A guest post by Brooke McDonald, Apple Valley Property Management, Minnesota
As we all know, outsourcing is a risk that can turn out to either be the best decision you ever made or the worst thought to ever cross your mind. When it comes to property management, you have to decide: Am I willing to put the care of my rental property into the hands of a stranger? Will the investment be worth it?
The stereotyped and semi-popular sitcom Outsourced didn’t last long on NBC, but it aired long enough to remind Americans of a poignant truth: Any kind of outsourcing involves some kind of learning curve, frustration, and a little bit of humor.
Thankfully, outsourcing your property management does not have to be as hairy as Todd Dempsy’s struggles to run his Indian call center, nor will it require working with an office on another continent (unless you hire a property management company in another country, which we don’t advise). No, local property management companies can, in fact, be an incredible benefit to you as a property owner, saving you time and money and providing real estate expertise that can protect you from legal trouble.
When you think of the word “outsourcing” in terms of property management, get rid of the negative connotations you often hear. Retrain your mind to hear the word “outsource” in conjunction with “property management” and think smart, wise, and worth it.
Outsourcing can be an outstanding decision
Doing all the management yourself is a heck of a lot of work for you, but it’s all in a day’s work for a property management company.
In addition, property management companies have all the structures and resources in place to do an excellent job. They usually employ software that an average person might not have – software that allows them to collect rent, perform background checks, and advertise listings.
Here’s what hiring a property manager can save you:
- Valuable time. Property management involves a lot of time communicating with tenants, marketing properties, advertising online and in high-traffic areas, and conducting showings.
- Worry about legal issues. Property management is a big responsibility and can result in lawsuits if tenant/landlord law is not followed correctly. No one wants lawsuits – and the experts you hire will understand the laws and know how to avoid them.
- Burdens about quality. A company that takes care of properties for a living can be trusted to go about things the right way. They also won’t be doing it on the side or in their spare time (as you might, especially if you have another day job along with caring for properties). It’s their main focus. You can relax knowing they have it all under control, rather than constantly thinking you might be missing something.
- Money (in the long run). Although there is a cost to property management, in the long run they will be doing needed maintenance as time progresses, preventing major blow-ups and ensuring that the property has all the updates it needs. Property managers also have the potential to make more money on properties because they understand local real estate, potentially charging higher rent, filling vacancies faster, and taking advantage of any special deals on maintenance and advertising they might have as professionals.
Common objections to giving up control
You may be saying, “But I really love this apartment, and I want to make sure it’s taken care of the way I want it to be taken care of.” Giving up control of your rental properties might feel a little bit like handing a newborn to a random hospital visitor. It matters to you! Nothing is more important to you as the owner than running a quality business, keeping tenants happy, and providing excellent upkeep of your properties so your tenants have a great experience.
Often, too, the cost that comes along with outsourcing property management makes people wrinkle their noses. But it’s possible to soothe your objections if you consider the overall advantages of hiring professionals – and hire the right ones.
Having confidence in your property management company
When considering people to hire, consider the recommendations of friends, as well as reviews and ratings of local companies. Also, sit down with the company and ask questions. Just as you’d screen a summer nanny or a house sitter, you want to feel confident and trust the person you choose.
Here are several helpful questions to ask, with some thoughts on the reason to ask them.
- How often will you inspect the property? You want your property manager to get into the property on a frequent basis and ideally not charge extra for these visits. The more often they are able to check up on things, the better job they will be able to do.
- How frequently will I receive reports? The more you are aware of how things are going with the property, the better. A good property manager should issue monthly reports – anything else is slightly suspicious.
- What are your fees based on? Ensure that the fees are based on rent collected, not potential rent charged. Also ask exactly what services are included, and make sure everything you are looking for is listed.
- How do you handle vacancies? Will they fill them ASAP? Will they charge you if a property sits unfilled?
- What are their methods for handling repairs and maintenance? Some companies provide receipts and expense reports to owners to show all that they have done on the property. Many also detail the types of repairs they can and cannot do. It is helpful to know this up front. Also discuss their spending procedures, and when they need to receive permission to spend money on your property.
The caveat to all this is obviously that outsourcing will prove a crummy decision if you trust the wrong folks to do it. You want to hire an expert company who will do the job right.
But if you pick the right kind of people who can take your property and run with it, well, who wouldn’t outsource?