The first question I am often asked when I propose property management to a prospective client is “Why should I hire a property management company?” and my response is always “How much is your time worth”?
Here are five top reasons why you should consider hiring a professional to manage your investment:
1. Save Your Time
Most property owners’ day to day work is not managing their properties; it is doing some other line of work. As many of you reading this can imagine, managing a single property or a group of properties is very time consuming and if that is not your only business, then it takes away from your day to day work and/or enjoyment of life. In a property management company, there should be systems in place to quickly and efficiently handle any issue which may arise. This makes what you believe to be a catastrophic issue or disruption, simply another day at the office for your property management company.
2. Rent Your Apartments Faster
My father always said there are three reasons why apartments don’t rent: price, appearance and tenants not being able to see the unit.
Day in and day out property management companies rent apartments. Property management companies are efficient at renting units because they are immersed in the market. They understand what today’s renters want and what they are willing to pay for it. For example, you may believe your unit is worth $1,200 a month, but we just rented an identical unit to yours for $1,150 just one block away. Every day the unit is overpriced is a day worth of rent that you will never get back. In the scenario above because you listed your apartment $50 too much per month, it is actually costing you $38.33 per day ($1,150/30 days in a month = $38.33 per day rental value). Not only have you lost that amount of money, but you may have also lost the possibility of renting to a great tenant.
As the saying goes “give the people what they want”. As I mentioned above, property management companies know the latest trends in remodeling and/or what tenants are looking for. In some areas tenants still want carpet instead of laminate or vinyl plank flooring. Every time a property management company starts to prepare a vacant unit for re-renting, the question that should always be asked is what will bring more rent and if the answer is nothing, then the unit should receive no improvements other than replacing what has been damaged by the previous tenant.
To address getting people to view the available units, property management companies should have a system in place consisting of:
- advertising (online, building signage and in newspapers),
- leasing agents/on site managers to show the units, and
- a back office staff to process the applications.
In addition to the above mentioned necessary items, management companies should also have staff at other properties in the area which can direct and/or show prospective tenants another property if the location they called on is full, or if they don’t like the location they came to see. For example, a prospective tenant calls to see a specific unit, but that property does not have any vacancies at the moment; the onsite manager should have been advised by the property management company to direct and/or show the prospective tenant a property in the area with a vacant unit. Renters are finicky in today’s rental market and if they can’t see it now, or are not given the option of another location, they jump back into the renter pool instead of having secured a place out of the market.
3. Save You Money
Property management companies should be saving you money on maintenance, renovations, and building improvements. How many times do you call a plumber a month? Once, twice…ten times a month. A management company with a good sized portfolio would call that same plumber over 100 times in a month and since the management company is calling the vendors that much more often, then they should be getting much better pricing than a single building owner can receive. In fact most vendors we deal with at the onset of doing business together have a “property manager price” as they know any property management company can provide a great deal of business to them.
In addition to this cost effective tip, a good property management company should be able to advise you on how to proceed and on what repairs are and are not necessary. We all know that most tenants request things to be replaced because they feel it should be. The key is to know how to listen and how to advise the tenant on what is or is not a reasonable repair/replacement. Property management companies can also save you the headache of getting bids for the work, because they understand what should be included in the scoop of work therefore insuring that costly “unexpected items” don’t pop up in the end.
4. Protect Your Asset
Property management companies are constantly learning and complying with new laws and requirements which are imposed by the federal, state and local authorities, as it is their job to be an expert in the field of rentals (residential and commercial). They should also be doing weekly site inspections to look for possible trip and fall hazards, costly leaks and other damages which could lead to more pricey repairs if left unmaintained. Your property managers should not be gate keepers who are just there to order things and open doors. They should be thinkers who advise landlords about measures to prevent damage from occurring, who take care of items which if left unattended could lead to a lawsuit, and who propose improvements that are necessary to maintain and enhance a property.
5. Take the Emotion Out of Management -it’s a Business
We all know that the hardest lesson to learn about running a residential rental property is that it is a business and not a social endeavor. Most landlords are guilty of being suckers for a sad story, giving too much, and ultimately being out of a lot of money. Unfortunately, the fact of the matter is that most tenants do not have the slightest idea regarding what it costs to run a property, and could care less if the owner loses the property due to a tenant’s lack of paying rent or lack of reimbursement for the things the tenant damaged. Property management companies are there to take the emotion out of running your property. A property management firm should manage the property by the book, and follow landlord/tenant law to the letter. If the rent is due on the first of the month and if the rent is not received, a Three Day Notice to Pay Rent or Quit should be served. If they don’t pay within the three days, eviction proceedings should begin. It may seem harsh, but when you go to the grocery store, can you pay later for what you would like to take home? Of course not! The same theory should apply to collecting rent.
Property mangers have a job to do. Their job is to operate the property to its fullest potential. As a property manager, I know at the end of the day that if I fail to rent the units, collect the rent, and maintain the property, I will be replaced.
When choosing a company to manage your investment, look for one that offers no wild promises, just excellent property management service.
Joel Rodstein is Vice President of North Oak Property Management which has been in business going on 37 years. He currently manages apartments, office, industrial, and retail spaces from as far north as Ventura County, as far south as Torrance, and as far east as Pasadena and its surrounding areas. For more information on North Oak, please visit www.northoak.com or call 818-715-0575.