In exploring the pros and cons of the utilization of a professional property management company, we can speak from personal experience. We own personal investment properties, and if we were not a property management organization, we most certainly would conduct our research and due diligence, and immediately align our properties under the care of a property manager partner. The number one reason investment owners provide for not utilizing a property manager is cost. The number two reason these owners provide is negative past experiences with property management companies. Certainly, there is a wide gap between the percentage of owners who offer reason number one to reason number two, and cost remains the number one factor why more owners self-manage their assets. However, as we are going to explore, the pros far outweigh the cons. Below are the top 5 reasons why those who choose to work with a property manager swear by their choice. Obviously, these pros are more applicable when choosing the "right" property management partner.
Pro 1
You save money in the long term. Yes, it's pretty well-known that property managers can charge upwards of 15% - 18% (these are national averages - IMS rates are lower) of your rental income, but in the long run, they can save you money. This results in many landlords who hesitate to hire property managers because of the fees, and as a result, aren't maximizing their cash flow over the years. Hiring a property manager will help you protect your investment by staying on top of maintenance issues to avoid costly repairs - for example, a single instance of water damage that isn't quickly addressed can easily surpass the cost of a property manager. They also help you maintain positive cash flow by enforcing on-time rent payments and filling vacancies quickly.
Pro 2
You save time. For many people, investing in rental properties is a great source of income — but it’s often not their full-time profession. That means in addition to their day job, many landlords are responsible for communicating with tenants, collecting rent, fulfilling maintenance requests, preparing for showings, and more. Hiring a local property manager means you no longer have to spend hours upon hours handling the day-to-day responsibilities of owning rental properties, and instead can focus on other areas of your business or life.
Pro 3
You can reduce tenant turnover. Successful property managers are responsive and available, addressing questions and concerns as they arise — and in turn giving tenants the best experience possible. By creating a great experience for tenants, local property managers can help landlords reduce tenant turnover and avoid vacancies. Here, we get into the second main reason owners offer for not utilizing a property manager - negative past experiences from a property management company. However, it is very evident that these respondents did most likely conduct thorough research in their chose of management representative.
Pro 4
The "right" property manager is the subject matter expert in property services. Face it; if you own any investment property, repairs and replacement of various items will happen. For short and long-term rentals, garbage disposals, hot water heaters, and HVAC systems are the top three items which will require servicing, repair, and eventual replacement. Obviously, the more frequently these systems are utilized, the more frequent service and replacement needs will be. Most owners do not live in the same geographic areas in which they own properties, and are certainly not experts in the diagnosis, repair or replacement of these items or systems. Consequently, until they locate and build trust in a repair/replacement with a service organization or individual, owners are at the mercy of a Google search, or at best, a referral from a friend or neighbor. The experienced property manager is the subject matter expert in the area of property services, and even if they personally do not have the expertise to repair or replace the item or system, they already have all of the contacts established, through all trades of professionals who offer these services. A distinct advantage IMS offers is that we completely self-perform all repairs and replacements of items or systems. We never subcontract services, repairs or replacements to outside organizations. This immediately saves the owner money, as IMS is not at the mercy of an outside provider, who will dictate pricing. Additionally, we are never at the mercy of timeliness in scheduling a repair or replacement of an item or system. The employees performing the service are IMS employees.
Pro 5
Simple, transparent business agreements. Among the top 10 (depending on the source of the information) reasons owners who self-manage their assets list for cons is complex, and wordy contracts, with a lot of small print, and hidden fees. As we are different, we offer this frequently used con as a pro. IMS is different, plain and simple. While we offer a 23 page, extremely comprehensive property management prospectus, to fully educate our prospective clients on all aspects of property management, and our history, and business operations, IMS business agreements consist of only a few pages, are completely transparent, and there are no hidden fees. Additionally, there is also no fine print. For the majority of our assets, with the exception of certain commercial and retail leases, we offer one, comparatively low monthly management fee. Also, an itemized listing of potential property services, as well as each's corresponding general costs are completely listed as an attachment to all business agreements. Again, this item we list as a pro, can easily be viewed as a con, if you are conducting business with the wrong partner. It is not uncommon for short-term rentals for example, for the property manager to mark up the cost of cleaning and/or linens, by as much as 100%. The same can be true of a multitude of other services, such as the replacement of a garbage disposal, simple replacement of HVAC filters, light bulbs, batteries, or placement of a new set of dishes, or glasses for the kitchen. And guess what - the property manager will cleverly pass along this insane mark up straight to the tenant. Therefore, a short term, seven day rental, with a base cost of $1800.00, can easily exceed $2300.00 to $2500.00 before any taxes or insurance, simply in adding in the cleaning and linen fees. That renter will not be staying in your short-term rental ever again. The same thing is seen with long-term rentals, commercial properties, industrial properties, and multifamily rentals. There are many areas, including CAM fees, weekly sanitation service, weekly landscaping service, and the list goes on and on, where many management companies mark up prices to ridiculous levels. With IMS, every aspect of our monthly billing, in line item form, is spelled out for the asset owner.
We sincerely appreciate you taking the time to read our Top 5 Reasons to List Your Property With a Property Manager. This blog is the first of a multi-part series of "Top" items we will disseminate in the coming weeks. The next discussion will consist of the "Top 10 Things to Look for in Choosing the "Right" Property Management Partner. We welcome your comments, feedback, and suggestions of other topics you would like to see us discuss. As the proud author of this blog, you may reach me directly at buddy@integritymgmtsystems.com. I look forward to hearing from you.
Comentários