Should you Hire a Rental Property Management Firm?
Rental Property Management
If you don’t live near your rental property, don’t have time to devote to day-to-day tenant and property issues, or simply don’t want the hassle of your phone ringing in the middle of the night because of a clogged toilet, then consider professional rental property management. A good property management system is worth its weight in gold!
A properly run rental property management company will assist you with marketing your property, filling vacancies, screening tenants by checking their credit and verifying employment, maintaining and improving the condition of the rental, bookkeeping, collecting rents and deposits, and evicting tenants, if needed. Since good property managers are experts in all these areas, they handle the details and paperwork and save property owners significant amounts of time and energy. A rental property manager knows their market areas well and can set the rents accordingly. They know the fair housing and non-discrimination laws that can keep you out of a lawsuit, too.
Each property management company runs a little differently, but basically they are paid a percentage of the rents collected each month, with 10% being about average. Sometimes they also charge a lease fee when they fill a vacancy or renew a lease, which might equal half or a full month’s rent. Typically a property owner enters into a year’s contract with a rental property management company, so these expenses and any others, are known up front.
After an income property manager collects the rents each month, they deduct the property expenses (landscaping, maintenance, leasing fees, advertising—anything the owner is responsible for), plus their management fee. The property owner gets the balance. Some property managers accomplish this over the Internet using special property management system software and electronic payments. Others send reports and paper checks through the mail. Property managers are available to assist tenants 24/7 and should be available to answer an owner’s questions as well. When interviewing property managers, it’s important to find one that promptly communicates the way you like, whether by phone, e-mail, text, etc. So ask lots of questions and carefully compare services between various rental property management companies. Consult the website for the Institute of Real Estate Management for information on certified management professionals.
A properly run rental property management company will assist you with marketing your property, filling vacancies, screening tenants by checking their credit and verifying employment, maintaining and improving the condition of the rental, bookkeeping, collecting rents and deposits, and evicting tenants, if needed. Since good property managers are experts in all these areas, they handle the details and paperwork and save property owners significant amounts of time and energy. A rental property manager knows their market areas well and can set the rents accordingly. They know the fair housing and non-discrimination laws that can keep you out of a lawsuit, too.
Each property management company runs a little differently, but basically they are paid a percentage of the rents collected each month, with 10% being about average. Sometimes they also charge a lease fee when they fill a vacancy or renew a lease, which might equal half or a full month’s rent. Typically a property owner enters into a year’s contract with a rental property management company, so these expenses and any others, are known up front.
After an income property manager collects the rents each month, they deduct the property expenses (landscaping, maintenance, leasing fees, advertising—anything the owner is responsible for), plus their management fee. The property owner gets the balance. Some property managers accomplish this over the Internet using special property management system software and electronic payments. Others send reports and paper checks through the mail. Property managers are available to assist tenants 24/7 and should be available to answer an owner’s questions as well. When interviewing property managers, it’s important to find one that promptly communicates the way you like, whether by phone, e-mail, text, etc. So ask lots of questions and carefully compare services between various rental property management companies. Consult the website for the Institute of Real Estate Management for information on certified management professionals.
How to Interview and Hire
a Property Manager
Rental Property Management
As you accumulate income-producing property, whether it's residential, commercial, retail, etc., there will come a point when you cannot manage it all yourself and you need to hire a rental property management firm. How do you find a good one? Get recommendations and then ask a lot of questions!
Naturally, you will only want to trust your investment(s) to an extremely competent and reputable management firm. If you can, get some recommendations from people you trust, then interview those rental property management firms. Look for a company that knows the local area inside and out, one with an impressive amount of experience managing properties similar to yours. A firm that specializes in retail properties probably won't be the best candidate for managing your high-end apartment complex.
Ask for references. You want to talk to a few of the firm's current clients who have properties like yours. Call these references and ask if they are pleased with the management firm's performance. Is the firm responsive to their needs? How quickly does the rental property management firm return calls from tenants? If there were any emergencies, how did the firm handle them? Has the firm met its financial expectations?
When you interview a rental property manager, ask what kind of property management system they have in place in case of an emergency. What are the firm's normal business hours? Is staff available on Saturdays and Sundays to show apartments to potential tenants? Will someone from the management firm be reachable 24/7 in case of an emergency?
Inquire about the training that managers and other employees of the management firm have received. Do they go for ongoing training and attend continuing education programs? The income property management firm must possess knowledge in many areas, including construction, accounting, tenant relations, sales, environmental concerns and relevant local laws.
The income property manager will be the face your clients see, from the time they first view the property and sign the lease to the inevitable moment they call with a maintenance request. As such, you will want to choose a management firm that is highly professional. If you don't feel they have good people skills, or if you feel they don't project the image you're looking for, choose someone else with a better property managment system in place.
Naturally, you will only want to trust your investment(s) to an extremely competent and reputable management firm. If you can, get some recommendations from people you trust, then interview those rental property management firms. Look for a company that knows the local area inside and out, one with an impressive amount of experience managing properties similar to yours. A firm that specializes in retail properties probably won't be the best candidate for managing your high-end apartment complex.
