Real estate is one of the safest of all investments. An investment in real estate is an investment in something that is likely to retain value and even grow in value. However, investing in real estate can be tough. Unlike some other forms of investing. investing in real estate means being active and hands-on. Many people who buy properties find that they may not have quite the knowledge they need to make sure their investments remain stable and in good shape. This is why so many investors find it helpful to turn to a property manager. Working with a property manager has many advantages.
Tremendous Expertise
Some people come to the field of real estate with many years of experience in the field. Others, however, do not have the same understanding. In that case, hiring a property manager can provide them with access to such expertise. A property manager typically knows exactly how to accomplish certain tasks such as investigating a tenant properly. The real estate novice may lack this same skill. Whey they may have a rudimentary idea of how to do the basics, they may not be sure what to do in the event of a tenant who isn’t quite up to the standards they’ve set for the property.
Working With Tenants
Another area where a property manager can really take the stress out of real estate investing is that managing the day-to-day activities of tenants. If something goes wrong late at night, the real estate manager can instantly confront the problem. A real estate investor may live far away from the property or even in another state. A real estate property manager will typically live onsite or at least a short distance away. This allows them to speak with tenants directly and find out the source of the problem immediately.
Local Court System
Evicting a tenant who is be behind on the rent can be tough. A real estate owner may not know where to start. A skilled real estate property manager will know exactly how to help. They know what the laws are in that state as well as the tenant’s rights. Many property managers also have access to real estate lawyers on hand. The real estate lawyer can offer the sort of expertise that can make the difference between a property that is turning a profit and one that is showing a loss.
Attention to Detail
A busy property investor may not have time to pay attention to all the details of their property such as landscaping or making minor repairs each season. The property manager can do this for them, allowing the investor to know their property is in good shape all year long.
Good property managers commit themselves to providing the ideal rental experience for tenants. They’ve sworn to manage tenant complaints, field queries and accommodate requests to the fullest extent their managerial powers allow, because they realize that tenants are the source of their profits, and therefore it would be mutually destructive to do anything less than keep tenants thrilled with their current living situation.
Great (and financially successful) property managers and landlords only become known as such by building effective professional relationships; they rely on the fact that their reputations for efficiency and attentiveness are cemented through heaps of praise from tenants.
Both tenants and landlords count equally on each other’s efforts to achieve peace and prosperity, which means landlords reserve the right to be as selective when vetting potential renters as tenants are when choosing places to live. And just like identifying the gems, recognizing possible indicators of a less than ideal tenant is essential to a landlord’s success, so below I’ve listed the major red flags to watch out for when screening tenant applicants.
A bad credit score – Credit scores are maintained by making payments in a timely fashion, so it’s sensible to assume that applicants with bad credit might have trouble paying rent on time, or at all. Applicants with a score of 620 of greater are far less likely to miss payments.
Lacking a steadily/adequately paying job – Employment status is a huge indicator of potential payment issues; if a tenant is unemployed, or employed at a job that doesn’t steadily pay at least 2.5 – 3 times the monthly rent, expect an occasional struggle when collecting their rent.
A hurried move – Tenants might have their reasons for seeking immediate housing (leases ending, terrible previous experiences, etc.), but use your best judgement when considering these situations, as a tenant’s eagerness to jump into a rental agreement could equal their willingness to flake out of one, and stiff you.
Needing additional time for the deposit – If a tenant can’t even manage a timely initial deposit, the probability of always receiving prompt rent from them may be practically nil.
Poor or nonexistent references – A great reference from a previous landlord, or commendations from an employer can alleviate previous concerns about applicants. However, serious questions arise when references fail to answer questions relevant to a tenant’s reliability, or cannot be reached anywhere.
Applicants new to living together – The potential for miscommunication between you and your renters rises slightly with each additional tenant per unit, but the main concern with multiple applicants is whether they can coexist peacefully as roommates, which hasn’t been proven if tenants have never before lived together successfully. Failed experiments in companionship easily lead to broken leases and lost profits.
