Purchasing a property and renting it out to tenants can provide a healthy income stream to willing investors for a very long time. But no matter what kind of property you purchase – commercial or residential, single-family or multi-unit – hassles and headaches are inevitable. Lots of patience and hard work go into finding the right tenants, maintaining the property, and acting responsibly as a landlord.
Unless owning and managing rental properties is a full-time job for you, or you want it to be, consider a property management firm to streamline your landlord duties. But before you sign with one, be sure to fully consider the pros and cons of managing your own property versus delegating tasks to a dedicated management firm.
What a Property Management Firm Does
The responsibilities that come along with property management include screening the credit histories and backgrounds of applicants, drawing up leases and processing rent payments, maintaining tax and legal records, and dealing with maintenance issues and complaints that crop up. Depending on the size of your property, these tasks alone can constitute more than a full-time job.
Every landlord has to decide whether the tasks required of property management are better suited to a dedicated firm or handled first-hand. The first thing to consider is whether you have the time and expertise to manage your own property. Are you comfortable doing basic handyman tasks (or do you know someone dependable who is)? Do you know a reliable electrician and plumber who offer same-day service? Do you mind being on call 24/7 to handle issues that inevitably arise? Are you comfortable confronting tenants over complaints or late payments? Or would you rather spend the money to free up your time by delegating these and other responsibilities?
While hiring a property management firm can eliminate after-hours phone calls and mitigate day-to-day hassles, nothing ever fully relieves you of management responsibilities as long as you own the property. Some maintenance issues (such as determining whether to repair an old dishwasher or replace it with a new one) are sure to require you to assess the situation and determine how to proceed. Additionally, certain tenant problems (such as eviction) will need your attention.
If you’re looking for a firm to take every single worry off your shoulders, you’re going to be disappointed – but if you want assistance lightening the load, a good property management firm provides a range of valuable services.
Dealing With Tenants
A big part of what any property management firm (or hands-on landlord) does is deal with tenants on a day-to-day basis. Responsibilities include advertising open units, interviewing and screening prospective tenants, drawing up leases, handling move-ins and move-outs, dealing with complaints, collecting rent, handling late payments and, in the worst scenarios, managing evictions. Property management firms should have a familiarity with legal aspects of the landlord/tenant relationship – and that includes understanding the rights of each party and how to proceed legally in the event of a problem.