Ask for references. You want to talk to a few of the firm's current clients who have properties like yours. Call these references and ask if they are pleased with the management firm's performance. Is the firm responsive to their needs? How quickly does the rental property management firm return calls from tenants? If there were any emergencies, how did the firm handle them? Has the firm met its financial expectations?
When you interview a rental property manager, ask what kind of property management system they have in place in case of an emergency. What are the firm's normal business hours? Is staff available on Saturdays and Sundays to show apartments to potential tenants? Will someone from the management firm be reachable 24/7 in case of an emergency?
Inquire about the training that managers and other employees of the management firm have received. Do they go for ongoing training and attend continuing education programs? The income property management firm must possess knowledge in many areas, including construction, accounting, tenant relations, sales, environmental concerns and relevant local laws.
The income property manager will be the face your clients see, from the time they first view the property and sign the lease to the inevitable moment they call with a maintenance request. As such, you will want to choose a management firm that is highly professional. If you don't feel they have good people skills, or if you feel they don't project the image you're looking for, choose someone else with a better property managment system in place.
Online Rent Payments: an Option Worth Considering?
According to the National Association of Residential Property Managers, many residents are requesting the option to pay their rent online because they are growing increasingly accustomed to paying other bills from the convenience of their homes. Offering online rental payments can enable rental property management firms to operate more efficiently and to receive funds more expediently each month, while also providing residents an important and convenient lifestyle amenity. Various online payment methods exist, each with pros and cons. The Resident-initiated transfer of funds method is explained below.
Resident-initiated transfer of funds means that residents log onto a website to access the property management system and enter their checking account information, then click to pay. The resident has the ability to choose the date on which he or she makes the payment each month and also the ability to control from which account funds are to be drawn. The resident’s experience is simple, and payment instructions are delivered immediately. Funds are delivered to the rental property management company's account quickly, usually on the next business day.
This payment option meets the flexibility and last-minute payment needs of residents and allows them to manage payments based on the availability of funds. As an electronic payment, it is a low-cost solution. Additionally, residents have the option to schedule multiple payments in advance, which can help forgetful residents avoid late fees. It also allows other parties to make payments on their behalf without wiring transfer funds or physically mailing checks to a rental property manager.
Resident-initiated online electronic funds transfer offers residents the convenience of paying exactly when they want and from anywhere they can access the Internet. High adoption by residents and an easy-to-manage property management system can translate into the highest level of efficiency, providing a solid return on the rental property manager's payment solution investment.
Resident-initiated transfer of funds means that residents log onto a website to access the property management system and enter their checking account information, then click to pay. The resident has the ability to choose the date on which he or she makes the payment each month and also the ability to control from which account funds are to be drawn. The resident’s experience is simple, and payment instructions are delivered immediately. Funds are delivered to the rental property management company's account quickly, usually on the next business day.
This payment option meets the flexibility and last-minute payment needs of residents and allows them to manage payments based on the availability of funds. As an electronic payment, it is a low-cost solution. Additionally, residents have the option to schedule multiple payments in advance, which can help forgetful residents avoid late fees. It also allows other parties to make payments on their behalf without wiring transfer funds or physically mailing checks to a rental property manager.
Resident-initiated online electronic funds transfer offers residents the convenience of paying exactly when they want and from anywhere they can access the Internet. High adoption by residents and an easy-to-manage property management system can translate into the highest level of efficiency, providing a solid return on the rental property manager's payment solution investment.
Time to Delegate — Maintain Life Balance to Ensure Success
We all have 168 hours each week and when you subtract 56 hours for sleep and another 10 hours for personal care; that does not leave a lot of time to get done what needs to be done. Delegation permits you to leverage your time through others and thereby increase your own results. The hardest part of delegation though, is simply letting go. We take great pride in doing things ourselves. Look at all that you want to do and with each item ask yourself, “Is this the best use of my time?” If it is, do it. If it is not, try to arrange a way to delegate it to someone else. There is a lot of difference between “I do it” and “It gets done.” It is especially challenging for self-employed people to maintain balance in life, but it's a little easier when you know the seven vital areas to concentrate on: health, family, financial, intellectual, social, professional, and spiritual. You will not spend equal amounts of time in each area. But, if you are spending a sufficient quantity and quality of time in each area in the long run, then your life will be balanced. Ignore any one of your areas, (never mind two or three) and you will get out of balance and potentially sabotage your success. So maybe it's time to hire a rental property management firm or invest in an online property management system that will make your life more balanced and enjoyable?
Property Management System Resources
The Landlord's Library is a comprehensive, single source reference book that provides all the information on the subject of residential landlording that you'll ever need. This 671 page e-book covers the complete range of subjects and information on residential landlording and cuts out all of the useless "hype" that is so common in many real estate investment books. The Landlord's Library provides you with practical, no nonsense information that you can directly apply and profit from. Numerous step-by-step examples and information ranging from making plumbing repairs in a rental unit to screening tenant applicants. No other real estate investment books on this subject provide such comprehensive, useful information as what you'll find in The Landlord's Library.