Property Management Companies
A Property management company is exactly what is sounds like – a company that manages property on an owners behalf. The most common use for a property management company is to manage investment property for investors. These companies typically find tenants, collect rents, perform maintenance, inspection, and everything else that would normally be expected of a property owner who is renting out a property. Management companies typically charge a fee based on a percentage of the gross monthly rent the property is generating. Typical rates vary from 5%-11% – with lower rates being offered to clients who have many properties under management.
Why Property Management?
Finding a tenant, collecting rent, and calling contractors over to fix things when they break can be quite a hassle – especially for investors who own multiple properties. Even if an investor wants to perform these tasks himself, many states REQUIRE investors to use property management companies if they don’t reside within the state themselves where they own the property. Giving up 5%-11% of gross monthly rent can seem like a lot, but most property management companies handle everything from on-site inspections to resolving problems with tenants. When / if something breaks, they’ll call up a reliable contractor to fix the problem at a reasonable cost. They’ll even let the property owner know beforehand – in case he wants to try and find a better quote from a contractor.Most property management companies will even send 1099 forms outlining the total rent collected, which makes tax reporting a lot easier.
Comparing Property Management Companies
There’s a lot of competition amongst property management companies, so don’t simply choose the first one you find. Compare rates and fully understand what services each company provides. Most property management companies can manage both single family homes and even high rise condos. I say “even high rise condos”, because most high-rise condos have strict HOAs, which sometimes require investors to rent out their units for minimum lengths of time.