Owning and taking care of rental properties can be a full-time job. For landlords who can’t or don’t want to do everything themselves, property management companies are the answer.
Some people purchase rental properties with plans to be a hands-on landlord. Many are successful at seeing to the day-to-day needs of their tenants. Others, however, can be overwhelmed at just how much work is involved, especially if they have another job. Keeping up with maintenance, rent collection, accounting, and emergencies becomes harder and harder the more properties they own.
Then there are rental property owners who are in the business solely for the investment opportunity. They intend to hire someone to handle the day-to-day management from day one. 카지노사이트
Property management companies can meet the needs of both of these types of owners. Every company is different, but most follow the same basic principles. Knowing how property management companies work can help an owner decide if they need one and prepare them for the search to find the one who’s the best fit.
What Property Management Companies Do
Property management companies lighten the load for property owners by taking on a variety of tasks. Landlords pay them to handle both routine operations and emergencies. The exact list of what will be delegated to the management company will be spelled out in a contract, as well as payment terms (more on that later).
Companies may have their own staff to do the work, or they may use different vendors for projects that need to be done. Many do both. For example, a company may employ a handyman who does small repairs, mows the lawn, and vacuums the entryway and hallways. They may hire a professional carpenter, plumber, or cleaning crew for bigger repairs or to get a unit ready for a new tenant.
Typical duties offered by property management company:
Screening new tenants and doing background checks
Cleaning units when tenants leave and preparing them for new renters
Drawing up lease documents
Collecting rent, banking, and bookkeeping
Responding to maintenance and repair requests
Maintaining grounds and common areas (lawn care, snow removal, sweeping, etc.) 안전한카지노사이트
Advertising and showing apartments to prospective tenants
Handling late payments, tenant disputes, and evictions if necessary
Depending on the level of involvement a landlord wishes to have, property management companies may do some of these things or all of them. Some owners, for example, may wish to deal with tenant screening themselves to ensure that those living in their rental homes meet their personal standards. (Note that all leasing must comply with the Federal Fair Housing Act, prohibiting discrimination.)
There are also full-service property management companies who will do it all. When property managers take on these tasks and do them well, it takes a huge burden off of the property owner. They have someone else to rely on for not only ordinary things but unpleasant ones like dealing with a bad tenant or starting eviction proceedings.
This doesn’t mean the owner won’t know what’s going on at the property. There should still be ample communication with the company and the owner should have final say in big decisions. But in many cases, there is little for the landlord to do but watch for the direct deposit of rent revenue in their account.
Property investors often have a property management company lined up before they even make a purchase. For other landlords, they may consider hiring one after trying to do everything themselves.
There are some situations where it is clear that hiring a property management company is a good idea:
Owning multiple rental units, especially in different locations, may make it impossible for one person to handle themselves. Even one or two homes or apartments may be too much as the landlord gets older.
The landlord may live far away from the property. There must be someone on-site or nearby to see to tenant needs.
Landlords may not want to be employers. By working with a property management company, they avoid having to be responsible for hiring, paying, and filing tax documents for employees.
There is often a tipping point when the cost of a property management company becomes “worth it.” The value isn’t only in dollars, but also the time and effort that the owner is spending on keeping the property running effectively.
How Property Management Companies Are Paid
Property management companies work by charging landlords to take on the administration and upkeep of rental properties. Exactly what they will do and how they will get paid is spelled out in a contract. Every company will have slightly different terms, but many follow similar guidelines.
Property management companies are paid between 8% and 12% of the property’s rental income. An owner should be sure they understand if this will be rent due or rent collected. This is important if there is difficulty getting some tenants to pay on time. It is preferable to pay the company only for what they actually collect each month.
The contract should also spell out what will happen with vacant units. If a management company is paid the same amount whether there is a tenant or not, there may be little incentive for them to find a new renter.
On top of a percentage of rent, owners will usually pay additional amounts for other expenses like repairs, advertising, credit and background checks, and accounting. This might be a flat fee charged each month, or an itemized bill for expenses. This usually depends on the number of properties covered by the contract.
For example, the company managing a small apartment building with four units might have one on-site maintenance man. The owner might receive a monthly bill based on actual receipts submitted by the handyman. On the other hand, with a large number of units, or a larger property management company, the owner is more likely to be charged a flat fee. The paperwork necessary to track specific expenses will simply be too cumbersome for a large operation to handle.
A number of normal monthly expenses are included in a flat fee. If there is something out of the ordinary, for example repairing a burst pipe, or replacing a unit’s refrigerator, the owner may be billed separately. All of this should be spelled out in the contract so the owner is not blindsided by a bill for a big-ticket item or project.
Often a property management company will require a reserve account to be set up by the owner. This allows them to pay for certain expenses out of the account without having to wait for payment from the owner. How this account is to be funded and used is another part of the contract the owner must understand and agree to before signing. 카지노사이트 추천
How to Find the Right One
Property management is a billion-dollar industry. Statistics show that there are over 275,000 property management companies in the U.S., employing more than 825,000 people. When an owner decides they need to hire one, they have plenty to choose from. What is more important, and sometimes more difficult is finding the right one.
The ideal property management company forms a true partnership with their property owners. They take good care of their tenants while also looking out for the owner’s best interest, all while following state and local laws.
Our blog post “Choosing a Property Management Company: The Questions Some Hope You Won’t Ask” can help you narrow down the search. At Select Properties Leasing & Management, our professional staff is trained to offer world-class support to owners and tenants in the greater St. Louis area. We welcome your questions about how our company works and how hiring a property management company can work for you.