Decision: Whether to Hire a Property Management Firm
You’re likely deep into the decision process of whether to bring in a property management company to manage your workload, especially if you’ve been managing everything yourself.
It’s not that your current provider isn’t managing the work okay, but with technology, regulation, more units, stronger market competition, and lower operating margins, the balance sheet is looking less rosy. You’re in need of a firm that will add value – in fees, services, and efficiency.
If you’re grimacing in anguish over the matter, take a time out and look at the big picture. You will need a firm with skills, technology, can scale up, and hopefully one that can add value.
The good news? There’s a company out there for you.
Do you Really Need a Property Management Company?
You’re sitting on the fence about replacing or hiring a new property manager but maybe lack enough justification.
You need a new provider if you:
- are acquiring more rentable properties
- see profit falling with no improvement in sight
- own rentals located in other cities, or are dispersed over a wide geographic area
- don’t want to actively manage your rental properties
- don’t want to be an employer hiring and training staff
- you realize that hiring a property management company is cost effective
- realize that competent firms can manage the properties and books better than you can
- have run out of time and energy
- tire of keeping up on government regulations
- have a current provider with insufficient technology skills to handle more properties
- have a current provider can’t do more work with less money
- you don’t do marketing, ad writing, and promotion well
A quality, skilled, creative, innovative property management provider can do all of this for you.
You can check out a number of property management companies near you and vet each for professionalism and reliability.
What is Property Management?
It has to be said that property management is a sophisticated service today, not just property maintenance. Today their services are more thorough, automated, and managers have greater knowledge and skill.
For the past 5 years at least, property owners have been increasing their real estate asset portfolios. With new construction and huge demand for rental housing, the stock of available rentable properties has grown and they’re buying. They’re scaling up to compete and reach profitability.
Scaling up is on everyone’s mind. Not all property managers can handle the extra work, and there’s more of it coming.
Enterprise Space has Grown
Corporate real estate firms have been very active in acquisition and growth and some of them may need a property management company to manage local collections. They may pursue a property management firm that is competent with certain types of properties (houses, apartments, how rise condos, high rise condos, mixed use buildings).
Keep up on the US rental property market, UK rental market, Berlin Rental market and Australian property rental market and view the US housing market stats to see how the housing and rental markets have grown as well.
Corona Virus Recession Increasing Foreclosures?
The Corona Virus shutdown and recession is likely will create more rental properties for sale. The end of the rent moratorium is raising anxieties for rental owners across the US.
What do Property Managers Do Today?
They do what they used to do, only a lot more of it, and more efficiently:
- collect rent
- deal with collection issues or court proceedings
- lower per unit maintenance costs
- hire contractors for building management
- keep the books for each specific property with real time reporting
- tenant acquisition
- high quality marketing services
- mitigate liability with tenants and local governments
- manage shorter term rentals
- find additional ways to generate revenue
Are Their Fees Reasonable?
This is where a spreadsheet comes in handy to help you forecast their prices against your revenues. Fees between 8% and 12% of revenues are normal. They can charge property management fees in a creative way which could increase your revenues and rewards them for better performance.
In a nutshell, a property management firm presents an extended set of benefits to owners. They can make your asset portfolio profitable.
The first step is to list all the work you need accomplished, in order of priority. It takes some thought to rank each of the capabilities. Some of those criteria would include:
- work automation (using digital management software organizes workloads and scheduling)
- maintenance and repairs (specifically, what will need constant maintenance and what will break down)
- tenant management (communicating efficiently, with consistent messaging, and positively with all tenants)
- rent collection (online collection with follow up when necessary)
- mitigation of tenant problems such as rent default
- vacancy listing and tenant screening
- bookkeeping and accounting (accurate management of accounts, transactions, ledgers, etc)
Hiring the Right Property Manager
Once you’ve understood the value, you must begin creating a list of potential service providers. You can investigate the list of property management firms we’ve collected. This lets you look at these companies objectively, so you see who they really are and what business they prefer.
There’s little point in hiring a property management company which is not suited to the types of properties or work entailed in your properties. Being objective is important to finding a company suited to your needs.
In Closing – Time to Find A Good One
Professional, well run property management companies and their managers are a key business asset for rental property owners. They don’t just replace you on work tasks, they ramp up work accomplishment to a new level.
It is likely, that they will be creating more in fees and revenue than you pay them. It’s a big decision to commit to one company, but if you’re growing, and you should be growing to stay in business today, this is the right choice.
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