Buying real estate properties can be a great way to invest your money. Tangible assets that can be leveraged and provide residual income? Score! However, the landlord game can also be intimidating and time-consuming. Although some real estate investors choose to manage their properties themselves, many prefer to hire a property management company instead.
The advantages are clear. Most investors do not have the time and knowledge to deal with the daily ins-and-outs of dealing with tenants and general maintenance. Besides, property management companies have invaluable local knowledge. They can help you not only find additional investment properties but also price your building right if you were to sell it.
On the downside, property management companies can be pricey. Depending on the company and the area you are planning to invest in, expect to spend on average 8% to 12% of the monthly rent for a general management fee. In addition, the property management company may charge you a leasing fee to find a new tenant, a set-up fee for each new account, an eviction fee, etc.
Nevertheless, although the cost might affect your profit margin, hiring a good property management is worth it in the long run. Look for a company with an in-depth local knowledge of the market you are planning to invest in. When interviewing potential candidates, ask them which other properties they are managing in the area, whether or not they offer emergency services, provide in-house maintenance, and oversee monthly accounting.
To build a fruitful long-term relationship with a property management company that will be an asset to your real estate portfolio, prefer businesses that offer a one-stop shop for all your needs. An excellent property management should not only take care of daily maintenance and tenant business but also provide insight on building your real estate investment portfolio and assist with buying, selling and flipping properties.
Thanks to low-interest rates and millennials postponing home ownership, it is a great time to invest in a long-term real-estate portfolio. A property management company can not only alleviate the hassle of daily obligations that come with being a landlord but also help expand your portfolio and build wealth for years to come.