So you’ve started your search for a local property management company to help manage your rental investment home. It can easily become overwhelming when Google shows you endless pages of company names, phone numbers start running together, and time starts to crunch. What type of company should you trust to manage your property? What are property management expenses? Will my home even rent?
Different Types Of Property Management Groups
No, not every property management group is made the same. Locality, flexibility, and sense of urgency can vary greatly and affect any investor’s profits. Generally, there are three major groups that property management companies tend to fall into; Individually owned and local, local corporate franchises, and large corporations that own their rental homes.
Local and Individually Owned:
These groups are typically smaller and will give you and your tenants a more personal experience. They cater to mom and pop type investors and it’s likely they have a staff that lives in the area and physical office you can visit. Rental homes are their primary business, they have a proven process, and are more flexible.
Think of companies like Remax. They mostly sell homes but also offer rentals in some of their service areas. They are typically tried and true but unlikely to waiver in their rental approach. Remember, their bread and butter comes from home sales, not rentals.
Large Corporate Offices:
Companies like Mainstreet Renewal and American Homes For Rent own all of their rental homes; usually thousands in one area. Progress Residential for example is known to drown out mom-and-pop type investors by buying land and building massive rental home communities at more than premium rates. It’s unlikely they have a major staff presence in their service areas if at all post COVID19, and typically have a strict listing and rental policies.
Property Management Expenses
Lets start by saying that there is NO STANDARD RATE. Each company offers different rates; some monthly, some flat rates, and some a combination of both. And while we cannot speak on others behalf, we will be able to break down our fee’s in hopes that investor clients are equipped with all information possible. But what do these property management expenses mean? What does it pay for? Is it worth it?
Expense associated with finding your tenant. This includes all photography, marketing, lead following, rental application screening, leasing documents, personal account manager, and more! While all of this may sound like a few simple steps, understand its time and quality you’re paying for.
-Account Manager: S/He will be your personal point of contact. Have questions? Your account manager is your expert! They’ll organize cleanings, maintenance, follow up on all prospect leads, tenant screening, home inspections and more! Your account manager will be your direct contact on all things rental home related and will serve as your liaison to your future tenant.
-Marketing: Everything from 3D Virtual Tours, photo editing, and creating a unique listing are included in placement expenses. Did you know Zillow now charges $9.99 per week to list your home on their website? While others refuse to take on that extra bill, rest easy knowing your home is being seen on the most popular home searching tool with this team.
-Tenant Screening and Leasing Materials: Arguably one of the most important components. Screening a future tenant is easy. There are websites by the dozen if you Google search but are they accurate? Not every credit/background check is created equal. What’s reported can vary greatly from site to site (FICO or TRANSUNION) and information can be easily misinterpreted. The same can be said for any leasing materials. Yes, we know, you can get a free copy online. Trust us, its not worth the risk. Inaccurate information on a lease, loose details, not adhering to Fair Housing Laws, and even simple rental accounting errors will make or break you in a court case. Many states also have very strict guidelines that must be accounted for in rental home leases. But you wont need to worry about any of that, because you’ve hired a local property manager!
Monthly Management Expenses:
This is a small percentage of the monthly rental income to your Property Management Company. For less than a cup of coffee a day, this expense covers your account managers time for maintenance/scheduling (Victory never upcharges on maintenance like other companies) and general communication to your tenants throughout their lease, all of the rental homes accounting including accounts receivable/payable and end of year tax documents, on-call emergency after-hours maintenance, eviction and court proceedings, and access to tested and true expert contractors.
So now comes the big question, is hiring a property management company worth it? Aside from the time saved tracking your expenses and your accounting all year, finding and scheduling great vendors in a hurry (and on a budget), answering midnight emergency calls, and property management expenses being completely tax-deductible, we’d say no. In fact, we suggest you dont hire Victory unless you’re looking for fast results with an unwavering strategy. Our results speak loudly and have grown louder through the COVID19 crisis; After helping thousands of property investors find their perfect tenants, you can trust an expert is on your side!