For those that may have extra resources available (a.k.a. cash), they are often advised to invest in real estate. The concept and return on investment is mostly positive, that is until you are left dealing with an overflowing toilet at 11 o’clock at night or looking for new tenants for the same unit for the third month in a row. An investment in real estate does have many advantages, but when it comes to managing the property there are professionals who can take that job off your hands and make your life that much easier. Consider the following ways in which a property management company can add value to your investment.
- Depending on the size of the company, they will often have specialists or a team of people working together to complete all the required duties. A property management company can add value by having salespeople advertise and show the units, by having property managers enforce rules and follow up on late rent; by having maintenance staff attending to work orders, and having bookkeepers and accountants maintaining the financial records. After all, do you know of someone who is great at marketing, bookkeeping, responding diplomatically to tenant complaints and is handy enough to patch drywall, change out taps or clean out air exchange filters? Chances are there are few people who are great at all of these things and who have such a diverse skill set. If you do know of someone like this though, please send them my contact information (just kidding…sort of!).
- Property managers add value by knowing the market. When you are constantly leasing units, you have a good understanding of the value of the units in the market. If a two-bedroom apartment with in-suite laundry is worth $1,200 to most renters, you may be leaving money on the table if you are charging less for a similar unit. Property taxes, water, and building materials increase every year, sometimes faster than inflation, therefore it is important to increase the rent (if the market will bear it) in relation to those increasing costs. This helps to ensure that the return on your investment property is positive.
- They will have systems in place to track work orders. If a tenant reports a maintenance issue, a property manager will have it logged into a system and assigned to a maintenance team member according to priority. This helps with keeping tenants satisfied and the building maintained. Ensuring that the property is in good repair prevents tenants from being frustrated and eliminates the hassle of dealing with repeated calls or emails making the same request over and over again.
- It turns the investment into passive income. You can own a rental property and never have to meet or deal with the complaints of the tenants or issues like dealing with tenancy branch hearings, orders of possessions or evictions. This frees up more of your time to handle other pressing situations in other aspects of your life.
Property management companies will have better screening systems. In the old days, people used to call the current landlord and/or the current employer of the prospective tenant. In many cases, the landlord wouldn’t give a good or bad reference they would only confirm if the rent was paid on time and if the place was kept tidy. With employers, it is difficult to get confirmation of employment due to privacy rules and regulations. In today’s world, many property management firms have software that does complete background checks on the prospects confirming their income and credit history, which is generally a good indication of their likelihood of pay the rent on time. With these systems in place, screening a tenant is that much easier and reliable and takes away the element of surprise