For those who are looking to increase their wealth, owning real estate, and renting out your properties, is one of the best ways to do so. However, it’s often impractical for people to manage their own rental units.
Obligations related to your job, family, and social life often get in the way, so the need to hire outside help often arises. But, are property managers worth hiring to run your rental property? Let’s take a look at what you should know about the costs you can expect hiring a property management firm.
Setup Fees
Under most circumstances, property managers will charge their clients a setup fee. This allows them to cover the costs involved with getting your property ready for rent.
These often include initial inspections, welcome materials for your tenants, and the labor associated with setting up your account with the property management company. You should be wary of property management companies that charge exorbitant setup fees. In general, this expense shouldn’t be more than a few hundred dollars.
If you find that a property manager attempts to charge you well over this amount, they are highly likely a predatory company that you should avoid at all costs.
When searching for one to work with, you should consider the past reviews the property management company has. This will provide insight into the type and quality of service that you can expect from them.
Management Fees
The ongoing management fees property managers charge will vary depending on the size and scope of your property.
Generally, they’ll take a percentage of your rent revenue in exchange for managing everything from finding tenants to handling monthly bookkeeping. This fee will vary depending on who you work with, making it imperative that you take the time to screen multiple property management companies.
Finding the right company can save you a great deal of money in the long run, and you can then reinvest this money into your property to make it more valuable.
Marketing and Advertising Fees
As you might guess, you won’t get very far when it comes to renting out your property if you don’t let people know that this space is available. In order to find the best tenants for your property, many property managers will charge a marketing and advertising fee.
This covers all of the costs associated with putting your property on websites, in print publications, and even sending mailers out to potential renters. This could also involve hiring a real estate agent. Many rental property management firms also leverage online advertising to help find tenants as quickly as possible.
This also goes a long way toward minimizing (or even eliminating) vacancies. Again, this expense can vary widely depending on the company you work with, making it important that you compare rates before making a decision.
Leasing Fees
Renting out your property is not as easy as simply showing it to prospective tenants. You need to ensure that their information (including credit scores, proof of income, rental history, and employment status) checks out before you have them sign an agreement. If a tenant decides to break his or her lease early for any reason, you’ll need to find someone else who’s willing to take over the space immediately.
This process will often involve advertising fees once again along with the administrative costs associated with re-renting your property quickly. Vacancies can cause a large number of additional headaches, and they often lead to significant losses for property owners.
Having the capability to minimize tenant churn rate is something that simply cannot be overlooked.
Maintenance Costs
In addition to the fees mentioned above, you can also expect to pay for things like repairs and maintenance.
Many property managers have preferred vendors they work with when it comes to these services. It’s important that you ask your property manager about this before anything goes wrong with your property. Otherwise, you could be on the hook for a hefty repair bill.
This is a situation you want to avoid, as home repairs are often notably expensive. This is particularly true involving issues related to wiring or plumbing.
Property maintenance is a necessary component that comes with owning rental property. However, hiring a property manager can take some of this burden off your shoulders.
Eviction Charges
One of the last situations you want to be able to address as a property owner is evicting a problem tenant. It can be a stressful and expensive process under most circumstances.
In some instances, you may be required to evict a tenant who doesn’t pay his or her rent. If this happens, your property manager will handle the labor associated with the eviction.
This is a key part of their service, as this obligation can be complex and potentially overwhelming for those who attempt to manage their own properties.
In many cases, your property manager will also be responsible for finding a new tenant to take over the space. This is something that is handled under advertising and leasing costs, though, so you likely won’t encounter unexpected expenses.
So, Are Property Managers Worth It?
Under the vast majority of circumstances, yes.
Property managers will allow you to simultaneously alleviate stress and handle your property more efficiently. This, in turn, can lead to increased profits and a more relaxed lifestyle. Make sure you compare rates before making your choice. It will likely be one of the best decisions that you make as a property owner.
Want to learn more about what we have to offer? Feel free to get in touch with RentSafe today and see how we can help.
