If you ask a financial guru or savings maven for the key to building long-term wealth, there’s a good chance they’ll say real estate investment. They’ll tell you it’s a crucial tool to building passive income and leveraging your resources into an ever-growing, snowballing net worth. That’s why, for new real estate investors, bringing a property ‘online’ is a bit of a shock.
It turns out that managing a property requires tremendous work. And to do it really well takes skills and experience you simply can’t develop overnight. So while real estate investment is, in fact, an immensely powerful financial tool, it’s only part of the story. If you want your investment to thrive, you have two options: Either become a great property manager, or hire a great management company.
So what exactly does a property management company do? We’ve rounded up a list of 8 key services they offer. And remember, these are all things you can do yourself as an owner and landlord – the question is simply whether you have the time, energy, and expertise.
1. Rent pricing
When you put an available unit on the market, how will you choose an appropriate rental rate? Setting the rent too high will make it difficult to attract residents, potentially increasing your vacancy rate, while setting it too low will make it hard to cover your mortgage cost and maintenance overhead. A property management company will have enough insight into the local rental economy to know exactly how high you can realistically set the rent, given your property’s location, quality, and the time of year of the vacancy.
2. Tenant selection
Choosing the very best tenants from a flood of applicants can be daunting — and it’s a high-stakes decision indeed. One or two problem residents can wipe out your income for the year, or even put you in debt. A professional management service will handle all of this, conducting the deep background checks, credit checks, and reference checks you need to make sure your residents are trustworthy and financially responsible.
3. Document processing
Drawing up contracts with vendors, signing lease agreements with tenants, filing paperwork with your municipality, navigating taxes, etc. is a huge administrative burden. And it’s crucial that you do it right – or risk falling afoul of the law. This is yet another set of tasks you’ll hand off to your property manager.
4. Vacancy filling
Spend any time in landlord and property investor forums and you’ll hear endless discussion of vacancy rates. This only makes sense. Every month you have an empty residential unit, you’re bleeding money. (After all, you still have to pay the mortgage.) A property manager will market your vacancies and fill them as quickly as possible, thus keeping your cash flowing. It sure beats stapling up flyers and posting on Craigslist.
5. Emergency repairs
When a pipe bursts, the roof starts leaking, or a furnace goes on the fritz, it’s your legal responsibility to fix the problem immediately. For a landlord going the DIY management route, it’s your telephone that will ring at 2am when there’s a crisis. If that’s not a role you want to fill, a property manager is perfect for the job. They’ll take the emergency service calls and keep you updated as the situation develops.
6. Long-term maintenance
Emergency repair work is only part of the equation. Maintaining a property also requires you to do major scheduled service — everything from leaf and litter removal to pool and gutter cleaning to floor and kitchen renovations. Professional management companies stay on top of this work — and the best ones (like Great Jones) get it done at deeply discounted, below-market rates.
7. Rent collection
For many owners and landlords, rent collection is the least fun part of the job. When you hire a property manager, it’s their responsibility to make sure rent is paid — whether your residents are using money orders, online transfers, checks, or some other form of payment. They’ll also handle late fee tracking and security deposit returns.
8. Move-ins and move-outs
When a new tenant moves into your property or an existing resident leaves, there are a number of tasks that must be done immediately. You need to perform an on-site inspection, assess any damage done to the unit, perform routine cleaning, deduct service costs from the previous tenant’s deposit, and do a final walkthrough to ensure the home is move-in ready. A property manager will handle all of this, and keep it streamlined enough to fill the vacancy immediately.
So there you have it. Hiring a property manager will get these 8 major workloads off your plate, freeing you up to focus on whatever you do with your time — whether that’s enjoying leisure with your family or scouting new real estate investment opportunities. And while we’ve focused on the measurable work that property managers do, that’s really only part of the story. A management service also protects you from the stress and heartache of self-management. Those are benefits you can’t measure in dollars and cents.
If you’re ready for your real estate investments to thrive with a professional property manager, look no further. Great Jones services a handful of areas across the Carolinas, Florida, and Indianapolis. Get in touch with one of our portfolio advisors to learn more about how we can help maximize your rental income and decrease your rental stress.