“I should rent out my property, but I don’t want to have to take calls from tenants at 3am.” – Skeptical Shopper
Potential investors, do either of these quotes sound like something you would say when someone suggests you invest in real estate? If so, this is the blog post you’ve been waiting for!
A property manager is a partner in your real estate business who handles the day to day operations of your investment property. This could either be a single individual authorized to manage properties in your state (often a broker) or an entire firm dedicated to managing every aspect of your real estate investment. You hand the property over to them for a small monthly fee (often 10-12% of gross rent collected) and you won’t technically need to do anything but accept your rental income from the property manager every month!
The key takeaway that applies to everything real estate is “don’t go it alone!” As with any new business venture, you need to have a support team to help you overcome every obstacle and remove the roadblocks you run into while building your real estate investment portfolio. A property manager is just as important to your advisory team as an accountant, attorney, or REALTOR® is. Keep reading below to see the 5 reasons why professional property management could be right for you:
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1) Dealing with Tenants:
A property manager is your primary line of communication with tenants and your first line of defense when things go wrong. Indeed, things will eventually go wrong when you have investment properties, and the property manager will be there to evict the tenants or work a deal to get them back on good paying standards. A lot of people fear getting into real estate investing because of these issues. You do not need to worry when you involve a property manager. This should be encouraging!
Rent is also collected and deposited automatically into your bank account. No need to be banging on doors collecting rent at the first of the month. I know that this one in itself seals the deal for me.
2) Affordable Maintenance:
Contrary to popular belief and conflicting with many people’s fears, you don’t have to go fix broken toilets at 3am! Property managers often have their own internal team of maintenance personnel to keep your property in tip top shape at very low hourly rates.
“Typically, a new investor tells his/her friends, ‘I’m going to invest in real estate.’ The first thing they all say is, ‘so that means at 3 AM you’re unclogging someone else’s toilet?’ A property manager takes care of that. We do provide a lot more, but that’s probably the first question is, ‘will you take care of that for me?’ and certainly we will.” said Andy Petzold, broker and co-owner of EPIC Property Management, a property management firm in Cedar Rapids, Iowa.
3) Routine Inspections and Upkeep:
Property managers will inspect your property on a regular basis to make sure the tenants are not doing any repairs or improvements to your property, like expanding a closet into the garage and making it impossible to park a car in the garage. Other nightmares that could escalate quickly are tenants raising and housing unauthorized pets/wild animals and allowing children to use your walls as fine art canvasses!
“That’s a pretty common fear among investors: that [the property] is just going to get trashed. We have processes in place and the first one is: we do a check in with the tenants. We let them know that this is the condition of the property, we’re aware of scratches and things like that here and there, and that we expect the property to be returned in as good of a condition as it was given to them. So we set that expectation with the tenants and we maintain that by periodically inspecting the property,” said Petzold.
4) Finding and Screening of Lease Applicants:
Get quick turns on your property when a tenant leaves and you need another one pronto. When you purchase a new investment property without a tenant, you want that puppy rented as fast as possible.
“I recently had a new owner tell me he was amazed how many showings we had on his $800.00/month property after he had tried advertising on his own for 6 weeks. There was definitely a value to him in our existing advertising and lead generating infrastructure,” said Petzold.
Property managers are local experts. They know the neighborhood rents and which areas you need to pursue or steer clear of. There’s nothing worse than purchasing a property to find out that you live in a crime ridden neighborhood and you woefully overestimated the rent you could get for your propertyOn the same token, you could underestimate the rent and sell yourself short. “I see that the rents that are charged by individual operators tend to be all over the board, but generally they’re low,” said Petzold.
Going on your own and managing a single property, especially multiple properties, by yourself is a daunting task. If you enjoy managing your property and don’t mind the hours of extra work, by all means go for it, but consider the hourly value of your time. It takes a special kind of person to manage properties, doggedly collecting rents, and evicting tenants from their homes with no exceptions made for their hardships. Be sure you are one of these people who can do all of the above. If you’re not, there is nothing to worry about if you hand this responsibility over to a professional property manager with years of experience and the tools to maximize your cash flow and peace of mind.
We’d like to thank EPIC Property Management of Cedar Rapids, Iowa for their input into this blog post and video. For more information, please call 319.981.3242 or visit their website at www.epiciowa.com and consult with one of their experts today!