Over 3 (serious) convictions in 5 years – If tenants consistently break the law, it’s difficult to expect them to honor your building regulations, or respect lease agreements.
Owning property can be a goldmine, but it can also be a hassle, especially for anyone with obligations exceeding duties as a landlord. And when you add multiple properties into the mix, maintaining an accurate gauge on rent payments, late fees, complaints, repairs, new tenant prep and more can get very sticky, very quick, even for the most veteran of landlords. To help, I’ve summarized a few reasons why it might be wise for landlords to look into locating a good property manager to mitigate the responsibilities of leasing property.
You will free up time
As a manager and founder of PANA rentals, I regularly oversee anywhere from 50 to 100 properties, many of which are low income or student housing. I’ve often heard firsthand from clients regarding the burdens on time and freedom that accompany being a landlord. I’ve heard clients tell of their responsibility for older relatives, or children who constantly need care; sometimes these clients are simply unable to work in the additional hours which being a landlord demands. We are living, thinking, caring people, and precious little is as valuable as our time.
Anyone can dream of reaping maximum benefits with minimum time constraint. Purchasing and leasing real estate is one of the most efficient methods of achieving some financial breathing room, provided you find yourself a decent property manager to clear the air of unnecessary hindrances on your time and peace of mind.
You will get more/better tenants
Good property managers know how to draw interest through marketing campaigns using all available resources, techniques and industry connections, strategies which generate a larger, healthier prospective tenant base. Highly developed screening processes also allow property managers to choose tenants who possess qualities which the landlord feels are ideal, such as keeping noise down at night, or being employed. Property managers also provide a barrier of professionalism by handling tenant interaction, which separates landlords from the painful and difficult decisions that can occasionally spring from becoming too personally involved in tenants’ lives.
You won’t have to worry about constantly traveling to and from properties
Whether due to damage, decay or negligence, issues with property are a given for owners, and being a landlord without a manager means you’ll have to be present whenever a problem needs solving. Living within feasible driving range becomes a necessity, unless, of course, you hire a property manager to act in your stead.
You can make money regardless of whether you have previous property management experience
There is no limit or minimum amount of control that must be ceded to a property manager. Both longtime landlords and novice property owners are able to maintain a level of involvement in the management process completely suited to their personal preference, meaning anyone can profit, no matter their current experience level.
For those looking to increase their wealth through investment, there are two basic investment types to make: investing in stock or investing in real estate. While each method has been proven effective, real estate investment is a highly lucrative game that could end up making you rich in the long run — of the 1,810 billionaires living today, 163 of them, or 9%, got their start in real estate, making the industry the third-largest source of wealth. However, real estate investment isn’t for everyone. Take a look at the pros and cons of investing in real estate before deciding if it’s the right investment method for you.
Pros:
The investment is physical.
Believe it or not, this is actually a huge deciding factor for many people when choosing how to invest their money. While investing in the stock market is also a great way to make money, for many people the main turn off is the way you can have money one minute and lose it the next. With real estate, this isn’t a concern. Your piece of land, your investment, is one you can reach out, touch, and even stand on. While money can come and go, your property investment will always remain.
You are in control of your investment.
With each new property that you purchase, you essentially become the owner and CEO of your own small company for which you’re in charge of hiring (renting), maintenance (general upkeep), and growth (additions and renovations). By making renovations to improve the house, like a bathroom or kitchen remodel, you’re increasing the value of your investment, something you can’t do with stock investments.
Real estate is a relatively stable investment.
When you invest in real estate, there is very little — if any — fluctuation that occurs in terms of value. While stock prices can double and halve in mere hours, real estate offers a stable alternative for investment for those who aren’t looking for the stressful ups and downs of stock market investment.
Cons:
The investment is illiquid.
