Buying real estate can be a smart investment, especially if you have 2 or more residential units in your building. You can expect regular rent from your tenants, which can help your bottom line in more ways than one. However, the upkeep of an investment property can be quite daunting. There are many issues that will arise that you may have not even considered before. Issues can range from very important (like flooding or broken utilities) to a minor (tenant disputes or minor complaints). Not to mention, if any of your tenants are not paying on time; this can be the biggest concern of all. The landlord/tenant laws can be very strict and a little bit scary for the investor, which is why it’s a good idea to have good knowledge of those laws.
It may not always seem like property managers are necessary, but I’ve compiled a list to determine when property management companies do make sense:
It happens all the time when people decide to take advantage of the good market somewhere far from home. In cases like this, it’s necessary to have a good property manager on your team; someone that lives in the area and can deal with any or all minor issues. Tenants can get needy sometimes, and you don’t want to have to drive all the way there just to replace a few hard to reach lightbulbs. Getting a property manager that is familiar with the building will limit your necessary visits and will only get you involved when/if there is a financial need, or an emergency needing your attention.
Just like friends and family, tenants can become complicated in their relationships. If you’re lucky, you’ll have tenants that get along well and don’t concern themselves with small discrepancies. Unfortunately, that is not always the case. Even if you have responsible, mature tenants, it’s possible that they will get on each other’s nerves. This is seen a lot more when rented out rooms, rather than entire units; usually for college or university students. Property managers can save you so many headaches just by being allowing the tenants to use them as a soundboard and complaint department. Often, the issues are minor, and will only need a brief chat to resolve; having someone else to manage those kinds of problems is going to be well worth the money for you!
Keeping Up with Regulations
The laws of renting out units are very strict and are not always in the landlord’s favor. It’s a good idea to hire a property management company, like Nomadic Real Estate, to ensure they know all the fine print, and regulations to keep your investment safe. They can also help you in the preliminary stages to ensure you’re following guidelines from the beginning and warn you about any expected issues they may see coming. If you’re able to hire a manager before signing contracts with a tenant, you may want to consult them about your lease agreements and expectations; they may have great insight and advice for you.
This job can sometimes get ugly and very technical. If there is ever any reason to utilize your property manager, it’s when your tenants are not paying up! The last thing you want is to have to go to court and bring in lawyers in to settle disagreements. A good property manager will be able to help avoid ever getting to that fearful stage. While you can’t always avoid every problem, using a property manager is the most proactive way to try. Tenants can get very disgruntled when it comes to finances and may use colorful language, threats, and/or even get physical in this regard. If that ever happens, please do not hesitate to get the police involved and keep you and your management team safe. However, the property managers are trained to avoid these problematic situations and will know exactly the best route to take with any disgruntles tenants.
The biggest reason investors shy away from real estate and leasing is because of the fear of tenants. If you take the time to ask any rental investors, they no doubt will have many horror stories for you. However, don’t be scared! Make sure you arm yourself with an equipped team to handle any possible issues or arguments that may arise, and you should be in the best position to make money off your investment. With distance being an issue, tenant management, tenant/landlord regulations, and collecting payments, your property manager will have their work cut out for them. It will be well worth saving your valuable time (which could be spent doing something way more productive) to hire out the tedious management work to a smart and qualified property manager.