Many people ask why is property management important, or even if they need a property manager to assist them with their real estate investment, rental home, second home, or even a short term situation until they sell a property. Depending on your needs, property management could be right for you or wrong for you. Keep reading to find out if the decision to hire a property manager could be the right choice for you.
Why is property management important?
If you’ve owned a home or even rented a home, you already know why property management is important. Let’s say you’ve found the perfect apartment on the perfect side of town at a great price, but soon after you move in, the heat stops working or the oven doesn’t fire up. Your first call is directly to the rental office and you hope and pray that they have a competent technician that can have your issues resolved in 24 or 48 hrs. If you own your home, you may call the home warranty, but if you have an issue that isn’t covered, you start calling everyone you know to see if they have a good handyman or plumber’s number in their phone. How about those nice 90 or 100 plus degree summer days if you live in an area that has those temperatures? Someone has to make sure the lawn is mowed and landscaping is kept up regardless of how hot it is outside. If you don’t have a rental office to call on that has maintenance technicians and tradesmen employed or under contract, you guessed it! You are the property manager by default!
The true cost of maintaining a property
According to a well known homeowner insurance company, the average homeowner can expect to pay one percent of their home’s current market value each year in maintenance expenses. The expenses can include lawn care, wiring, plumbing issues, repairs to roofing, fixing floor such as carpet and tile, replacing ceiling fans, repairing doors, repainting and patching walls, pest control, and additional exterior building expenses such as power washing and deck treating.
Having professionals periodically check the major systems of your house can save you money in the long run. Check out the comparison below showing the annual cost versus the replacement costs if these major systems are not properly taken care of.
Why use a property management company?
If you’ve ever asked yourself the question, “Why do you need a property manager?”, continue reading to find out why………………..
Absentee Ownership
If you dread getting a phone call in the middle of the night for a tenant issue miles away or even in another state, having a property manager means you have someone close by or in the same area who can solve the issue right away and keep your phone from ringing off the hook. Also, it would be good to have someone dependable who can drive by the property or do inspections to make sure the tenants are taking care of your investment.
Multiple Properties
Any maintenance issues, coordination of technicians, handymen or contractors, tenant questions, rent payment issues, or filling vacancies is multiplied when you have more than one property. If you are a business owner or have a full-time job, it can be difficult to juggle all of these responsibilities. If conditions in your area, housing industry cycles, or unforeseen events cause a change in housing demand, you may need an expert to help reduce the time that your properties are vacant.
Inexperience
If you are new to managing a property, you may not have an existing list of contractors, handymen, or skilled tradesmen to call on if you need to do repairs, upkeep or renovations. According to the National Apartment Association, the turnover cost for a property owner between the tenant that moved out and the new tenant moving in could be $1,000 or more including rental loss. This cost estimate is based on an apartment unit, but you can use this estimate and change it to fit a house, duplex, townhome, etc. If you don’t have experience with getting a property back to rentable condition or professionals you can trust to make the repairs, your turnover costs could be extremely higher.
Legal Compliance
Most states and localities have landlord-tenants laws and procedures that include tenant’s rights, tenant eviction and getting back legal possession of your property. You must also know about Fair Housing laws to make sure you don’t expose yourself to lawsuits or fines. A property management company is expected to stay up-to-date with federal, state and local laws regarding housing and landlord-tenant laws and guidelines.
Property Value
It may not be obvious, but a good property management company should increase rather than decrease the value of your property. Property managers have a vested interest in the value and upkeep of your property. A well-kept and updated property can continue to command rents at the higher end of local rental rates, and allow you to take advantage of the ability to raise rents as rental rates rise in your area. Because property managers typically receive a percentage of tenant rents they collect, higher rents mean higher income potential for the property management company. A good property manager should be motivated to identify and recommend maintenance needs and repairs, enhancements to curb appeal, and general steps that could increase the value of the property if acted upon.
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