Owning a rental property is a full-time business and career. Like any other business out there, it needs professional managers to make it successful and realize returns on investment (ROI). A rental property management company does all the hassles of ensuring a property is in its best status to attract and keep tenants.
If you’ve invested in rental properties and still buttling with the decision of hiring a professional property manager, you could be risking a lot. You ought to act first to safeguard your most valued investments. Of course, those cons you might have heard about dealing with property managers are there. But the pros undeniably outweigh the disadvantages.
What’s a Property Management Professional?
Perhaps shedding some more light on what professional property managers are and what they do could best fast-track your decision-making.
A property management professional is a third-party entity handling all the daily processes of real estate investments. The services differ with a management firm; some manage single-family houses, luxury properties, and multi-unit properties while others manage everything.
Most firms offer to handle many issues, including property marketing, rent collection, maintenance, and even local authority compliances. Depending on the contract terms, the property managers will do everything and leave the owner to make critical decisions.
The following are some of the services offered by the majority of property management professionals:
o property marketing and advertising.
o Potential tenants screening and interview.
o Lease agreement execution.
o Rent collection.
o Maintenance and repair.
What If I Choose to Handle My Real Estate Investment?
Some property owners like to give a personal touch by handling their property management hassle. This approach can work if you only have a single-family house that you live nearby, and you have no plans to expand soon.
Still, it would mean that you don’t have anything else going on apart from focusing on that single property.
Most of the time, this is not the case. Every investor has plans to expand their venture. If you choose not to hire a property management professional, you’re more likely to encounter the following challenges.
1.Charging Below Market Rate Rents
Most property owners who are not up to date with the current market rates risk undercharging tenants grossly and deceiving themselves. On the contrary, if the rent is highly charged than the market is offering, the property will remain vacant for the more significant part of a year.
Finding a balance needs some serious expert analysis and experience in real estate. And that can only be done best by a professional property management firm.
2.Losing potential tenants by poor advertising
Without proper advertising methodology, it might take longer to find good potential tenants. A property manager has a broad syndicated distribution network to reach out to potential tenants in the fastest timeframe.
3.Letting rowdy tenants in through improper screening
Before allowing a tenant in, it’s critical to do a thorough screening to avoid late rent payments, property vandalism, and disorderliness, among other issues. Property managers best know what to check and how to identify a desirable applicant. A landlord might be tempted to accept a tenant once they’re offered the money, especially when the house has been unoccupied for long.
4.Risk of expensive lawsuits
Local authorities have regulations about how property owners should conduct themselves. For instance, if a tenant makes changes to the property without following proper guidelines, it’s the owner that could face litigation. The latter might not be aware of all local laws regarding property changes. But property management professionals are good at outlining the regulations to tenants and enforcing them.
5.Maintenance irregularities
Without a proper channel to report maintenance and repair requests, minor issues remain unattended and eventually grow to massive unsafe, and probably legal matters. Property managers will have a clear protocol for maintenances and repairs to be done on time.
6.Unauthorized dealings on property
Repetitive bad behavior of tenants can implicate the landlord in serious legalities. As such, timely inspection of the property and neighbors is necessary. The landlord might not do regular, thorough checks, but a property manager will have scheduled inspections strictly followed.
7.Rent arrears without penalties
Tenants can fall behind in rent payments occasionally. But when it becomes frequent with the accruing sum being too high, it might be difficult to force them to pay or evict them. When some motivation is in place, they’ll always do what’s necessary to settle in time. Property managers are adept at enforcing late payment fees or doing evictions.
8.Unauthorized persons or pets residing in the property
What does the lease agreement say about accommodating unknown persons for long? Are there any strict requirements not to keep some pets? At times, landlords may not structure their lease agreements well to state these requirements, or the language could be too vague for tenants. Even if it’s so, landlords could have difficulty removing squatters or unauthorized animals from the property.
9.Frequent non-urgent emergency calls
There’s nothing so distracting as receiving calls from your tenants in the middle of the night about a failing toilet flapper ball. Some tenants can report just anything as an emergency. Even when the landlord is out of town, they can call in their 24/7 emergency service providers and slap the landlord with the bill. A property manager will always be around to handle all sorts of emergency calls from troublesome tenants.
10.Costly legalities in evicting tenants
If it gets to the point of evicting a tenant, litigations may be involved. The landlord might bear the costs of hiring attorneys to execute the eviction legally. If the lease agreements had no proper documentation, it might be very challenging to find legal representation.
11.Failure by tenants to do basic maintenance
Some tenants can fail to do their duty in doing essential maintenance duties such as replacing AC filters. At first, it may seem like non-issues, but when the undone maintenances pile up, they can result in costly repairs to the owner.
12.Trashing up the place when vacating
If the tenant had wrangled with the landlord, they might likely cause costly damages to the property when moving out. Hunting them down for compensation can turn out as expensive as doing the repairs. A property manager can supervise the whole process of moving out to ensure no damage is done to the property.
13.Costly disrepairs
If no regular touchpoints are done, minor repair issues can grow into more extensive and expensive repairs. For example, a leaking pipe may go unnoticed and unreported by a tenant. If it goes for long, it could cause a series of other problems like wood decays.
These are just the tip of the iceberg of problems you may encounter if you don’t have a property management professional to safeguard your valuable investment. Your rental property is a business, so treat it like one by getting reputable managers on board.
I'm Liran Koren. It’s still hard for me to call myself a real estate pro. Also, I'm a co-founder of Luxury Property Care. I believe that through common work we can create a healthy ecosystem, that serves investors, landlords and even tenants altogether.