The most important element for the success of a real estate investment is management. How a rental property is managed will influence:
- The quality of the property and the caliber of tenants it attracts
- The cost of operating the property and its overall profitability
- If the asset is a source of passive income for the owner or a job
There are two ways landlords can manage their assets. They can operate the rental property by themselves, in which case they would have to dedicate considerable time to overseeing repairs and maintenance, supervising their staff, managing tenant relationships, and doing all the work of marketing the property.
The second option is to hire a property manager (PM) to see the day-to-day operations of the property. The property manager does all the work the owner would have done if they were managing the home by themselves. The owner, having been relieved of the job of managing the asset can dedicate their time to other things.
This second option is the better way to manage a rental property as it offers clear advantages to landlords and the tenants in their property. When they think of hiring a property manager, most landlords focus on the cost versus the benefits. But the advantages offered by a property manager completely outweigh the cost of hiring that manager.
How property managers benefit landlords
- Top-notch property maintenance
Property managers have systems in place for keeping a rental in the best possible condition. They know the problems most likely to happen, the best way to avoid those problems, how to solve them for the long-term, and do all that while saving money.
- Help build a great team
Managing an investment property successfully is not something landlords can do in isolation. They need a team of competent professionals. Finding professionals who are the right fit for your rental can be challenging. A property manager can help by granting access to their network or making recommendations.
- Complying with local laws
One thing that makes owning a rental property difficult is the string of regulations about how to operate a rental. Property managers are intimately familiar with these laws and can help landlords avoid problems with the authorities.
- Eliminate the learning curve
Mistakes are inevitable when you are a newbie property manager. Property owners who operate on their own are more likely to make mistakes that are fatal to their investments. Conversely, landlords who have an experienced property manager by their side get the benefit of the PM’s insights.
- Efficient marketing
The ability to find new tenants consistently and keep vacancy rates low is what makes a rental profitable. From years of marketing properties, property managers have learned what works and what doesn’t. They also have efficient systems and networks for marketing properties effectively.
- Superior tenant screening
Property managers know the right questions to ask when screening potential tenants. Many have well-honed instincts for detecting inconsistencies in the information a renter provides. Good tenant screening is essential; it is easier to keep bad tenants out than it is to get them out once they are on the property.
- Better tenant management
Finding tenants for a rental property is hard work but making sure those tenants pay the rent on time, while abiding by the terms of the lease, is an even trickier work. Invariably, the time comes when every landlord must evict a tenant, having a property manager makes this process easier.
- Improved profits
By being able to keep maintenance costs low and keeping the property in prime condition, the property manager is able to attract the best kinds of tenants to the home. This, in addition to the PM’s marketing efforts, can make the property a lot more profitable.
- Greater prospects for growth
There is a limit to how many properties a landlord can successfully manage on their own. Property managers let investors grow their portfolio without increasing the amount of work they must do. A PM can help to transform a real estate investment into a true source of passive income.
How property managers benefit tenants
- Increased confidence
Tenants feel a deeper level of confidence when they know a property is professionally managed. That is because they know their relationship with the operator of the property and those who work for him or her will be more objective. There will be less room for conflicts.
- Better tenant satisfaction
Unlike a property manager, landlords often have other things to do in addition to managing the property. This means the property manager can dedicate more time to the property than the owner. The result is a timely response to tenants’ issues when the rental is under the care of a property manager.
- Greater stability
A competent property manager introduces a level of stability in the tenant’s lives. The tenants always know what to expect because the PM delivers consistent service. Tenants are less likely to want to move out when they have that. This creates a win-win situation for both the landlord and the tenants.