Investors dealing with multi-dwelling units (MDUs) or other rental properties can benefit from the services of a property manager or a property management firm. Outsourcing property management reduces the time you’ll spend collecting rent, filling vacancies, and dealing with repairs, amongst other tasks.
With these time-consuming responsibilities taken care of, you can focus on finding the best fix and flip or rental properties to boost your profits.
Do You Need a Property Manager?
Property managers do more than just maintain or fix your rental properties and solve tenant problems. A good property management firm can alleviate you from many of the burdens of renting MDUs. A property management firm can advertise vacancies, interview prospective tenants, help maintain the property, and run background and credit checks to help ensure you are getting the most reliable tenants.
All of these tasks together could constitute a full-time job for an investor. “If you have several highly profitable properties and would rather focus on investing to grow your business, a property manager solves the problem,” says Shawn Miller, 5 Arch CEO.
Resident Manager, or Property Management Firm?
If you have one or two single-family home rentals, you might prefer to hire a resident manager. This person will take care of any maintenance issues that arise. This individual could be a handyman type, who keeps things running himself, or someone with business savvy that hires contractors to fix problems on your behalf.
Most times, a resident manager is a full-time W-2 employee on payroll who may also require benefits, office space, and equipment. In addition, you’ll have to pay unemployment taxes.
Of course, not every investor wants to become an employer. That’s when a property management firm is key, explains Miller. “You’ll want to find one that offers next-level services for multiple properties, professional expertise, and the reliability of a larger firm, rather than a single individual.”
If you have multiple rental properties, including MDUs, a property management firm may be more capable than a residential manager to handle all your properties in an effective and consistent manner. In addition, a property management firm is often well-versed in real estate law to ensure you comply with local and state regulations, adds Miller.
The price tag for a property management firm typically ranges from 5 to 10% of your total rent revenue, so it pays to perform a cost-benefit analysis and determine how much time you’re spending on property management tasks or managing your resident manager.
“Is it worth your time to manage people or properties when you could earn more by investing?” says Miller. “That’s the question to ask and ultimately, how to decide if you a property management firm Is right for you.”
How to Hire a Property Management Firm
If you’ve decided it’s time to rely on an outside company to manage your properties, start your search the same way you’d hire any independent contractor: Ask around. Word-of-mouth is usually the best way to find any type of service provider.
The Institute of Real Estate Management and the National Association of Residential Property Managers also have search functions on their websites to help you locate a management firm in your area.
Be sure the firm you employ is experienced dealing with properties similar to your own. Check references, and make sure to interview multiple candidates before making your decision.
“As with hiring any professional, you’ll want to conduct a face-to-face interview and trust your instincts,” reminds Miller. “Is this a company you can trust?”
A trustworthy property management firm can make all the difference as your rental properties begin generating passive income as you continue to build your real estate empire.
Property Management Firms Make Managing Rentals Easy…
And 5 Arch makes it easy to get the funding you need