So there you are – having done all the research, weighed all the options and having cross checked your budget 18 times – you have just bought your first investment property. You have the keys to the house that you wish to turn into an investment by renting it out and earning a monthly income as landlord. There’s just one little problem with your plan. You’re not the kind of person who does well dealing with tenants, being assertive, being all landlord-like and getting paid on time. And so, you’re considering doing something that everyone who knows of your situation has told you already – going to a property management companies that can take the problem off your hands.
These are people who can just make sure that you get to enjoy the fruits of your investment while never dealing with the business end of it. Does it always work out well when you go to the property management companies? Or is there anything you need to be aware of? Well, let’s try a few pointers out that others before you have thought of.
Property Management Companies
Now the promise in the whole property management business is that they completely take the hassle of being a landlord off your hands. You don’t care if the wiring is faulty, if the furnace breaks down, if there is water leaking through the roof. You’re not going to get a call in the middle of the night reporting that something awful has happened to your house. It’s all taken care of. And nothing could be more wonderful.
But think about what happens when you’re renovating and a contracting firm tells you that they’ll take care of everything for you. For instance, when you hire a home decorator or a building contractor to build your house for you, do you just give them the money and walk away? You still have to be involved in anything involving employing other people because no one ever does their job properly unless they are supervised.
The kind of person who hates to get caught up in paperwork, forms and all that sort of thing – that’s the kind of person who hires property management companies. Now these companies will usually take care of everything for you – right from advertising for tenants to screening them, signing them up, billing them, collecting and so on. This is one part that they do very well indeed. If you’re the kind of person who just can’t take all the paperwork that go into property ownership, property management companies are exactly whom you should go with.
But you do need to be willing to pay. The typical payment is $100 a home every month for your standard-sized home. When you consider all the financial responsibilities that go into owning a home right from mortgage the payments to the property taxes, the burden of paying a management company may be the final straw. However, you may try to get around this by adding management fees right to the rent.
If the home you’ve bought is brand-new, there will be practically no maintenance work to worry about. New homes come with a guarantee. If anything stops working, you just need to call the manufacturer of the thing that’s broken. Basically, if you’re hiring a property management person just to take care of this sort of thing, it’s not worth it in the first year of your time being a landlord.
If your home is an old one though, such a move may make a lot of sense.