Professional companies can provide real estate investors with several time and effort saving property management services, ranging from evaluating your property and its value, through marketing it, to building and maintaining a relationship with potential tenants in order to maximize your return on investment and to maintain a steady flow of tenants renting your rental property.
Even though there are companies that can offer you the full range of property management services, in many cases a real estate investor will not need to hire a professional to do everything for him/her.
The range of property management services that should be employed by the real estate investor or the landlord will depend on his/her own personal preferences based on a number of factors such as location in relation to the rental property and the handymen, financial skills, and free time available.
Related: Consider Property Management Options for Your Rental Property
Here are the most essential property management services that are employed by real estate investors, when should they be used, and the benefits they provide for the investor:
Property evaluation and valuation
Property management services can provide the real estate investor with:
- Provide a detailed documentation of the property.
- Offer recommendations related to any repairs or cosmetic improvements that the property might need in order to maximize the monthly rent (and thus rental income) and to provide a good return on investment.
- Gather data on other rental properties in the area to determine the optimal rent rate in relation to other similar properties in the area.
- Discuss different policies with the investor such as pet and smoking policies and their potential effect on the rental property’s occupancy rate.
This category of property management services can be extremely useful for any real estate investor who is just starting out with a new rental property, as the information provided in this regard is only crucial during the initial states of the investment process.
Additionally, most real estate agents are capable of acquiring this data by doing their own research or by using online service providers that can help provide and analyze the data, saving a lot of research time and effort.
Related: How to do Investment Property Analysis
Marketing the property
Property management services can also offer marketing services for rental properties, in addition to preparing the property for rent. These services can include but are not limited to:
- Create efficient rental ads and rental listings that will appeal to and attract tenants based on preferences designed around the specific rental property.
- Publish those rental ads on mediums such as websites, newspapers, real estate bulletins, etc.
- Provide a phone service to answer potential tenants’ inquiries and provide additional information about the rental property.
- Meet with any prospective tenants who are interested in seeing the property and give them a tour around the property.
However, if you’re trying to save money and are willing to put some extra effort, it is very possible for any real estate agent with a bit of creativity to market his/her own rental listing in order to have a successful investment property.
Related: Road to Renting: Rental Property Marketing
Legal and financial services
Perhaps some of the most widely used property management services are legal and financial services. Many real estate investors do not come from real estate, finance, or law related backgrounds, so they lack the sufficient knowledge related to the legal and financial management of a rental property.
A property management services provider can fill the gap for you by providing the following services:
- Legal advice in events of legal issues or disputes related to the rental property.
- References to qualified real estate lawyers if needed.
- An understanding of the latest legislation (local, state, and federal) that applies to rental properties and their maintenance.
- Accounting property management services.
- A full documentation of expenses through receipts and invoices.
- Data base recording of documents such as invoices, inspection reports, leases, and warranties.
- Tax documents and annual financial reports.
- Advice on tax related regulations that might affect the rental property.
- Other legal and financial services.
Legal and financial property management services can be a great real estate investing tool to utilize if you’re not confident in your knowledge of these processes and procedures.
However, some real estate investors come from legal/financial backgrounds, and are fully capable of managing their property in these regards without the need for hiring professional property management services.
Tenant related services
Property management services mostly act like public relations for your investment by reaching out to tenants and providing them with direct services and assistance, as well as protecting the landlord from any unwanted tenants who could be harmful for the return on investment.
These services can include but are not limited to:
- Managing the process of selecting and screening tenants by performing background checks, identity verification, and income and credit and rental history check, in addition to grading the tenants according to a criteria based on the information gathered.
- Assisting both the tenants and the landlord in the tenants’ move-in process. This is done by drawing up a lease agreement and ensuring all understandings between the two parties have been properly met, in addition to collecting security deposits and monthly rents.
- Assisting the tenants and the landlord in matters related to the move-out process. This is done by executing unit inspections to ensure the rental property’s state after the tenants have moved out, estimating any damages, cleaning and maintaining the property, and marking back the property in the rental market as available.
These services highly depend on the personal preference of the real estate investor, the nature of the rental property, its location, and the number of rental properties that the real estate investor owns.
Related: How to Manage Multiple Investment Properties on Your Own
If the owner lives close to the rental property, he/she can perform these tasks on his/her own for a more personalized experience for both the landlord and the tenants. This could develop a healthy relationship between the two, and could cause the rental property to receive more positive feedback and word-of-mouth marketing.
But of course, not all real estate investors have the social skills, patience, or ability to manage their tenants and all aspects related to them, and so they rely on property management services to do it for them.
Repairs and maintenance
A professional property management services provider will have an established network of handymen (electricians, plumbers, and other contractors) who are constantly available to do any needed repairs or maintenance on the spot and at discounted fees. This reduces the time and effort required by the landlord to find and provide these services at a guaranteed quality and a good price.
However, if the landlord is close to the rental property and possesses the necessary skills to provide any required repairs on his/her own, it could also be better for the marketing image as it creates a more personal relationship between the landlord and the tenants.
Conclusion
Property management services can be utilized by all real estate investors wishing to have a guaranteed professional management of their rental property to ensure that it turns into and remains a successful investment. Due to property management services essentially being an extra expense that is deducted from the owner’s monthly rental income, many real estate investors forego hiring professional help in exchange for an increased profit. This, however, is based on the assumption that property management services cost more than the value which they add. But a professional property management company will ensure that your investment has a fair chance of competing in the market, and that it is generating as much positive cash flow as possible. Moreover, they save a lot of time and effort for the property owner.
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