Renting a property can be a great source of extra income or cash flow. With interest rates at an all-time low, real estate investment is becoming more widespread. In a city as popular as Denver, renting properties can be a worthwhile investment. However, playing landlord isn’t simply collecting monthly rent from tenants. There’s an endless list of tasks and objectives to fulfill, most of which can be a time-suck or money draining, especially if experience is limited. The benefits of property management can help highlight the perks of investment properties while avoiding the catastrophic issues that can arise with becoming a landlord.
What are property managers, exactly and how can they assist? Property managers are responsible for day-to-day operations on a property or properties where the owner has rented to an individual or individuals. They form a link between the property owner and the renter. Their jobs are essentially to oversee the unique needs of tenant and property owner.
What Does a Property Manager Do?
As outlined in Small Business, competent property managers oversee several crucial roles. Those experienced with property management can significantly add value to the real estate investment. For one, they’re tasked with the responsibility of ensuring all legal guidelines are met between tenant and owner. In addition, they can help with reducing downtime between tenants and pricing properties as they make sense for the surrounding areas. More specifically, a property manager oversees:
1. Maintenance and Repair
It is the property manager’s job to ensure tenants occupy their rental space respectfully. They respond to maintenance and repair issues. They repair or replace non-functioning items and help to provide excellent living environment for tenants. Typically, property managers hire qualified trades people to do the work and oversee its completion.
As with most house repairs, they are needed when least expected. Property managers can provide a streamlined approach to servicing tenants, particularly in emergency situations. This helps to give property owners peace of mind and helps them to avoid making 24/7 house calls when something on the property is not functioning correctly. One of the key benefits of property management is the ability to rely on another team to fix issues immediately.
Administrative, Legal, and Accounting
Property managers look after the administration of property rentals for the owner. This includes more than collecting rent, paying bills, keeping records, and paying taxes. Property managers often prepare budgets, draw up rental agreements, and prepare end-of-fiscal-year reports. Property managers must also know and comply with rental laws. Additionally, knowledgeable property management companies will provide insight into pricing a property for rent to ensure that homeowners and commercial building owners are getting the most for their investments.
Property owners advertise rentals. They interview prospective renters, check references, and choose renters. Property managers have the knowledge and interview skills necessary to procure responsible tenants who will keep the property in good shape.
Property managers understand rental rates in the area and ensure owners are getting the best value for their property.
Vacant rental properties are a liability. So, too, are bad renters who do not pay their rent and/or trash the place. It is the job of a property owner to get and keep good renters. This involves salesmanship and making an enthusiastic pitch.
Property managers are the face of the rental company. They need excellent communication skills. They select tenants, respond to maintenance concerns, set rental rates, and deal with disputes between renters and owners or between renters. Theirs is a mediation role when issues arise. They are masters of conflict resolution. Likely one of the most amazing benefits of property management is allowing an experienced team to oversee tenant needs and interactions.
Self-Managing Properties: The Downside
Managing a rental property isn’t a walk in the park. There are dozens of factors that can contribute to how well a property is managed, including overseeing of the property, structure of team work, responsiveness, and much more. While self-management can save money, it can also be incredibly costly in the long-run.
For one, being available for tenant needs is one of the top priorities for real estate owners who have chosen property self-management. Unfortunately, tenant needs can arise at any time–day or night. Additionally, something as simple collecting money can be difficult to oversee. Tenants are usually afforded a grace period and organizing systems to ensure proper collection of money can be overwhelming.
A Forbes article suggests that the following issues be considered:
- Rental properties can be a good source of income. However, property rental is not passive income. Rentals require work. Know what the duties are and make sure you have the time and expertise to do them.
- You need to be able to create and place ads. You have to be prepared to take phone calls and create files on prospective renters. You also must be able to show properties, explaining their best features.
- Professional property management companies—or third-party property managers, as they are often called—provide a liaison between the owner and renters. They are experienced at handling day-to-day property management.
Should you manage the property yourself? Self-management is a way to save money. However, you should consider some key issues. Complete a list of duties property managers usually handle. Then, ask yourself:
- Do I have the skills to manage my rental property?
- Do I have the time for these tasks?
- Do I want to do these things?
- Are there other activities I’d rather do and/or projects which would make me more money?
What Does Hiring a Property Management Cost?
There is no single answer to this question. Property management fees vary from property to property and from location to location.
Single-family properties and small multi-family properties may cost you up to 12% of your rental income. Some property rental companies charge as high as 30%. However, they may include cleaning, minor maintenance costs, and overseeing the property as part of this.
Types of Property Managers
Not all property managers perform the same duties or manage the same type of rental space.
Commercial Property Managers
These people manage property rented by businesses. Commercial property managers have an extensive knowledge of industrial buildings and business renters.
Multi-family Property Managers
Multi-family property managers specialize in managing apartment buildings or rental single-family complexes. Good customer relations skills and efficient service response are vital.
Multi-family property managers usually work for real-estate companies or corporations.
Single-Family Home Property Managers
These managers are often employed by real estate investors who own residential blocks or subdivisions that they rent to families as a source of income.
Single-family rentals often have a high turnover rate. The renters may be transitioning to or from home ownership. Likely candidates are young couples or retirees.
In all cases, owners hire property managers to ensure reliable finding reliable renters and maintaining the value of the property.
How Property Managers Can Save You Money
In many cases, hiring a property manager may save you money. Instead of your being tied to maintenance, marketing, renter selection, administrative, and budgeting duties, you will be free to do such tasks as finding and renovating additional rental properties.
Let’s assume you are paying a management company $5,000 a year. This employee may well save you twice that amount in getting reliable renters and keeping your property well maintained.
Tips for Hiring a Property Manager
If you decide to hire a property manager, do your homework first. List the duties you expect the manager to accomplish. You want the best manager in Denver.
Ask others who own rental properties. The best references are word-of-mouth. If you are confused by the sheer amount of information and you are afraid of ending up with a bad manager, a good strategy is to use the services of an experienced, proven, third-party management company like Urban Phenix.
We can all learn to self-manage but it takes time to perfect the skills of a good property manager. This may be a job you’d prefer to entrust to a seasoned professional.
Why Choose Urban Phenix?
Urban Phenix is a highly regarded, third-party, Denver property management company. Their staff has proven itself as a company that keeps property well maintained and selects high-quality tenants. Both owners and renters are highly satisfied with their services
Urban Phenix oversees daily rental property tasks aimed at ensuring that property owners profit from the company’s vast knowledge and experience in the property management sector.
For more information on how Urban Phenix can help you maximize your rental property income, contact us today.