If you own investment properties, you’ve probably considered hiring a rental-management company. These businesses make life easier for owners of rental units, and while not every landlord needs help, a management company can be crucial to the financial success of your properties.
Yes, their services cost money, but in the end hiring a rental-management company could be the most sound choice you make. But how can you know if hiring a rental-management company is right for you? After all, there are plenty of landlords that get by just fine without outside help; why should you dig into your monthly profits just to have another person complete tasks you can handle yourself? Because doing so gives you more time for other tasks, and can enhance the long-term quality of your properties.
What Does a Rental-Management Company Do?
First of all, it helps to establish what a rental-management company does, and what they don’t do, as this knowledge will help guide your decision. These businesses simply manage the rental properties you own, and the extent of the work they perform can vary depending on the business itself and the contract you sign.
Typical responsibilities for a rental-management company include marketing a rental unit, assessing potential tenants, and working out lease contracts. Once the tenant is in the unit, their responsibilities can also include repairs, overall maintenance, and seasonal upkeep, such as plowing snow, raking leaves, and mowing lawns.
The details will depend on the company, and you may be able to negotiate services. For example, you could work out a contract that excludes outdoor upkeep, allowing you to perform this service yourself.
There really is nothing a rental-management team won’t do, outside of actually finding rental properties for you to purchase. They’re not an investment-strategy or sourcing firm, but they can help with just about everything else.
Top Signs You Should Hire a Rental-Management Company
The decision to hire a rental-management company should take into account many different factors, but these signs may suggest that the time is right to invest in their services…
You Have More Than Two Rental Properties
There’s no magic rule that says if you have a specific amount of units, you must hire a rental property. However, landlords with three or more rental properties will likely realize the benefits of these companies. Generally speaking, the more units you have, the more likely you will benefit from hiring a management team. This is especially true if you have a full time job and owning properties is merely a side project to generate additional income.
Your Rental Properties are More Than a Half-Hour Drive Away from Your Home
No matter how many you have, if your rental properties are more than a half-hour away, you likely won’t be able to drive by and check on them as often as you’d like. No, you can’t go into the house whenever you please (there are laws against that), but nothing stops you from driving by the property and making sure it’s still in good care and condition, at least from the exterior. Living far from the property also makes upkeep more of a hassle, so hiring a management company to perform basic tasks like replacing garbage disposals or installing windows may be a good idea.
You Don’t Like (or Don’t Have Time For) Handyman Work
Being a landlord often requires a do-it-yourself attitude. From replacing faucets to cleaning gutters to installing washing machines, there are many handyman task that will require your attention. If you are not good at these tasks, or you simply don’t like the idea of completing these time-consuming chores, a rental-management team will be able to take many of these tasks off your shoulders.
You Would Prefer to Not Deal Directly with Tenants
Being a landlord involves a lot more than just cashing monthly rental checks. From the very start, you are dealing with the general public to find the right tenants for your properties. Much like an employer looking for employees, you have to accept applications, perform interviews, conduct background checks, and perform a myriad of other tasks before giving new tenants the keys to your investment property. You’ll have to set up meetings for viewing the property, and you’ll have to make sure lease agreements are completed to satisfaction.
Even after the property is rented, you’ll have to take calls about pipes breaking in the middle of the night or air conditioners quitting in the middle of August.
There is a lot to deal with, so if you don’t think you would enjoy dealing with people, and you’re not sure if you have the patience for taking calls about even the smallest household issues, a management team will free you of this burden.
You Participate in Affordable-Housing Programs
Things can get complicated for any landlord that participates in government-sponsored affordable-housing programs. These programs have noble goals that certainly need the support of property owners, and they usually involve financial incentives, which can come in the form of a grant or tax credits. However, to participate in the programs landlords need to meet a detailed set of rules, which can be confusing and complicated. To make matters easier and avoid accidentally violating the rules, it may be best to hire a management company that has experience dealing with these programs.
You are Willing to Spend Money to Get Time
What do you need more: time or money? This really is the fundamental question when you are deciding to hire a management company for your investment and rental properties. Do you have the time to manage the property yourself, including finding tenants and maintaining the property? Do you have the money to pay for a rental-management team in the first place?
If you value your time and don’t want to spend your weekends caring for properties, then perhaps a management team would be the right choice. However, if you value the financial rewards of property ownership, and feel it’s in your best financial interest to do everything yourself, then by all means continue without a management team.
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