When I meet with clients for tax planning, I show them how the tax code favors small business. Even if they have a good job, adding a side business is beneficial. Investing in rental properties is one example. But, real estate investing is not for everyone - managing property or being a good landlord takes practice. That’s why many successful real estate investors and landlords depend on their property management companies.
Whether you're starting out in the business or an experienced landlord, a competent property manager can add significant value to your investment. Here are some of the benefits of a skilled property manager:
Dependable Tenants and Lower Turnover Rate
An experienced property management company knows how to conduct a thorough screening process that results in tenants that are long-term, pay on time, and take care of their rented spaces. This kind of long-term experience is one of the most important benefits provided.
High vacancy rates mean lost rent and higher turnover costs - cleaning, painting the walls and possibly new carpet or small repairs, changing the locks, as well as marketing, showing, screening and settling in each new tenant. A good property management company will have a time-tested approach to retaining tenants that includes:
- Determination of optimal rent. If it’s too high units will be empty; rents that are too low yield monthly losses. Determining the right price requires knowledge of the local market and access to rental rate tools.
- Attention to the attractiveness of the property. Regular maintenance and repair, as well as major and cosmetic improvements, make the property more attractive. A property manager will oversee maintenance and enhancements that maximize revenue.
- Professional quality marketing. An experienced property management company has written hundreds of ads, can negotiate cheaper advertising rates, and knows how to deal with potential tenants.
Rent Collection and Related Legal Problems
The only way to maintain consistent cash-flow is to get on time rent payments every month. An experienced property manager has the skills to deal with late payments and, when necessary, initiate the eviction process.
Property management companies know the latest landlord-tenant laws and will ensure that you are not leaving yourself vulnerable to a potential lawsuit. The money saved from avoiding a single lawsuit can more than cover the property management fees.
Maintenance and Repair
Proper maintenance and repairs keep tenants happy and preserve the value of your investment. When you hire a management firm, their in-house maintenance staff is not the only benefit gained. You will also have access to their network of licensed, bonded and insured contractors who have already been vetted for reasonable pricing and quality work.
Finally, a competent and trustworthy management company can reduce stress and free up your time to focus on asset management. After all, you probably didn't invest in real estate to spend your time repairing the plumbing in the rental units!
Let us help you plan ahead for growth!
Are you interested in accounting outsourcing services for your small business? Contact us today to learn more about the benefits of outsourcing services offered by Washington DC small business accounting firm, Charles P Myrick CPA. (202) 789-8898