The ABCs of Getting a Mortgage Loan for First-Timers

Posted on: 17 December 2014

To effectively manage your rental property, you really do need to like working with people. You also need patience, an affinity for detail and the ability to make difficult and sometimes unpopular decisions. If you don't have these management skills, or simply want to hand the reins to someone else, consider hiring a property management firm. Here are six reasons to sign a contract with these skilled professionals.

Better Screening for Quality Tenants

The first step in getting quality tenants in your units is to do a thorough credit check and/or background check. Property management firms have the resources to do this quickly and effectively. The tenants that do pass these checks tend to stay longer, pay their rent on time and take better care of your property. More discerning tenants also tend to seek out property management firms when looking for a home. They believe they will get a higher quality and better managed property.

Higher Occupancy Rate and Lower Rental Costs

All that good screening usually results in higher occupancy rates, without having to continually advertize and screen more prospective tenants. Every time you put an ad in the paper or schedule a block of time for tenant interviews or showings, you are losing money. Your rental units must be professionally cleaned and any repairs made before a new tenant moves in, another cost. A good property management firm can reduce the frequency of the "revolving door scenario."

Handles Collections and Evictions

Collecting late rents and handing out eviction notices are usually two of the most difficult tasks property managers handle. Both must be done tactfully, and legally. These firms are up on the federal, state and local laws. This minimizes the chance of inadvertently giving a tenant a legal loophole to pursue. A lawsuit costs time and money, even if you ultimately win. Most property management firms have attorneys on retainers that can represent you through the entire eviction and/or lawsuit process. 

Takes Care of Property Maintenance

A well tended apartment complex usually attracts better tenants. Property management companies have "go to" firms to take care of maintenance issues. Because of these contacts, the work can usually be done at a lower cost. For example, if you own an apartment complex, chances are you'll have amenities such as a pool, playground, barbeque area, laundry room and maybe a workout room. You could hire one maintenance person to take care of everything, which probably means you'll have to contract some of the more difficult tasks out. Or, you could hire a property management firm that has contracts with professionals in all maintenance areas. Even better, 24/7 emergency maintenance service can usually be arranged.

Makes Tax Time Less Stressful

Your property management firm keeps track of all their activity. At the end of the year you have a complete run down of expenses and profits. The report also outlines the parts of your expenses that can be deducted from you taxes. Even your property management fees are deductable. Having all your records professionally produced means you just have to pass the information to your tax preparer.

Putting Distance between You and Your Tenants

Some tenants are more apt to take advantage of an owner/manager than a professional management firm. If you do self-manage, you want to remain friendly, but this can lead to uncomfortable situations. Tenants may start asking for exceptions to rules or for extensions on their rental due date. You may be inclined to grant their requests, and there are always situations where leniency is warranted. The danger is that the exception, such as the later rent date, will become the norm. A property management firm is seen more as a professional entity. There is less of a tendency to make excuses or ask for favors unless it is really necessary.