Owning rental properties is an excellent method of generating passive income, but the possibility of risk remains. You may wonder; what does a property manager do? Many private landlords face obstacles such as property maintenance issues, non-paying tenants, or simply not finding a tenant and leaving the property unoccupied for multiple months. When a tenant doesn’t pay or is nonexistent, it directly affects the homeowner; the owner is responsible for paying a mortgage, property tax, and insurance. One of the benefits of using a property manager is that it allows the duties and responsibilities to be completed correctly while allowing the homeowner to focus on other aspects of life. In addition, a property manager conducts the day-to-day operations and oversees the integrity of the building, which is part of the property management benefits. Knowing the advantages and disadvantages of using a property management company is essential.
Property management companies offer residential homeowners services but completely supervise commercial rental buildings. Most property managers charge one month’s rent to place a tenant, then set a monthly management fee, a percentage, or a flat fee. The monthly payment is typically five to ten percent of the generated rent.
Using a property manager to oversee the rental operations is recommended if you own property in another state; handling the standard tasks will be overwhelming if you lack rental experience or are focused on other aspects of life. An enormous benefit of using an estate manager is that often, the cost is tax-deductible, and any expense can be reduced from the annual property tax.
Overall, the advantages of an estate manager outweigh the cons. In this blog post, our family-owned company will explain how to properly utilize property management benefits to generate wealth and extend to owning more properties while minimizing stress!
Duties of Property Manager
The responsibilities and tasks conducted by the property management team are extensive; these individuals oversee the entire rental process and operation. Some duties are more evident than others, such as locating qualified tenants or collecting rent. Essentially, a homeowner pays the estate manager a portion of the proceeds to handle every headache in the rental process. The first step when working with a professional manager will be to discuss and determine the exact rental rate by comparing similar rental property rates in the neighborhood.
Next, the property manager will market the property to attract potential renters’ attention. The company will list the property for rent on MLS (Multiple Listing Services) and advertise the property online to market the home. It’ll be time to conduct walkthroughs and qualify the tenants. The management company will screen the tenants thoroughly, including credit checks and criminal history, verifying employment and income, and contacting previous property managers for recommendations.
Once a qualified tenant is placed, the property manager will collect monthly rent while averting any possible house repairs or emergencies. Often, homes display minor issues with plumbing or appliances, and some tenants will submit service calls over minor problems. Most managers will conduct annual property inspections to ensure no major issues or damage caused by the tenant, which helps protect the home’s overall condition. The benefits of using a property manager are excellent for individuals who own multiple properties or have hectic and demanding careers.
What Does a Property Manager Do
- Determine the rental rate based on comparable rental comps in the area!
- Advertise and market the property to potential tenants with their property manager skills.
- Qualify tenants – completed through an intense screening process.
- Collect monthly rent – handle evictions, leases, legal documents, etc.
- Complete any house repairs, home maintenance, or property emergencies.
Benefits of Using a Property Manager
The advantages of using an estate manager are endless; it relieves the stress of running a rental property and is also a suitable method financially. A property manager ensures the tenants are properly screened and qualified, reducing the risk of a non-paying tenant. Using a property manager to rent a property eliminates the responsibility of the day-to-day tasks, such as locating a tradesperson to complete any repairs or maintenance or simply being on call and collecting rent.
Hiring this professional allows house owners to conclude projects or focus on other aspects of life. The tax benefits place the cherry on top of the cake; you can deduct the property manager’s expenses to reduce the total amount owed yearly on taxes. Finally, a property manager provides a smooth rental process; if any issues arise, this professional will solve the problem and save the day!
- Utilizing a property manager relieves the stress of owning rentals.
- The tenants are appropriately screened and qualified!
- Estate managers handle all maintenance and house repairs.
- Rent is collected, and the property’s legal issues are handled accordingly.
- The expense of hiring a property manager is deducted from the year-end taxes.
How to Locate the Precise Freelance Property Manager
It’s important to understand that, like any other profession, not all property managers are equivalent! Some estate managers are much more qualified and capable of successfully handling the rental process and tenants! Ensure this freelance property manager is licensed and insured, verify if the Better Business Bureau accredits them, and currently have any filed complaints!
It’s suggested that the best way to find a reputable manager is by referral; an individual with first-hand experience can provide the best guidance and recommendations. Interview each potential candidate and ensure these companies are representable and respectful. Ask questions on what qualifies these individual, recently managed properties, how they advertise, their track record with non-paying tenants, and how they handle vacancies, especially in the slow rental months of winter!
Review the rental and tenant lease agreement to guarantee this individual is best suited to satisfy the rental process. Locating an appropriate manager is not simple; ensure you conduct your due diligence and feel confident about the professional you hire!
- Ensure the property manager is licensed and insured.
- The best method to find the best estate manager is by referral.
- Interview each candidate – ask questions to qualify the company/individual.
- Review their agreement and tenant lease.
- Do your due diligence on the advantages and disadvantages of using a property management company.
Standard Property Manager Fees
In recent years, many investors have begun expanding their horizons and purchasing investment property out of state. If you own a rental property in another state, locating a tenant and dealing with the daily/weekly responsibilities may be challenging. These investors purchasing out-of-state homes hire property managers to ensure a smooth real estate process; most investors require roughly the exact costs and follow similar guidelines!
Estate managers will initially charge one month’s rent to place a tenant, then a monthly percentage or a flat fee. The monthly rate for their professional real estate services is typically five to ten percent of the total monthly income. It’s an exceptional service that essentially is a tax deduction; there is no reason not to utilize a property manager if you can initially afford the investment! If you’re considering a career as an estate/property manager, it’s two important factors to remember. This profession offers flexibility and freedom to create your schedule (as long as you remain on call) & on average, a property manager makes fifty-six thousand annually!
- Usually, one month’s rent.
- At times, a monthly percentage of roughly five to ten percent.
- Excellent idea for out-of-state property owners!
- The average estate manager in the Philadelphia area makes 56,000 dollars annually.
Disadvantages of utilizing a property manager
- Overall Cost: Property management companies generally charge a recurring monthly fee, which can be a substantial expense for owners.
- Little control: When you employ a property management organization, you give up a certain level of control over your rental property. Without your input, the company will make most decisions about the process, from tenant screening to house repairs/maintenance.
- Communication problems: Communication can be an issue with property management companies. Getting in touch with someone with a question or concern can be challenging.
- Inexperience: Some property management companies are inexperienced and may be unable to deliver the required assistance to run the rental property properly.
- Unethical procedures: There have been cases of property management companies engaging in unethical practices, such as overcharging tenants or not preserving the properties properly for unjustified reasons.
It is essential to weigh the pros and cons of using a property management company before deciding. If you are uncomfortable with the possible disadvantages, you may want to consider managing your rental property yourself.
Advantages and disadvantages of using a property management company
A way to obtain success is appropriately using resources, including the assistance of a real estate professional, to ensure the rental process is effortless, and the proper tenant pays rent on time and maintains the home’s integrity! There is no downside in utilizing a property manager; the tenants are properly screened, the rent is collected, and any issues are solved promptly.
If you can pay one month’s rent to the manager and wait until the end of tax season to receive the tax credit for using their services, Buying Property 215 highly recommends an estate manager. Owning rentals without stress or obstacles is magical; it allows the homeowner to enjoy life and focus on other investments. These managers are also a fabulous way to have guidance within the real estate industry. Ensure you properly qualify your property manager; the wrong choice can cost time and money.
- Thank you for reading our blog post on the advantages and disadvantages of using a property management company!