Real estate investment is a particularly attractive field because it can be very lucrative, and because it can also be passive under the right circumstances.
That said, many people underestimate just how much time and effort is required to keep your rental properties up and running. Even with a modest real estate portfolio, you could quickly become bogged down with tasks and responsibilities to manage.
In pursuit of reducing the scope of these responsibilities and streamlining the process of property management, many investors turn to the help of a property management company. But how exactly do these companies work? And what can they do for you?
The Basics of Property Management
A property management company is a business designed to assist real estate investors with their real estate investments. As we’ll see, property management companies can help you with a wide range of responsibilities, and in exchange, they’ll typically charge you a fixed percentage of your gross monthly rental income.
This is designed to be a mutually beneficial partnership. You’ll get to tap into the knowledge, resources, and expertise of your property management company, and they’ll generate a bit of revenue in return. If you’re looking to make your rental portfolio as passive as possible, it’s an easy decision to make.
What a Property Management Company Can Do for You
So what exactly can a property management company do for you?
Not every property management company runs itself exactly the same way, so you won’t always get the exact same scope of services. However, most property management companies can help you by doing the following and more:
- Clean and prepare your property. If you already have properties in your portfolio, your property management company can help you clean and prepare them for rent. This is an important step that makes your properties more attractive and more habitable, allowing you to fill them quicker and potentially even charge more rent for them.
- Market your property. Even if you have a very attractive property in a very attractive area, there’s no guarantee that you’re going to find the tenants you need in a timely manner. That’s why many property management companies help you with marketing and advertising, making sure your property is as visible as possible to the people who are most likely to rent it.
- Screen tenant applicants. Tenant screening is practically necessary if you want to keep your property reliably occupied. It’s a process designed to filter out candidates who won’t be able to afford your property or may otherwise be unreliable in maintaining it. Unfortunately, this process can be a significant headache, which is why property managers typically take care of it for you.
- Streamline onboarding. Onboarding new tenants is a brief, but important step in the process that property managers can handle for you. In aggregate, it can save you a ton of time.
- Collect rent. Property management business owners also take charge of collecting rent from tenants in most arrangements. In fact, rent collection is typically automated.
- Issue maintenance and repairs. Managing maintenance and repairs is crucial if you want to keep your property in good condition and keep your tenants happy. Property management companies can manage and exercise routine maintenance when necessary, and handle repair requests whenever they come in.
- Respond to tenant complaints and concerns. Even the most cooperative tenants are going to occasionally have complaints and concerns. Your property management company can handle intake on these matters and address them as necessary on your behalf.
- Coordinate move-outs. Managing the ends of your leases and coordinating move-outs can also take time. Your property managers will likely handle all of this so you don’t have to.
- Organize documentation. A big part of rental property management is keeping track of your income and expenses for tax purposes. Without proper accounting and organization, you could find yourself in over your head during tax season. Most property management companies help you with collecting, organizing, and managing all your most essential documents, so the tax process is as streamlined as possible.
- Advise on related matters. Many property managers are also willing to help with advice on related matters. For example, you might be considering selling one of your rental properties or adding a new one to your portfolio. These are big decisions with lots of variables to consider, so it pays to have experts on your team who can direct you to the best possible choices.
In exchange for these services, all you’ll need to do is pay a fixed percentage of your gross monthly rental income to your property management company. It’s a trade that works out favorably for millions of real estate investors, and it could help you save a tremendous amount of time and effort.