If you’ve owned real estate for quite some time now, you would know that rental properties are financially rewarding investments. They’re a great way to earn passive income, but only if you’re willing to commit much of your time and effort into property management.
The most successful property investors hire a property management company to handle the day-to-day demands, however, some landlords find it to be an unnecessary expense. Why pay someone else to collect rent, screen tenants, etc. when you can do it all by yourself, right?
Below, we’ve rounded up 7 things that can happen if you don’t hire a professional property manager.
#1 Leasing at the Wrong Rental Rates
Most property owners are unfamiliar with the real estate market, which puts them at risk of undercharging and overcharging their rent. While lower rates might result in more interested tenants, it won’t translate to high returns. Similarly, rental rates that are far too high will discourage prospective tenants, which means that the property will be unoccupied for longer periods.
A professional property manager will conduct a thorough market analysis to determine the most accurate rental price for the property. They will determine your property’s value and compare it with similar properties in the area. With a property manager, you can maximize your investment to its fullest potential.
#2 Ending Up With Bad Tenants
Property managers implement strict screening procedures to make sure that only qualified tenants get to live in your property. Without this rigorous process, landlords might allow “bad apples” to sign the lease. You might end up with more costs than expected after the tenant destroys your property, fights with neighbors, and refuses to pay their rent for months on end.
Property managers are experts at carefully selecting the right tenants. They’ll look into each applicant’s credit score, criminal background, employment, and much more. It’s their job to assess the risks associated with each tenant, helping ensure that the tenant you end up with treats your property with respect.
#3 Poorly Marketed Properties
Many property owners believe that listing their rentals on websites such as Zillow, Trulia, or worse — Craigslist is enough to generate a wide pool of applicants. Without the expertise of a property management firm, the chance of finding quality tenants shrinks drastically. Professional property managers partner with high-traffic websites and leverage social media to give your property as much exposure as possible. Also, they have access to the Multiple Listing Service (MLS), which is a database used by real estate professionals to fill vacancies in record time.
You may be thinking, “I can just post my rental property on Facebook,” and while this is true, it will take you a long time to find good tenants. And remember, an unoccupied property is an unprofitable property. If you want to get cash flowing, you’ll need professionals who know which marketing methods to follow.
#4 Unsafe and Illegal Activities on Your Property
As a landlord, you are responsible for your tenant’s behavior. Without specific rules clearly stated in the lease agreement, tenants can do whatever they want — including unsafe and illegal activities. The last thing you want is for the authorities to get involved. To avoid these improper situations, it’s crucial to require tenants to sign attorney-prepared leases, where certain actions have their corresponding ramifications. You could enforce fines for “bad” behavior such as smoking inside the building.
A property management firm typically has an in-house team of lawyers to ensure that unsafe and illegal activities are explicitly banned during the entire tenancy. In addition, property managers offer tenant education to make sure that tenants are aware of their responsibilities.
#5 Poorly Maintained Properties
Maintaining the upkeep of rental properties can be challenging especially if you’re managing multiple rentals. Owning a real estate investment comes with the huge responsibility of carrying out scheduled maintenance and repairs. And while basic fixes, such as replacing the lightbulb or unclogging the toilet, can be performed by the tenants, routine maintenance should be shouldered by the property owner.
When problems are ignored for far too long, they turn into bigger problems. Often, these serious issues result in expensive repairs as well as legal repercussions, especially if they violate the housing code. Property managers will conduct routine property inspections for you to ensure that your property is safe and habitable.
#6 Being Overcharged by Vendors
Property managers have the connections that you don’t. When your tenant calls to report a broken window, leaking pipe, etc., it’s important that you address these problems straight away. When that happens, the first thing you must do is to find a reputable vendor who can get the job done quickly.
Without established relationships with maintenance workers, contractors, suppliers, and other vendors, it’s possible that you will be charged for much more. Property management firms have their network of trusted vendors who can deliver quality work at the best prices. In addition, they’ll oversee the entire project from start to finish.
#7 Late Rent Collection
Securing monthly payments from tenants can give even the most seasoned landlords a headache. Not every tenant will be able to pay on time. This means that you will have to personally knock on their doors and demand rent, which can often be an awkward and time-consuming process.
Property management companies utilize online systems to efficiently collect rent on time. By streamlining the rent collection process, you can maintain your cash flow and avoid conflict with your renters.
Hiring a property management firm can help you avoid all of the unlucky problems listed above. With access to a team of experts, you won’t have to worry about losing money, dealing with bad tenants, getting sued, and much more.
Let Luxury Property Care help you manage your real estate investments. With a team of seasoned property managers, as well as in-house accountants and attorneys, we can guarantee you peace of mind knowing that your rental property is well-managed.