I have met many rental property owners that have taken the position that hiring a professional property management company to manage their rental is a waste of money, especially when they could simply manage it by themselves.
I believe this is a “penny wise, pound foolish” approach. Of course, the person who decides to do it themselves will save the monthly management fee they would have paid to their property manager, but they risk losing much more in the long run.
A good property management company is worth their weight in gold. The problem is, not every property management company is good. To make matters worse, rental property owners do not generally find out they have engaged a bad property management company until after the damage is done.
So, how do you know you have a good property management company? A reasonable indicator is when your property management company provides you a benefit that far exceeds the expense of their monthly management fee. In other words, you should expect your property management company to provide value for the fee they collect.
For example, a good property management company can shorten the time it takes to prepare your property to be rented. One reason for this is because they are able to coordinate the repairs and maintenance needed to get your property ready to rent much quicker than you could on your own. This is true because many vendors give property managers preferred treatment since the property management companies control so much of their business. So, by reducing the amount of time your property is vacant, your property manager is essentially increasing your rental income.
In addition to reducing the time it takes to prepare your property to rent, a good property management company can also reduce the associated costs of the preparation. This is because they are generally able to negotiate much better rates on the repair and maintenance work to be performed on your property. Consider this another benefit of controlling so much of their vendors business.
A good property management company should also be able to quickly identify and define the optimal rental rate for your property. They have access to a data base that is only available to licensed realtors called the Multiple Listing Service (MLS). The MLS contains valuable information about exactly how much similar properties in your area have recently rented for.
Being able to quickly and accurately determine the optimal rental rate for your property benefits you in two ways. First it prevents your property from being on the market for an extended period of time because it is priced too high. Second it helps you avoid renting it for an amount that is less than the market will allow.
When you do find a qualified tenant, a good property management company will help you thoroughly screen your prospective tenants. Property management companies regularly screen tenants and as a result are able to identify potential red flags that might not be apparent to you. Preventing a bad tenant from moving into your property is invaluable.
Perhaps the most valuable thing that a good property management company can provide you is knowledge. Experienced property managers are well versed in landlord tenant laws and will ensure they are followed. This means they can significantly limit your exposure to litigation stemming from your tenant.
It is clear that a good property management company can be a valuable asset. The difficult part is finding one.