The number one reason that people give for not getting into owning “buy and hold” real estate is “I don’t want to get a call in the middle of the night for a leaky faucet or a clogged toilet.” Well, the good news is you don’t have to. You can be a landlord and not have to deal with taking maintenance calls and coordinating contractors. As a real estate investor your time is much to important to be handling maintenance calls. A good management company will have someone dedicated to answering the phone, talking with the tenant to identify the issue, then sending the appropriate contractor out to fix the issue. The issue isn’t resolved until the the tenants are satisfied with the solution or repair and the property owner is satisfied with the work completed and the price. Keeping the tenants happy is a critical part of collecting rent.
2. Rent Collections
When your tenants get a few days late on rent it sure is nice to have someone putting effort into collecting on your behalf. A good property management company will send letters, email and call the tenants when they get behind on rent. Once it gets to be the middle of the month your property management company should physically drive out to the property and knock on the door and ask for rent. (You would be surprised how many companies don’t.) Also, its helpful to make sure the tenants have not vacated the property. Even if every thing is going well and your tenants are paying on time its still nice to have an intermediary that collects rent for you and provides receipts and records. This also insures that there is a system of bookkeeping for your rental revenue. Today, a good property management company should make it as easy as possible for the tenant to pay rent. Making rent payments online is convenient for the tenants, the owners and the property managers.
3. Rehab and Turn Budgets
When ever I purchase a new property I have our management company go out and give a budget of what is will cost to get the property rent ready. My property management company consistently gives the best possible price for materials and labor on any given project. Likewise, when a tenant moves out and we need to get the property turned around and rent ready, I have my property management company get a budget together. Because they are managing the property and are well aware if a tenant moves out, they can get the budget together faster than an outside contractor could.
4. Board of Health
Every once in a while as a property owner you have to deal with the board of health, the IHPC, or violations from city government. This is of course is no fun at all to deal with. This type of paper work can be extremely time consuming. Having a management company to take care of it is very valuable. Some management companies won’t deal with issues like this but a GOOD property management company will.
When you own a good amount of rentals you will eventually have to deal with a tenant that does not want to pay rent. If you can’t get your tenants to pay then you need to file for an eviction. I have my property management company take care of evictions from start to finish. They file it with there attorney’s office and make sure that everything gets handled and the lawyer shows up to small claims court.
Typically a property management fee is about 10% of collected rents. To me this is a very small fee for such a broad spectrum of responsibilities and services. For an investor with dozens of rental properties the up keep would simply not be possible with out some help. Investors with just 1 or 2 properties might want to read this article about self-managing.
Be sure to do plenty of research when choosing your property management team!