Are you thinking about investing in a property and becoming a landlord? Well, you should know that maintaining and caring for a property on your own is arguably one of the most difficult parts of being a property owner. That's why many real estate investors go on to hire a property manager. Whether it's an apartment complex, single-family home, shopping center, or office building, a good property manager will not only ensure the upkeep of your property, but can also increase the value of your asset. Good property management also makes sure your tenants pay their rent on time, and that you're paid on time as well.
Here are just a few roles property managers play in the management and upkeep of property:
1. RENT COLLECTIONS
A property management company collects monthly rent payments on a property from the tenant. This is perhaps the most obvious task of a property manager, but that doesn't mean it's the easiest. Not all tenants pay their rent on time, which often hurts the property owner's revenue. Collecting rent is where the value of a property manager lies. They're great at hunting down late rent payments. And if they have to, they'll send out pay or quit notices and force tenants to pay late fees. Your property manager will always work in the best interests of you and your property. They'll likely avoid eviction - it's quite expensive - at all costs and use it as a last resort.
2. REPAIR AND MAINTENANCE
If you think you can handle rent payments on your own, then fine. But try dealing with regular maintenance calls. Imagine trying to run an apartment complex on your own. Forget about it. Things would get quite ugly really fast. For handling repairs and maintenance, property managers:
Find licensed, bonded, and insured contractors to make repairs
Organize a preventative maintenance policy to identify and deal with repair needs
Maintain outdoor areas with leaf and snow removal, landscaping, and removing trash and debris
Maintain and monitor an emergency repair line
Make renovations to raise property value and maximize rental income
3. MORTGAGE & UTILITY PAYMENTS
Your property management company of choice will handle most standard property expenses such as the utilities and mortgage payments. Depending on the rules you set in the lease, your tenant may be required to pay certain utilities such as electricity, gas, and/or water. If you're still paying the mortgage on your property, your property manager will take part of your rent payment and put it towards your principal and interest.
A property manager will typically draw up the leasing agreement between you and your tenant(s). They'll also review lease guidelines with tenants regarding things like rental payment terms, late fees, things that violate the lease agreement, and required property maintenance. Your property manager will handle tenants that are in violation of their lease agreement by imposing penalties, handing out eviction notices, etc.
5. ACCOUNTING SERVICES
Handling the financial aspect of property ownership can be a huge headache. Luckily, property management companies include accounting services as part of their package. They'll document your expenses using invoices and receipts. Your property manager will also keep a record of important documents such as paid invoices, leases, inspection reports, warranties, etc. And who can forget about the dreaded taxes? Property managers handle that too.
6. SECURITY DEPOSITS
When you move a tenant into your property, you must protect your asset at all costs. That's part of a property manager's job. They'll collect security deposits from tenants. In the event the tenant damages the property, you can use the money received from them to make repairs. If they keep the property in a similar condition to when they moved in, they'll often get the deposit back.