If you’re a real estate investor, you’ve likely questioned whether or not you should hire a property manager. We’ve all been through this, especially those who have been investing in real estate for a longer period of time. The do-it-yourself model may be great for some full time handyman, but if you’re like most real estate investors, hiring a property manager may be the right move to continue scaling your business. Here are the top 5 reasons why you should hire a property manager:
1 – They Know the Right Market Rent
I, myself, as a property manager at Greater Sudbury Property Management (GSPM), have recently taken over a property where the rent was significantly under market value. Thing is, renting under market rent has many downfalls. Not only are you receiving lower revenue, but the property price will attract the type of tenant in that price range. Example, a sophisticated professional looking for a modern comfortable apartment may not look at an ad for an apartment in a lower price range if the price is way too low. The professional will assume that the apartment itself is below par. The price is always a true reflection of the property.
As a Real Estate Investor, you can always do your research and try out a price for a while. If that doesn’t work, bring down the price etc. but you might lose out of opportunities. Property managers know the market and can establish the right price for your rental, without losing time and opportunities.
2- They Do Proper Tenant Screening
Property managers have a system in place for properly screening tenants. This is key for avoiding costly repairs, late payments or even evictions. For instance, at (GSPM), all of our tenants must provide the following three elements in order to qualify to rent one of our apartments:
- Pass a credit check
- Have two landlord references
- Have a minimum monthly revenue of three times the monthly rent.
When we do a credit check, we are looking for zero collections. If the tenant has collections, we can accept a guarantor to pay their rent on their behalf. Otherwise, GSPM will not rent to anyone to has collections.
If the tenant cannot provide two past landlord references, we require a reference of someone who is an authority figure or a professional in the community. For example, their supervisor at work or a well known lawyer who’s been a friend of the family’s for a long time.
For the requirement of monthly revenue being three times the month’s rent, we may ask for a pay stub if we are unsure of the type of salary that the tenant’s occupation typically provides.
We believe proper screening is key to successful real estate investing. Tenants who have good (or great) credit also typically have a lot of respect for their surroundings. We take a lot of pride in our screening process and our Real Estate Investors notice. Property managers typically have great leasing skills.
3- They Have a Larger Market Reach
Property managers know how to advertise a unit to get maximum visibility. A real estate investor will typically post their ad on kijiji or Facebook etc. but a property manager would have access to all those channels, plus their website, their facebook page, their instagram page, and more. They would even have a list of potential leads waiting for an apartment.
In my city, there is currently a low vacancy rate, so as property managers, we have a list of tenants waiting for an apartment along with their criteria. If an apartment comes up that matches their criteria, we would contact that tenant and book a showing.
A larger pool of leads and potential tenants leaves you with more options to pick a better quality tenant.
4- They Have a Team
We all know how fast costs can add up when you have a leaky pipe or clogged bath tub. A plumber may charge a markup just for having to pull out his 30 foot snake. No worries, there’s hope! Property managers generally have a team of professionals working for them, and they don’t charge an arm and a leg for repairs and maintenance. At GSPM, we have a team of contractors that handle all types of repairs and maintenance for a cost of $50 per hour. So whether we were renovating the apartment to increase the rent, or fixing an issue in an apartment that was tenanted, the cost will always be $50 per hour, leaving more cash-flow for our investors.
5- You’ll Invest More!
And the best reason to hire a property manager… You’ll invest in Real Estate longer! Ever experience a really needy tenant that calls you way to often? Some are definitely more demanding than others! Did it ever happen to you to get discouraged and think to yourself “I’ll sell this property!” or think “I don’t want to deal with this anymore!” It happens but again, there’s hope!
Property managers add a lot of value in the mindset of the Real Estate Investor. By dealing with the day to day issues, property managers help avoid the “downs” in the ups and downs of real estate investing. They take care of it all. Generally speaking, the only time a real estate investor will even know that there was an issue, is when the investor receives his monthly statement, and by that time, the issue has already been dealt with.
Investors are stronger when they have a clear head. I truly believe their real estate portfolio will have longer longevity with a property manager on their team.
Other than those 5 reasons, there are several other reasons why Investors should have a property manager. For instance, property managers know the rules and regulations of the residential tenancy act or how to deal with hearings, late payment, evictions etc. If you’re a Real Estate Investor in Sudbury, ON and have some questions on how this whole property management thing works, feel free to reach out to us. We’d love to help!
