Is a Property Management Company Worth the Cost?
If you’re the owner of at least one investment property that rents out to long term tenants, you’re somewhat aware of what goes into maintaining your properties: maintenance, grounds work, and renovations. Just to name a few.
You’re also aware of what goes into finding and vetting tenants for your property.
Today, with the ease of access to property investment, the responsibility of maintaining these structures and assisting the people that inhabit them becomes increasingly demanding.
A great way to cover all your needs, from running credit checks on prospective tenants to maintaining the physical property to fixing a leaky sink, is to seek out a property management company.
Property management companies specialize in covering all of your property’s needs and provide services that’ll keep you, the owner, hands-free.
The drawback to an all-inclusive service, like any other, is the cost. But as you look at the needs of your investment(s) and the time you have to offer for care and maintenance, would a property management service be worth the cost for you?
What is a property management service?
Before we delve into the pros and cost, let’s review the basics of a property management service.
A property management service handles the ongoing needs of a single property or multiple properties for a given owner.
These companies differ in offerings, but the core services remain the same: they’ll cover anything, and everything from prospect and tenant needs to the physical upkeep of the house or building.
Where a property management service can cover these essential services for you, as landlord, you won’t be completely shut off from your building. But this service can significantly reduce stress and the time required of you in managing your property.
If you’re the type of landlord that likes to be hands-on, then a service like this might not be for you. But if you have multiple properties, it might be beneficial to employ an agency that can handle, anticipate, and respond quickly to its needs.
Let’s break down the benefits of utilizing a property management company:
Looking for and maintaining tenants can be a full-time job. But a property management company can cover both of these areas for you.
Most can market your property out to potential tenants. They can also take over the rest of the process by vetting your tenants through applications and credit checks, saving you time and paperwork.
Most property management services have a keen understanding of the legal needs of processing tenants. From drawing up leases to handling issues, these agencies are well versed in the responsibilities of the owner and the renter.
They’ll also handle the schedule for move-ins, move-outs, respond to questions or complaints and, when necessary, manage evictions. For existing tenants, your manager will handle the in-person requests, whether it’s fixing the air conditioner in their unit or collecting rent.
Some landlords prefer to be personally involved when it comes to who lives in their building or property. But, for the owner that prefer not to have ongoing interactions with their renters, or would rather be hands-off in general, a property management service is well equipped to handle this for you.
Aside from the necessary human interactions involved with maintaining your property, the physical building itself requires ongoing attention.
If your property is newly built or remodeled, this won’t be a big concern. If the building is older and requires regular maintenance, a property manager can monitor and respond to these needs for you.
Property management companies have a large network of contractors to handle issues as they arise. From plumbers to electricians, a manager can coordinate the right person for the job.
Does your property need regular landscaping? Expect the company to help with this as well, by coordinating a routine service or even doing it themselves.
Are you’re a property owner that lives out of town? Then these services become essential. Having someone on the ground to take care of your investment and respond to its needs is extremely valuable.
Buying and maintaining a property comes with a truckload of paperwork. You’re taking on a whole slew of bills, not to mention the information that comes from vetting and keeping renters. If you only have a couple of tenants, maybe one or two properties, your paperwork may be minimal.
But do you have multiple properties with a variety of tenants? Is your property mixed-use with both residential and commercial tenants? That’s where a property management service can also come through for you. They’ll keep track of your bills, statements, applications, and credit checks and also have a full understanding of your tenants’ needs and your responsibility as a landlord.
Do you offer subsidized housing? Expect to encounter and complete double the amount of paperwork.
Having someone (or better yet a team of people) handle the paperwork, can optimize your time and, better yet, keep you organized.
As with all services, the cost is the deciding factor.
When vetting property management services expect to receive quotes that range between 5% and 12% of your monthly rent revenue.
But many factors go into determining what you’ll be charged. The final quoted fee is based on how many properties you want this company to cover, what services they’ll be performing, as well as the location and condition of the property.
Aside from the management fee, you may encounter other costs such as a vacancy fee, set-up fee, or leasing fee. All of which differ and depend on the company you use.
According to ManageMyProperty.com, “a lower price may reflect either an acknowledgment they don’t provide top tier service, or an attempt to gain business by undercutting the competition.”
They go on to say that, “if a firm is under-pricing their services across the board it is possible they may try to make up for it by overloading their managers with as many properties as they can (or can’t) handle.”
The pricing structure is also important.
According to Money Crashers, besides charging a percentage fee, some companies might charge a flat fee. Again, determined by the services they plan to render, size of the property, and how many properties they’ll be covering. Money Crashers goes on to say that you might encounter bulk pricing or a discount for their employment on multiple properties. A single property or single homeowner might not receive the same discount.
So, is it worth the cost?
The deciding factor in determining whether to seek out a property management company should come down to the amount of time and responsibilities that go into managing your properties.
If you own multiple properties with multiple tenants, then employing a property management company and their package of services can save you both time and money. It might also save you from the headache of maintaining the different needs of your investment.
If you’re a property owner that lives out of town, employing an on-the-ground manager is a great way to have someone take care of your assets for you.
With any effective service, the goal is to optimize your day-to-day. A property management service does exactly that while maintaining your investment in the long run.