Thursday, December 2, 2010
When you hire a property management company it’s reasonable that you’d be concerned with when and how you are going to get your money. Fortunately, the entire process is typically pretty easy. First of all, the way you get your money and how often you receive revenue from your properties is typically going to be outlined in your property management contract.
You will also be receiving a statement from your property management company which outlines a few things. First, it will outline how much money you have received in rent this month. Second, it will outline your expenses. In the normal course of things, there won’t be much more in the way of expenses than the commission and fees you pay the company. Let’s say you collect $3000 in rent across several different properties. If you’re paying your company a 5% commission then they are taking $150 off the top. If one of those rental amounts was someone’s first month rent you might actually end up paying $150 in commission + $250 in the lease set up fee. The company will then disburse $2650 to you—not bad considering they had to do the work of managing the property. There might of course be other fees or expenses such as maintenance costs or the like; the way those will come out of your disbursement will be reflected in your contract.
The company might send you a check in the mail or they might deposit the money directly into your checking account through a direct deposit agreement. If you want the money direct deposited you’ll typically have to fill out an authorization form of some sort.
In short, it’s a pretty no-hassle way to make sure you get your money from your properties, all at once. You can compare this to waiting for six different rent checks to come in the mail, or with calling people on the 3rd to see why their rent is late. The money that’s been collected simply comes to you, and the property management company handles the details from there.
You will also be receiving a statement from your property management company which outlines a few things. First, it will outline how much money you have received in rent this month. Second, it will outline your expenses. In the normal course of things, there won’t be much more in the way of expenses than the commission and fees you pay the company. Let’s say you collect $3000 in rent across several different properties. If you’re paying your company a 5% commission then they are taking $150 off the top. If one of those rental amounts was someone’s first month rent you might actually end up paying $150 in commission + $250 in the lease set up fee. The company will then disburse $2650 to you—not bad considering they had to do the work of managing the property. There might of course be other fees or expenses such as maintenance costs or the like; the way those will come out of your disbursement will be reflected in your contract.
The company might send you a check in the mail or they might deposit the money directly into your checking account through a direct deposit agreement. If you want the money direct deposited you’ll typically have to fill out an authorization form of some sort.
In short, it’s a pretty no-hassle way to make sure you get your money from your properties, all at once. You can compare this to waiting for six different rent checks to come in the mail, or with calling people on the 3rd to see why their rent is late. The money that’s been collected simply comes to you, and the property management company handles the details from there.
Monday, July 26, 2010
Property management companies perform a variety of tasks involved with keeping your properties profitable. First, they market the properties. If you’re going to rent out properties then it makes sense that you’d want someone to get tenants into them as quickly as possible. Property management companies also screen tenants. This gives you peace of mind that every possible step has been taken to ensure that you get good tenants who aren’t going to cost you more money in the long run. They can also advise you on where you should set your rent. While this figure may seem obvious to you, there are sometimes factors like neighborhood demographics which impact how much you can realistically charge in rent.
Second, they collect the rent. In the normal course of things they’re simply going to get the tenant’s rent squared away on the first and that will be all there is to it. Occasionally, someone’s going to pay late, or they’re not going to pay at all. The property management company engages in the collection procedures that get you your money, or they engage in the legal proceedings that get the bad tenant out so that they can hurry up and get a new tenant in there.
Third, they respond to tenant complaints. They take all the tenant phone calls. If the garbage disposal isn’t working, they send out maintenance. If there’s an emergency, they do that too. If the groundskeepers didn’t come cut the grass, they also handle this problem. A good property management company can keep you on great terms with your primary customers: the tenants.
Fourth, they get the rentals ready for new tenants. For example, once the old tenant moves out, they call in the contractors who clean the unit, repair the unit, and repaint the unit. They then repeat the process of marketing and tenant screening. They increase the chances that your rental will get a tenant quickly instead of sitting vacant for months at a time, costing you money.
Finally, property management companies help mitigate the threat of lawsuits by bringing all of their knowledge of landlord-tenant and Fair Housing law to bear. A good company handles everything in a manner that is consistent with the law so that you don’t end up sued. Since, as a property owner, you now have an asset in the form of your property, this kind of preventative asset protection can well prove invaluable to helping you build the kind of financial future you initially saw when you bought the property.
Tuesday, June 29, 2010
On the surface, managing your own property might sound easy enough. You might have some notion that it will take little more than placing an ad on Craigslist and then sitting back to move your tenant in and collect your rent. Then, you get that 3 A.M. phone call about the hot water heater exploding. Or your tenant decides not to pay the rent this month. Or you find yourself having to perform your very first eviction. At that point, you may begin to recognize some of the benefits of hiring a property management company.
Property management companies save you time. They also typically make your properties more profitable. They have experience. They’ve already forged good deals with vendors and trades. They know their landlord tenant law. They can even open you up to a wider variety of renters by helping you offer your property up as an affordable housing property if that is what you desire. When that three in the morning phone call happens, they are the ones to handle it. That experience can also be invaluable in helping you avoid lawsuits. This becomes a concern the moment you start renting properties, so this kind of protection becomes invaluable.
Property management companies can also typically get your property rented faster to a higher quality level of tenant. This is because they’ve had experience in marketing properties that you might not have. They know who their target market is for each type of property and where to find those people. They also know what sort of standards to hold tenants to, which means you don’t end up spending thousands of dollars repairing a property after a bad tenant has come and gone. That also keeps late rent and evictions down, which is important whether you’re an investor or simply trying to mitigate a bad mortgage.
Finally, property managers have time that you might not have. This is all they do. You might have another job. You might have other entrepreneurial ventures. In some cases, you might not even live in the same city or state as your properties. If you have a great many properties then it’s often difficult to manage them all on your own. Property management companies can help you with this scenario. If you’re the type of property investor who got into this game so that you could have the time and freedom to do other things besides work then this represents an ideal scenario for you. You’ll have that freedom, and the well managed properties mean you can potentially use the time for other, more lucrative things, such as scouting out new properties to buy.
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