One of the major cons that deters people from investing in real estate is how illiquid — or how difficult to convert from asset to cash — the investment is. Where buying and selling stocks can be completed in a matter of seconds, selling a piece of property can take weeks or even months for proper paperwork to be signed, payments to go through, and sales to be finalized. So while real estate is a far more stable investment,
It requires a lot of work.
Where stocks are easy in that, once you invest in them, your work is primarily done, real estate investments require a lot of work to be put into them for you to see substantial returns. Often times, people choose to hire property managers who act as the middleman and take the burden of maintenance off of the shoulders of the landlord, but if you don’t then you’re looking at fixing minor repairs as they arise, maintaining the property, finding your own tenants, and enforcing the lease on your own.
If you can’t find tenants, you’re paying for your investment.
Another huge con of real estate investment is that you need other people to make your investment profitable. If you’ve purchased a rental property, you’ll need tenants to occupy the building or else you’ll end up losing money each month as you pay for mortgage, utilities, and general upkeep.
In today’s world, people want three things- time, money, and happiness. Unfortunately, we can’t always get what we wish for, but we can work towards making choices that will help effectively manage our lives. Today, the housing market is a popular form of investing, but many people keep the burden of owning a property without help, creating a high level of stress, too much time wasted, and more money being spent on things that typically shouldn’t be. Property management (PM) is a crucial way for to people to successfully invest in properties without having to deal with the inconvenient headaches that go along with being a landlord. If you’re looking for a stress-free lifestyle, here’s a look at why you should hire a property management company today.
Maintaining a Property
The most important responsibility of a property manager is right in the name. They manage your property. Owning properties with tenants come with great responsibilities, such as managing the the property to ensure the tenants have a good home to live in. Property managers take on the responsibilities of making sure everything on the property is up to date and complies with the laws and regulations of creating a property into a rental. PM’s are also responsible for taking care of the needs a property (or tenant) may need. For example, if something is broken within the property, or there is a property emergency, the first person of contact to resolve the issue in the PM, so you don’t have to deal with the problem. Most property managers also provide some type of strategy for security. This will contribute to tenants feeling more comfortable in the property, while taking the steps towards prevention of problems and insecurities from outsiders.
Background Checks and Payments
One of the biggest issues landlords face with tenants is the lack of background checks and screenings. This issue leads to problems such as late (or no) rental payments, damages, and overall complaints, all of which can be prevented. Property managers take the steps to ensure that background checks and screenings are properly performed to learn more about the tenant’s past history with rentals and payments. Property managers also have strategic systems for you to receive rental payments on time and in full. As a liaison between you and your tenant, you can confidently know your expected monthly income from your properties.
Marketing and Rent Pricing
In order for you to make an income off your investments on a monthly basis, it’s important that your property doesn’t sit empty for months at a time. Property managers put a great focus on finding tenants for your property through a strategic marketing process. They also work with you to determine the right rental price for your property. Through the use of the internet, it is easy for tenants to see which properties are priced too high, so you want to ensure that your rental prices are at the current market value in order to stay competitive.
Inspection Reports and Book Keeping
Another nice tasks that property managers take on is inspecting the properties before, during, and after the tenant occupies the space, providing you with updated reports. PM’s are also able to help you when it comes to filing your taxes. They’ll provide you with bookkeeping materials that will help you understand what you can claim and deduct for your investments. This way you won’t have to do much math or worry about where your property stands.
More freedom for you
Overall, there are not many downsides to hiring a property management company. Many landlords overlook the idea of hiring a property manager because they think they can’t afford it. However, property managers don’t charge as much as you may think. It’s important to do your research and talk to multiple companies to get estimates. Having a property manager allows you gives you the freedom to live wherever and do whatever you want, knowing that your investments are in good hands.
Many people may have heard the term ‘property manager’ before. Some people probably even work with them in the buildings that they live in. But what do these people do? What are their roles and responsibilities? Let’s find out!
