’s certainly possible to get a bad tenant out of your home once they’re in, but it’s a real hassle, and you’re way better off not accepting them in the first place. A thorough screening process results in reliable tenants who:

• pay on time;
• rent longer;
• put less wear-and-tear on the unit; and
• generally cause fewer problems.

An experienced property management company has seen thousands of applications. They know how to quickly dig for the real facts about candidates, and they know how to analyze that information for warning signs. By letting a management company handle the screening, you’ll also shield yourself from rental scams directed at owners, as well as discrimination lawsuits resulting from inconsistent screening processes. This kind of experience takes time, and because it means avoiding bad tenants, scams and lawsuits, it’s arguably one of the most significant benefits a property management company can provide.

Fewer Costly and Time-Consuming Legal Problems

Veteran landlords know that it only takes one troublesome tenant to cause significant legal and financial headaches. A good property manager is armed with knowledge of the latest landlord-tenant laws and will ensure that you’re not leaving yourself vulnerable to a potential lawsuit. Each state and municipality has its own laws. Coupled with various federal laws, these regulations cover a number of areas, including (but not limited) to:

• tenant screening
• safety and conditions of the property
• evictions
• inspections
• lease addendums
• terminating leases
• handling security deposits
• rent collection

Avoiding a single lawsuit can more than pay for the property management fees, as well as spare you time and anguish.

Shorter Vacancy Cycles

A property manager will help you perform three critical tasks that affect how long it takes to fill your vacancies.

1. They’ll improve and prepare the property for rent. A property manager will suggest and oversee cosmetic improvements that maximize revenue.
2. They’ll determine the best rent rate. If the rent is too high, you’ll be stuck waiting. If it’s set too low, you’ll lose money every month the tenant is in the unit. Determining the optimal price requires deep knowledge of the local market, data on recently sold comparables, and access to rental rate tools.
3. They’ll effectively market your property. An experienced property management company has written hundreds of ads, so they understand what to say and where to advertise in order to get a larger pool of candidates in a shorter period of time. Additionally, their volume means they can usually negotiate cheaper advertising rates online and offline. Lastly, they’re familiar with sales, so they know how to close when they field calls from prospects and take them on showings.

Better Tenant Retention

It’s easy to see the effects of lost rent, but high tenant turnover rates create other, equally serious problems. The turnover process involves thoroughly cleaning the property, changing the locks, painting the walls and possibly installing new carpeting and completing small repairs—not to mention all the effort associated with marketing, showing, screening and settling in a new tenant. This time-consuming and expensive process can be averted by keeping tenants happy and well cared for. A good property management company will have a time-tested tenant retention policy that ensures happy tenants with lengthy stays in your properties. These kinds of programs require a consistent, systematic approach, which is exactly what a good property management company can provide.

Tighter Rent Collection Process & Easier Evictions

The way you handle rent collection and late payments can spell the difference between success and failure as a landlord. Collecting rent on time every month is the only way to maintain consistent cash flow, and your tenants need to understand that this is not negotiable. Hiring a property manager puts a buffer between you and the tenant. It allows the property manager to be the bad guy who has to listen to excuses, chase down rent, and possibly evict your tenants.

If you let them, your tenants will walk all over you. They have to be trained to follow every part of the lease or deal with the consequences. Property managers have an advantage, because tenants realize that they, unlike the owner, are only doing their job and are obligated to enforce the lease terms. Many property managers will tell you that it’s considerably easier to manage other people’s units rather than their own for precisely this reason.

Strict laws govern the eviction process. So doing it wrong, or trying to evict a “professional tenant,” can be a major fiasco. A good property management firm knows the law and has a good process for obtaining the best possible outcome, given the circumstances. Never having to handle another eviction can be a compelling reason to consider hiring a property management company.

Assistance with Taxes

Property management fees are tax deductible, as well as some other expenses involved in owning and renting residential property. (Note: The Realty Medics can provide an itemized cash-flow analysis broken down for the year or on a monthly level, if desired). This saves owners the significant time and hassle of saving every receipt.

Lower Maintenance and Repair Costs

Timely and effective maintenance and repairs keep tenants happy and preserve the value of your investment, which make them a critically important part of landlording. By hiring a management firm, you gain access to their in-house maintenance staff, as well as a network of licensed, bonded and insured contractors who have already been vetted for good pricing and quality work.

This can translate into significant savings compared to going online and hiring a handyman yourself. Not only is the firm able to get volume discounts on the work, they also know the contractors and understand maintenance issues, so they’re capable of intelligently supervising the work. (Note: All vendors hired by The Realty Medics are licensed, bonded, insured, and the work is warrantied.)

Increase the Value of Your Investment

Preventative maintenance is critical, and the best way to achieve it is by putting systems in place that can catch and manage maintenance and repair issues early—before they grow into larger and more costly problems. This requires a written maintenance check program, detailed maintenance documentation and regular maintenance visits.

A property management firm can also offer suggestions and feedback on upgrades and modifications in terms of how they’ll affect the rent you can charge, as well as their impact on maintenance and insurance.

Personal Benefits for Owners

• Less stress. You avoid dealing with middle-of-the-night emergencies, chasing down rent, evicting people from your property, tenants who wreck your property, rental scams, lousy vendors and piles of paperwork.
• More freedom. You can live and invest wherever you want, without the constraints of needing to be near your properties. Additionally, you can live and travel free of the need to always be available for your tenants. Once you’ve found a good management company, it doesn’t matter if you live in the same state as your properties. Some landlords live in other countries and simply collect their check every month without ever seeing the property.
• Free up more of your time. Time is money, and for many investors, their time can be more profitably spent in areas other than servicing their properties. When you focus on asset management, you’re working ON your business. When you manage your own properties, you work IN it. Additionally, you have more time to spend with family or friends doing the things you truly love to do.

A Final Thought

Of course, this is an ideal scenario. These results can only be expected if a management company is competent, trustworthy and a good fit for your property. Be aware that a poor choice of a property management company can produce its own headaches.

Property Management Hiring Guide

Basics of Property Management

1. 11 Questions for Determining if You Need a Property Management Firm
2. Property Management Services: A Complete List
3. What Are the Benefits of Using a Property Management Company?

What to Look for in a Property Management Company

1. Property Management Fees, Part I
2. Property Management Fees, Part II
3. Handling Tenant and Owner Funds
4. Setting and Collecting Rent
5. Property Maintenance and Repairs
6. Property Inspections
7. Tenant Marketing and Retention
8. Tenant Screening
9. Examining the Organization: Background, Qualifications, Portfolio
10. Examining the Organization: Size, Staff, Customer Service

What to Look for In a Property Management Contract

1. Responsibilities and Representations
2. Contract Termination
3. Indemnification and Boilerplate Items