Pros & Cons of Using a Property Management Company for Your Home Rental
The rental market is on the rise and can prove itself very profitable for the average homeowner; however, the decision to rent out one of your largest investments should not be taken lightly. When you decide to rent out your property, carefully consider who will manage that rental property – you or an outside party. Should you prefer an outside party, here are a few benefits and considerations that come with it.
First, experts are available to help you through the ongoing transactional process of a lease. A property management company can facilitate your due-diligence by simplifying the three biggest worries of renting out a home: finding a good renter, collecting monthly payments, and insuring against damaged property. Additionally, a good property management company constantly stays up to date with new laws, cases, and code requirements.
Property management companies can (quickly and easily) run background checks, credit reports, verify employment, and check current and past rental history. Rental property managers know exactly what questions they can ask potential tenants and recognize quality attributes in a good tenant. They can forecast potential warning flags, too. Their goal is to provide fair business dealings to tenants but ultimately serve your best interest as the landlord. They’ll do a careful job, screening all applicants according to the law.
A property management company can alleviate stress when it comes to managing money and late rent payments, too. It’s their responsibility to ensure that the monthly rent is submitted on time. If the rent is late, they are responsible for notifying the tenant(s) immediately and taking action accordingly (with your consent). They also ensure accurate accounting of money received and money disbursed, receipts and monthly reports. If necessary, a property management company arranges for an attorney to handle any court evictions, and send a representative to attend court on the Landlord’s behalf.
Most management companies offer a 24-hour answering service to handle all property-related emergencies. Preferred contractors can be notified in a moment’s notice to evaluate the situations and respond accordingly. A property management company can arrange for periodic inspections and preventative maintenance to ensure good care of the property also.
Rental management companies can literally handle the entire transaction of renting out your property, while you’re sitting on the beach halfway across the world. They find the renter for you, pre-qualify the tenant, show the property to the prospective client, and draw up all the paperwork needed to get things rolling. They can alleviate a ton of stress from the rental process.
There is, however, a fee that accompanies their work. Typically the first month’s rent covers most of their upfront expenses. Then, there is a small percentage subtracted from each month’s rent after that.
Be sure to confirm all expenses on the front end before you sign on with a property management company. As best you can, check whether there are any extraordinary costs for hypothetical scenarios. It’s always beneficial to have everything communicated on the front end.
There’s great comfort that comes along with having professionals assist and advise on the management of large assets. Rental property managers are experts in their field. They know the current market rental rates, and they have all the tools needed to handle various scenarios. They can act on your behalf, save you time, and do the hard work of collecting and managing the rental income. As you consider renting out your home, take the time to weigh the costs of handing over that responsibility to a company that excels in property management. A few dollars here and there may save you several headaches down the road.