Owning an investment property can be a great way to earn passive income each month. However, depending on the type of investment property and how many tenants you have, you may quickly realize that there is more to being a property manager than it seems. If you are spending more time and money than anticipated on your property, it may be time to consider hiring a property management service.
Here are the biggest reasons why you need a property manager.
There are several aspects involved when it comes to the rent that you are charging each month, and a property manager can help with each.
- Setting Rates: If you’re just starting out or when leases are up, a property manager can help you determine an appropriate rent amount based on comparable properties in the area and the Lincoln real estate market at the time. They can also take your budget into consideration to ensure you are maximizing your return on investment.
- Collecting Rent: Collecting rent each month sounds easy enough, but with 30+ residents, it can quickly become time-consuming. It’s also important for the process of paying rent to be quick and easy for your renters
- Managing Late Fees: If or when a resident fails to pay rent on time, a fee will need to be collected as well. Oftentimes, late payment fees get bigger the longer it goes unpaid, so managing this schedule and keeping tabs on residents is essential. In some cases, when rent goes unpaid for too long, legal action may be required.
There must be an exceptional level of communication between various people, including tenants, the property owner, and vendors. When there is a regular inspection that needs to take place, residents need to be informed that someone will have to enter their unit. Tenants need to be informed of rent increases, changes to the lease, changes in office hours, etc. When there are disputes between tenants, the property owner may need to know or get involved. And any communication between vendors needs to be clear and concise. This level of communication requires a lot of experience in the property management industry.
When there are open units, it’s up to the property manager to market and advertise the property in order to quickly find a new tenant and to keep that monthly income. Marketing a property takes training and experience as well, and when done incorrectly or poorly, it can end up costing a significant amount of time and effort. A property management service will understand which marketing methods will work best in order to reach an ideal tenant. They can also do it more efficiently, reducing the amount of time a unit sits empty.
The entire process of finding new tenants, including giving tours, managing the application process, completing credit and background checks, reviewing references, and more, can be a full-time job on its own — especially when your property has several or even dozens to hundreds of units to fill. The more specific task of screening tenants is essential in order to ensure that everyone living on the property will pay rent on time and will take care of the property while living there.
Repair and maintenance contractors, tradesmen, suppliers, and other vendors play an important role in the success of the property. A property management service will have existing relationships with these vendors and often have discounted prices, providing another method to maximize return on investment.
Laws and Regulations
There are attorneys who specialize in real estate law, so it would be an incredible feat for the average property owner to understand everything they need to in order to protect their investment and their tenants. When an issue arises that requires legal attention, a property manager will have a good level of understanding of relevant laws and regulations. These can include local, state, and federal regulations and fair housing laws, and a property must be up-to-date and in compliance with these laws.
If there is a dispute between tenants or a disagreement between a tenant and the property manager, the company will have processes in place and the experience in order to resolve the problem quickly and efficiently. If an issue escalates, they will understand what options are available and be prepared to take the necessary steps.
Saves Time and Money
Hiring a property management service is an expense, but as you can see, there are many very important responsibilities that the manager oversees. Not only will hiring a property manager save a significant amount of time, but it can also act as a type of insurance, protecting you from fines, fees, and potential legal issues when the property is not in compliance or when a dispute occurs.
Hip Realty works with several apartment complexes throughout the Lincoln area and we offer support for both residential and commercial property owners. Michael Holroyd, the founder and president of Hip Realty, holds a Nebraska Real Estate Broker’s license and is a Certified Property Manager (CPM) designation with the Institute of Real Estate Management (IREM).
Get in touch with us today to learn how we can help you manage your investment property.