As you grow in the real estate business, your maintenance responsibility grows, and you might be overwhelmed by the work. At this point, you will need assistance handling the properties’ daily maintenance. You could hire a property manager or appoint a tenant to help oversee property operations.
Although these options are helpful, hiring a third-party property management firm can be the best alternative. Although at a fee, it helps you have time for other businesses as you receive your passive income. Keep reading to understand what real estate management is and what it can offer to you as an investor.
What is real estate management?
Definition
Real estate management is the business of overseeing the daily operations of rental properties, including residential, industrial, or commercial real estate. The management firms assume all the landlord’s duties and responsibilities, including rent collection, screening prospective tenants, and daily property maintenance.
Additionally, a real estate management company is in charge of evicting troublesome tenants, including filling out any paperwork involved. They also hire repairs and cleaning services to ensure the property is in perfect condition.
Suppose you are a landlord seeking a helping hand with your property management; check out the pros and cons of hiring real estate agents.
Pros of Real Estate Agents
1. Finding quality tenants
Tenant screening is a complex process, especially if you are inexperienced in the real estate business. Real estate management companies hire experienced agents to screen prospective tenants and identify red flags.
Adequate tenant screening prevents multiple problems, including delayed rent payments, legal issues, or property damages.
In addition, professional real estate management can identify tenants who can rent for a long term, pay rent on time, and cause less wear and tear to the property. They prevent rental scams and unwanted lawsuits.
2. Efficient rent collection
To ensure consistent cash flow, rent must be collected on time—however, tenants tend to ignore the lease agreement with numerous excuses. If you are too permissive, tenants can cause costly problems, especially with property expenses. Allowing a third party to handle the rent collection is prudent to avoid issues and misunderstandings with tenants.
Professional management companies have well-defined systems that ensure rent is paid without delays. They also impose fines on late payments or consider eviction when necessary. As a landlord, you are saved from dealing with emotional excuses from tenants that come up with new excuses each time.
3. Low vacancy rate
A high vacancy rate can be costly, especially when you have mortgages. A property management company with well-designed marketing strategies can increase the occupancy rate.
Most property managers have also established reasonable periods for tenants to give notices of vacating the property. As a result, the marketing team has enough time to market the houses before they are vacant, reducing the vacancy period.
In newly built rentals, a real estate management firm with marketing expertise can fill up the houses quickly. Most start marketing it when it is under construction, allowing tenants to book and wait. Some properties can be fully booked before they are ready for occupancy.
4. Lower maintenance cost
One of the significant causes of property depreciation is poor or lack of proper maintenance. Once you hire a management company, they ensure proper maintenance and timely repairs, which prevents severe structural defects. Also, property management companies’ repair charges are competitive.
Besides reducing your property maintenance cost, property managers help increase or maintain your property value. An experienced real estate management firm knows the secret to keeping property value is preventive maintenance. They also give professional upgrade opinions to landlords when necessary.
5. Less stress and more freedom
Finding and managing tenants is not easy; if you are not skilled, you can give up and let the property be.
However, once you hand over your responsibilities to a property management company, you let them worry about everything. You can take a long time without visiting the property and still be in perfect condition and operation.
Property management firms also help in bookkeeping and accounting reports. They hire professional accounting staff to provide landlords/clients with their monthly financial statements.
Cons of Real Estate Agents
1. Loss of control
If you are the kind of landlord that wants to be the decision maker in every aspect of your property, then Real Estate Management Company is not for you.
Once you hand over the maintenance responsibility to a manager, you must trust that they can handle it. They will decide who lives in your houses through screening and evict non-cooperative tenants without consulting you.
2. Cost
You must be able and willing to pay for the services offered by the real estate management companies once you decide to hire them.
If their charges will strain your finances, it is prudent to seek a cheaper alternative.
However, real estate management firms do not charge fixed rates; with sound research, you can get an affordable one.
3. Difficulties in finding reliable agents
When hiring a real estate management company, you expect excellent services that make the tenants comfortable. If this does not happen, it is frustrating.
The negative effect of unreliable managers is that the more you change them, the more you mess with your reputation. It is, therefore, prudent to conduct good research until you find the right one. Referrals are the most effective way of getting reliable agents.
When to Hire a Real Estate Agent
Several circumstances influence the decision to hire a real estate management company, including:
- When you have many properties that you manage by yourself
- When the property is not within your residing area
- When you are extremely busy to find time to do the maintenance duties
- When it wasn’t your decision to be a landlord in the first place, you are not passionate about it.
- When you feel a third party can do better work than you regarding your experience in real estate management roles.
Summary
Although real estate management companies might be costly, their services are worth the price. They relieve you as a landlord from a lot of time-consuming duties.
