Purchasing a buy and hold rental property is just the first step to becoming a successful landlord. You can have a great property in a desirable location, but it needs to be run efficiently. Whether you decide to do this yourself or enlist the services of a property manager, there are a handful of important factors that must be addressed. It is not uncommon for new landlords to become overwhelmed with how much work is involved, and decide to go the property manager route. Before you do, however, you need to know exactly what their job description is and what they will do for you. Here is a list of just some of the roles a property manager should fill:
1. Finding Tenants: Everything in the rental property business revolves around finding good tenants. If your property is constantly vacant, you won’t have any money coming in. This sounds simple enough, yet not enough attention is paid to this until it is too late. One of the key functions of a property manager is to keep your property constantly filled with quality tenants. Not only will they market and promote your property, but they will screen all prospective applicants. Anyone who has ever done this knows just how time consuming it can be. Between showing the property, answering questions and reviewing applications, the process can take several hours out of your week. Of course, it is not enough to simply fill vacancies: you need to get the most qualified tenants you possibly can. A seasoned property manager will review the application, make follow-up calls and give you a good idea of what you are working with. Ultimately, it is your call on who you rent to, but a property manager will do all the dirty work to weed out bad tenants.
2. Rent Collection: If filling vacancies is the most important role of a property manager, rent collection is a close second. In a perfect world, your tenant will pay on time, without prompting, every month. Of course, things rarely go according to plan. There will be times where your tenant is a few days late and needs a subtle reminder. If the situation gets worse, your property manager will make follow-up calls, and – if needed – pay a visit to the property. They will also make it as easy as possible for your tenants to pay. This could mean setting up a dedicated account where the tenant can automate their payments. It can mean picking up checks for you and dropping them off at a dedicated spot.
3. Maintenance: Once your tenant is in the property, you must expect issues to pop up form time to time. Even the best tenants cannot prevent the inevitable. How you handle issues will often determine how happy your tenants are, and whether or not they would consider renewing their lease. Your property manager will not only field the calls from your tenant, but will also organize the work that has to be done. It is important to remember that you are still paying for the work, but your property manager will handle everything else. Most of the issues in your rental will be minor in nature, but they still need to get done. The longer you wait to have a toilet unclogged or a dishwasher fixed is a direct reflection of the owner. By having someone that is solely dedicated to handling issues like this, things will get done quicker and more efficiently.
4. Turnover: Shuffling in a new tenant while simultaneously getting your existing one out is not easy. This can be a hectic time, as both sides are coming and going. An oversight at the beginning of the lease can come back to haunt you down the road. Missing something as your tenant moves out can cost you repair money, and even a portion of the security deposit. Here is where having a property manager can help you smooth this transition. They will give your existing tenant plenty of notice as to what is expected and what condition the property must be in at the end of the lease. They will not only screen the new tenant, but also provide them with the lease and instructions for the security deposit. If nothing else, they give you an extra set of eyes and ears on the property.
5. Growth: One of the hidden impacts of a good property manager is business growth. This isn’t the main reason you would use one, but can be a great benefit. Your property manager often has numerous established contacts in a local area. These can range from a contractor to a mortgage broker, and perhaps anything in between. In taking care of your property manager and treating them fairly, they will refer you to others when opportunities arise. Additionally, you never know when you will meet a new contact that will change the course of your business. You may not consider your property manager a lead generation source, but they usually know a lot more people than you think.
Only you can determine if a property manager makes sense for you and your business. Every property manager brings something a little different to the table, but the core items are constant.