Owning a residential or commercial rental property can be an effective way to make money, but turning a profit on that investment is not as easy or straightforward as it may initially seem. There are numerous moving parts involved in making money from a real-estate investment, and less-experienced property owners often make mistakes that have negative financial repercussions.
A common example is choosing to self-manage rather than hire a property management company based on the assumption it will be the more cost-effective strategy. For most investors, however, the cost of hiring a property manager is more than worth it because of the many benefits and services they provide. In fact, hiring the right property manager can actually save you money in the long run.
Below are just a few of the many benefits of professional property managers and key ways they can help you make the most of your real-estate investment:
Every day a property sits vacant, it costs you money, and simply having a property—even a really desirable one—doesn’t guarantee you’ll be able to lease it. It also doesn’t guarantee you’ll get the best price for it. It takes an effective advertising and marketing strategy to find stable residents and reduce costly turnover.
Hiring a property management company gives you access to a team of experienced professionals who know the market in the Seattle area and how to effectively get your property in front of the right audience. They keep all property listings up-to-date, advertise across a variety of platforms targeted toward desirable tenants, carefully screen and interview potential residents, and are proactive in handling complaints and maintenance requests. Collectively, these services can decrease vacancies and your resident turnover rate so your properties stay occupied by top-notch residents.
Commercial and residential properties don’t take care of themselves. In fact, the U.S. Census Bureau estimates property owners spend more than 20% of their rental income toward maintenance. If you’re responsible for the maintenance of an investment property, you need to know where to find the right services and materials to keep things in top shape.
If you don’t have access to the right labor and materials, you can pay more than you need to, which cuts into your profits. If you spend too little, you may not get the quality and reliability you need, forcing you to fix the same problems repeatedly.
Related: How Much Does it Cost to Hire a Property Manager?
Property managers can help you design and implement a preventative maintenance plan to avoid total system failure and downtime and extend the life of high-cost equipment, reducing your overall maintenance costs. They also can help you plan and schedule regular cleanings and inspections and keep an inventory of equipment and when work was performed.
There are numerous complex legal and liability issues that come with owning an investment property. You’ll need to make sure any lease you execute adequately covers you in these matters. Making a mistake there can result in costly legal fees or little recourse if a tenant breaks their lease or damages you property.
A property management company will know the ins and outs of issues related to taxes, eviction procedures, and local, state, and federal fair-housing and anti-discrimination laws.
Additionally, they will already have procedures and resources available to ensure you’re in compliance without you having to reinvent the wheel. They will stay on top of important changes in these areas and make sure you are protected from the penalties of non-compliance and expensive lawsuits.
Many property owners make the mistake of assuming that once the lease is signed, everything will operate pretty smoothly. What happens if your tenant doesn’t pay the rent? Will you be prepared to handle that? Property management companies take those worries away with time-tested systems, tools, and policies in place to help streamline the process of collecting rent and other fees from tenants. They also have processes in place to increase rent and tactfully communicate the justification to your tenants.
Special features and amenities can make your property more desirable to current and prospective tenants, but different ones appeal to different demographics. Using knowledge gained from market studies and resident survey, your property management company can recommend supplementary upgrades or strategic improvements, such as additional parking, car charging stations, on-site laundry facilities, or package delivery lockers. These extra features have ability to attract more residents, increase the value of your property, and enhance your revenue stream.
Time is money, as they say. The responsibilities of property management—which include screening credit histories, drawing up leases, maintaining tax and legal records, and dealing with complaints and maintenance requests—can constitute a full time job, even if you have just a few properties.
Your limited time can be more profitably spent at your day job, finding other investment properties, or however else you’d rather use it. Property management companies encompass the appropriate structures and resources to cost-effectively lease your property, qualify tenants, collect rent, field phone calls, handle repairs, and much more, all for a relatively low management fee.
So, is property management worth it? Yes, you can save a lot of personal headache and achieve financial gain better by hiring a property manager to keep things running smoothly.
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Powell Property Management is the oldest home builder in Seattle. We understand building—and what it takes to maintain quality buildings. We also know the area and how to reach the local market. And we have the financial stability and connections to local services to ensure that your property will be well taken care of.
Are you considering hiring a property or real estate management company? Contact us to learn more about who we are and how we can help!