“To manage or not to manage?” That is the question! Once you have purchased your investment property, you will wonder whether it’s better to try to manage it on your own or enlist professional assistance.
In chapter 14 of Paul Jamison’s book, he mentions, “You can absolutely manage your own property and prosper.” However, there are many benefits to hiring a property management company, no matter if you are a first-time or seasoned investor. The decision comes down to the amount of time you have available to learn the ins and outs of management, as well as the time to dedicate to performing your management duties. What can you expect from a professional property management firm?
Do you have the time it takes to commit to investment property management?
Two Fundamentals of an Investment Property Manager
Who’s the boss? You are.
The first fundamental of your relationship with a property management company is that they work for you. You still make the decisions regarding your property. You can also give your property management company the power to make decisions on your behalf, which are in your best interest. After all, a property management company will have more experience in decisions pertaining to caring for your rental. Are property management companies perfect? No, they are not. Problems can arise, and they will eventually. A great property management company will be able to navigate choppy waters effectively, and that is as important as anything – how they deal with adversity.
Investment property management companies work for property owners.
Vacancy versus no vacancy.
The second fundamental of property management is that a vacant property is not the end of the world. Who you rent to is more important than how quickly you rent your investment property. A management company will be able to help you endure the process of a vacant property and will be better able to get the right renters in due time. Patience is a virtue, especially when it comes to getting great tenants for your investment property. Pulling the trigger too quickly can become your greatest nightmare in property investment.
All property managers are not created equally.
This is not a bad thing. Successful property management companies are adapted to their own markets, as well as the types of properties they are experienced in managing. You must perform your due diligence when considering property managers. In doing so, understand that they will have different philosophies. It’s important that you make your decision with all emotions aside. You might really like management company A. They are funny and congenial. They have your similar life interests. But company B has given you a structured and informational presentation, along with fantastic client recommendations, and they successfully manage lots of properties just like the one you have purchased. If your heart tells you to choose company A, but your head says to go with company B, trust your logical mind. Choose company B!
Take your chances with the best property management company, not the funniest.
Examples of How Everyone Gets Paid
Just as philosophies will differ between investment property management companies, so too will their business procedures. An experienced and reputable management company will be able to outline all their best practices. They will answer your questions. They will communicate effectively. They will take care of you before they take care of themselves.
You should get paid before your management company.
How is money distributed, when, and to whom?
One positive practice of a reputable property manager is ensuring that the owner gets paid before they do. If a company tells you that they will put money into their bank before yours, this is a bad sign. It is also wise in today’s environment of potential check fraud, that your property manager pays via direct deposit. That works to everyone’s benefit. Different companies will choose different designated days each month, on which they process payments. These days will be dictated by the way that rent is paid, how quickly it gets paid, or if it remains unpaid. Remember that your property manager must allow enough time for tenants’ funds to clear each month, before can pay you.
What are typical fees charged by a management company?
Of course, you can expect to pay your management company, but how much? Don’t fret when a company gives you a detailed list of their fees – you employ them, so you can expect to pay them. The more extensive list of fees they provide, the better. This leaves little room for debate when a scenario arises, which is not covered on the list. Don’t become overwhelmed with all the details in this case. Some common fees that are charged by investment property management firms might be…
- An upfront fee that is a set percentage of the rent at the time the lease is signed or at move-in
- A monthly set percentage of the rent on your investment property
- Late rent fees go to the management company
- Rental application fees are kept by the property management company
See the complete list of potential property management fees, which is provided in chapter 14 of Paul’s book!
Communication is everything.
In the age of social media sharing, you might have heard, “If you didn’t get a picture, it never happened.” When it comes to working with an investment property manager, the saying should go, “If you don’t have it in writing, it never happened.” That said, your communication with the property manager and theirs with you, SHOULD BE DOCUMENTED. Reputable management firms will have software in place, which centrally stores written communication, such as text messages and emails. The best management firms will follow up written communication with an old-fashioned, friendly telephone call. When it comes to your investment, you cannot overcommunicate.
Get it in writing and put it in writing when it comes to managing your property.
Also read: Do I need a property manager?
Get the full property management skinny.
Paul Jamison offers much more information about investment property management in chapter 14 of his book, Opportunity Is Knocking: How to Open the Door to Rental Property Investment and Management. This information includes the tenant screening process, leases, selling your property, and even how to start your own property management company. Get all the goods in Paul’s book, available on Amazon here.