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When property owners take on multiple investments, one of the most significant decisions they'll make is if they need to hire a property management company. If you only own one property, it may not be necessary.
However, if that one property is in a state where you don't reside, that's a different story. People acquire investment property for a myriad of reasons and their need for property management companies are just as varied. If you've often wondered whether you should hire a property manager, it’s essential to do some homework first.
Why are Property Management Companies Essential?
A property management company's primary function is dealing directly with prospective tenants. In doing so, they save landlords time and worry. A good property management team handles marketing the landlord's rentals, repair issues or maintenance, rental collections, mitigation of tenant complaints, and follow-through with eviction processes.
Working with a property management teams also brings knowledge and experience to the table. When landlords are new to investing, this is an invaluable asset. Best of all, these teams work as independent contractors. There isn’t any need to worry about working in an employer and employee role.
Weigh Your Options
If you're on the fence about proceeding, begin by weighing your options. Here are some tips:
- Play the numbers game: When hiring a property manager, sometimes you need cold-hard numbers. Look up the phone numbers or websites for at least three property management companies in your area. Contact them and request estimates.
- The process of elimination: Those companies that are unresponsive should be eliminated immediately. If they're not going to respond to a request for an estimate promptly, then that's a good indication for what it's going to be like working with them. It's also a good indication of the treatment your tenants will experience.
- Customer service: When you receive responses, be strategic. You will be working with this team long-term. Do you believe you can establish a rapport? Are they friendly and responsive to your questions? Do they sound like they like their job? When you finish your inquiry, how do you feel? If you feel good after the experience, put them on your list of prospects.
When is the Optimal Time to Hire a Rental Property Manager?
Many factors contribute to when it's an optimal time to hire a rental property manager. Aside from deciding whether you should or not, deciding when is the next step. Consider the following factors:
- You're a landlord with many rental units or properties: You'll benefit from using a property manager when you invest in multiple properties or units.
- You're not living near your investment property: If you're not living near your investment property, a property manager is a significant asset. They'll deal with many issues beyond rental collection that you can't address from afar.
- You have no interest in managing hands-on: Under some circumstances, landlords make investments in property strictly for financial purposes. They would like to leave all the other details to someone else. If you fall into that category, hiring a property manager is ideal.
- You have time constraints: Even if you would like to manage your property, time doesn't allow you to do so. You don't want your tenants to suffer, so you need to hire help.
- Your business is growing: When the growth of your business suddenly inundates you with tasks to the point you can no longer manage, a property manager can help streamline everything.
Communication and Organizational Strengths
Veteran property managers will be eager to provide you with regular communications. Their ultimate goal will be to give you peace of mind regarding the state of your investment. It's critical to be in contact with property management companies that utilize optimal communication or organization skills.
Not only will they work with your tenants regarding every issue, but they'll involve you throughout the entire process. These strengths will shine when you're going through the interviewing and negotiation process.
Be Sure to Assess Your Finances
Assessing your finances is an essential part of determining if you should hire a property manager. On average, the fee for hiring a property manager is between 4% and 10% of the property's gross monthly income.
For example, a single-family rental property might merit a 10% fee. If properties have more than ten units, then the cost could be as low as 4% or as high as 7%. Some property management companies also charge tenant placement fees. It’s essential that you receive all of this information during the interview process and, if the rates don’t seem appropriate, negotiate them.
Look Over Your Research
When looking at the question regarding, “should you hire a property manager,” look over your research. A myriad of factors goes into answering this question including the location of your property, whether or not you would like to be a hands-on manager, and what you can afford.
Green River Property Management offers property owners the peace of mind they need. With more than 15 years of experience and many properties serviced, we've got the knowledge and expertise you seek in a property management group. Check out our guide to hiring a property manager or schedule a call with us to learn more today.