Owing a rental property can be a rewarding experience, as it often generates a steady income. However, a rental property only generates income when a landlord has good tenants who pay their rent on time and do not destroy their units. Once a landlord encounters a problem tenant, owning and managing a rental property becomes difficult and time-consuming. Using a professional property management company has a number of benefits for landlords, especially those who own multiple properties. These benefits save landlords a significant amount of time and money and make owning a rental property more rewarding.
One of the biggest benefits of using a property management firm is that the firm can handle all tenant screening activities. Some landlords do not run credit or background checks because they do not have the time or know where to get the reports. Renting to people without regard for their criminal background and financial history is one sure way to end up with problem tenants. Property management companies manage the entire screening process so that landlords get tenants that pay on time and take better care of their units than those who were not screened.
Property management firms handle all of the legal aspects of dealing with tenants and maintaining a property. Landlord-tenant laws vary by state and municipality, so it is important to know how to handle problem tenants and other rental issues properly. Property managers handle evictions, property inspections, lease negotiations, lease terminations, and the collection of rent from tenants. They also make sure that each property is in compliance with all property codes and safety laws. These services can help landlords avoid costly lawsuits and legal problems.
Landlords need to collect rent on time every month to ensure that property taxes and other expenses are paid on time. On-time rent collection is also the only way for a landlord to generate reliable income. Unfortunately, some landlords do not control the rent collection process as well as they should. They listen to excuses from tenants and allow people to pay their rent late. In some cases, tenants use bad checks to pay their rent and the landlord is stuck with bank fees and other problems. Property managers control this entire process so that landlords do not have to deal with tenants who do not want to pay their rent as agreed. A property manager will contact a late-paying tenant until payment is received. If a tenant does not pay as agreed, a property manager can start the illegal eviction process.
Lease enforcement is another unpleasant part of being a landlord. The terms of a lease protect both the landlord and the tenant, but the landlord is the one who suffers if the tenant breaks his or her end of the deal. Property managers will take care of lease enforcement and deal with tenants who break the terms of their leases. If a tenant is not allowed to have pets and someone reports that a pet is on the premises, the property manager will contact the tenant and demand that the pet be removed within a specific time frame. If the tenant puts holes in the wall or makes other property modifications that were not discussed with the landlord, the property manager can make sure the tenant pays for repairs.
Making a profit as a landlord comes down to collecting rent consistently and knowing how to reduce the tax burden of owning a rental property. If a landlord does not claim the right number of deductions, he or she could face stiff penalties from local, state, or federal tax agencies. Not claiming the right number of deductions may also increase the amount of tax a landlord owes. A property management company can help landlords determine which deductions to claim and help them get organized each tax season. This can help landlords save time and money, and it can also save them from having to pay fines and penalties for filing their taxes incorrectly.
Using a property management firm can help shorten vacancy cycles, which cost a landlord money. Without a property management firm, it may take a landlord several months to prepare a property for rent, determine how much rent to charge, and market the property to potential tenants. Professional property managers can reduce the amount of time it takes to perform these tasks. Once a tenant rents a property, a property management company can also improve tenant retention. Once a landlord finds a good tenant, he or she wants to keep the tenant in the property as long as possible. Property managers can help make this happen by making repairs quickly and helping good tenants whenever they have a problem. This improves the chances of a good tenant staying in the property.
Many of the benefits of using a property management company are related directly to saving money. However, using a property management firm can also give landlords several personal benefits. The less a landlord has to deal with problem tenants, the less stress he or she will have. Using a property management company also reduces the amount of time a landlord must spend making repairs, chasing down tenants for late rent payments, and enforcing the terms of a lease. The most important personal benefit of using a property management company is that it allows landlords greater freedom. Instead of being attached to one property, a landlord can buy multiple properties in different locations and let the property management company take care of each one.