Investing in a property is an excellent strategy if you’re looking to generate some extra income. However, managing property comes with responsibilities that can complicate making a profit. Things such as maintenance, filling vacancies, and establishing standard operating procedures can make your investment property more of a hassle than it’s worth.
If you have multiple properties or you are located in a different state, hiring a rental property management company can help unload some of the responsibilities that bog down your ability to make a profit off your investment.
This article discusses the pros and cons of hiring a rental property management company. Continue reading to see whether hiring one of these companies is compatible with your investment strategy.
What Is a Rental Property Manager?
Property managers are third-party operations that handle the day-to-day operations of investment properties. These companies can manage an array of properties, anywhere from family-homes, to downtown studio apartments.
Many rental property managers are turnkey operations. A turnkey operation refers to companies that handle the administrative duties involved in owning and operating a rental property. They can address issues such as rent collections and maintenance requests.
This concept may lead you to believe that you won’t have any control over your investment property’s day-to-day operations. However, different contract structures determine how much final-say the owner has instead of the property management company.
Pros of Using a Rental Property Management Company
The following is a set of examples detailing the pros of a rental property management company. Most of these benefits pertain to taking responsibility off your hands and standardizing operations that would be challenging to create and implement yourself.
When you choose to hire a rental property management company, you can be confident that who you hire has valuable industry experience. These professionals understand your property value and how it pertains to the market. They will also know how to advertise based on your property and its location.
Reduces Your Responsibilities
Owning an investment property entails a laundry list of responsibilities. Fulfilling these responsibilities can be challenging, especially if your investment property is a side gig. Landlords might also have a portfolio of investment properties.
If this is the case, landlords might have too many properties to manage or live in a different city than their investments. In areas like Scottsdale, there are vacation rental management companies that can help ease the workload for these landlords.
Improves Your Maintenance Response Time
All homeowners understand what it’s like to have mounting issues with their homes. Often, it can seem like a never-ending cycle of fixes. Rental property management companies put an infrastructure in place for your residents so that you don’t need to worry about every maintenance issue.
If you’re the only one managing the process, you have to deal with every maintenance issue that arises personally. 3:00 am on a Sunday? Doesn’t matter. The tenants are calling you to fix the problem. When you have a rental property management company, they can shoulder most of the maintenance requests so you can continue to enjoy life and fulfill other responsibilities.
Finding tenants isn’t easy, especially if you’re in a highly competitive market. The rental management firm will understand your market, and they know where to look for tenants. Through social media campaigns, email outreach, and other marketing tactics, you can fill vacancies quicker when you use rental property management companies.
Even if you have a prospective resident and understand how to reach new tenants, do you want to deal with all the paperwork that comes with it? Rental property management companies can take this responsibility off your hands.
Set the Right Rental Rates
These companies understand your market, and they know fair pricing for your area. If you live in a different location or own multiple properties, do you want to conduct market research into these places and adjust your asking price accordingly? Outsourcing these responsibilities can save you time and money.
Cons of Using a Rental Property Management Company
Despite the many advantages of using a rental property management company, there are a few drawbacks. The following sections detail some of the disadvantages of using a rental property management company.
The most apparent drawback to outsourcing these responsibilities is that they cost money. When deciding whether to use a property management company, you should weigh how much impact it will have on your bottom line. If you don’t have the right budgeting in place, you shouldn’t sacrifice your income to save you some time.
Property management companies typically collect 7-10% of the month’s rent. For example, on a $1500 property, you can expect to pay $150 to the property management company.
These costs bring up an essential question for landlords when deciding on a rental property management company. The question you should ask yourself shouldn’t be whether you want a property management company. It should be whether you have the necessary funds to turn a profit.
Lack of Involvement
Another drawback to using a property management company is that you might not have as much ability to control the maintenance and execution of your property’s day-to-day operations. If you have a specific way of managing your property, outsourcing these responsibilities might not address the issues you care about.
Lackluster Screening Processes
When choosing property management companies, landlords should conduct a thorough vetting process to determine which ones are the most reliable. Some companies might perform lackluster screening processes for their renters, and you might be left with a mess.
Conclusion- The Pros and Cons of Using a Rental Property Management Company
Investing in property is an intelligent investment. Few things offer as much stability as owning land. However, if you overextend yourself, investment properties can turn into money drains.
If you own an investment property, hiring a rental property manager can help you keep your affairs in order. These companies take most of the administrative duties off your hands and fulfill the day-to-day responsibilities that can hamper your investment. It’s up to you to decide whether rental property management companies will help or hinder your investments.
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