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What Is a Property Management Company & Why Its Crucial in Rental Business Success

If you are a landlord, you probably know by now that owning and looking after a residential rental property is like having a full-time job. There are lots of responsibilities to deal with in order to keep the value of the property high, gain maximum returns, and keep the vacancy rates down. The day-to-day operation of a rental property includes lots of tasks, such as marketing, maintenance, tenant screening, accounting, legal services, and so on.

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Owners who cannot or do not want to handle all of the duties on their own can benefit from hiring a professional property management company to do it for them. In the lines below, we will explain what a property management company does and review the services provided.

By the time you read this article, you should have a better understanding of what the benefits are and how to choose a highly qualified rental management agency, which will give you peace of mind and increased profits.

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What Is Property Management?

If you own a residential rental property like a single-family home, a townhouse or an apartment building, chances are you will require the services of an experienced professional company to oversee the daily operations. A property management company is a third-party hired to handle day-to-day responsibilities and tasks of running a successful rental business.

Typical services include maintenance, repairs and tenant communication. By delegating the tasks to professionals, hosts and owners get extra time and the opportunity to focus on other areas of life or work. In addition, appointing a property manager saves money by reducing expenses while maintaining good value.

How It Works: What Are The Responsibilities Of A Property Manager?

The property manager serves to lift the burden off of the owner’s shoulders, in terms of all the aspects involved in the rental business, from in-depth rental market analysis and setting the rental price over to routine matters like marketing vacant space to emergencies, collecting rent and repairs.

A good property management company has a long list of trusted and loyal suppliers, vendors, and contractors, for projects that need to be done on the property. For instance, they can hire a licensed and skilled handyman, a plumber, an electrician, or a carpenter to ensure high-quality work.

A typical full-service package involves, but is not limited to, the following services:

  • Powerful marketing and advertising with price analysis for increased reach
  • Thorough screening of potential tenants (background checks, credit history, rental references)
  • Tenant Placement
  • Drafting, negotiating and signing lease documents on behalf of landlords
  • Rent collection, finances, taxes, accounting and bookkeeping
  • Tenant communication
  • 24/7 emergency assistance
  • Maintenance and repair
  • Move-in and move-out inspections
  • Handling late payments and evictions if required
  • Compliance to local and state laws and regulations
  • Collaboration with licensed and insured local contractors

A typical full-service package is designed for owners who do not wish to deal with all of the duties. They can rely on property managers to take care of everything, even unpleasant situations, such as the eviction process.

On the other hand, there are owners who prefer to take care of all rental operations themselves but wish to delegate marketing, screening and tenant placement to professionals. Acquiring the right renters requires extensive experience in real estate, marketing, price analysis and networking, to name some. Tenant placement package includes a number of services aimed at finding high-quality tenants to secure long-term occupancy, continuous income flow, and property’s value raised. 

Do I Really Need a Property Manager?

While there is no rule stating that property manager is a must, there are certain circumstances where hiring a professional to run your rental business effectively makes the most sense:

Multiple Rental Units Owner

If you own several rental properties, it can be almost impossible to operate your business especially if they are all in a different location. You can quickly become overwhelmed and overburdened with the duties and tasks at hand.

Absentee Owner

If you do not live within proximity of your asset, it is a good idea to hire a manager who can be on-site, or live nearby to be able to keep a close watch and handle issues promptly.

You Want To Avoid Being An Employer

Landlords who do not want to deal with hiring employees can employ property managers who will take care of all employee duties, such as legal issues, payroll, and taxes.

Your Time Is Limited

Sometimes, due to time constraints or other business engagements, landlords are not able to stay actively involved in property operations on a daily basis. This would be a perfect scenario for asking for professional assistance.

You Are Reluctant About Running A Business Yourself

You should also seek assistance from property managers if you are hesitant about doing daily tasks yourself and prefer to only collect the income earned.

You Can Afford The Extra Cost

If you can afford the fee imposed for managing your assets, you should take full advantage, as it will be worth it. Not only will you have more free time, but you will also have peace of mind while gaining higher yields.

You Lack Expertise In Real Estate, Marketing, Law, Or Accounting

By working with a rental property management agency, you can rest assured your tenants and the estate will be taken care of well, while your interests are looked after, too. You will have unlimited access to knowledgeable and skilled team who is working for your best interests.

Top Benefits of Hiring Professionals to Run Your Rental Business

While hiring a highly qualified team does incur extra charges, countless advantages outweigh the cost: 

  • Saving time and money – Professionals often secure vendor discounts, ensuring you save both time and money on routine tasks.
  • Reducing vacancies – Expertise in marketing and tenant relationships means your property won’t sit empty for long.
  • Increased rental value – Property managers continuously study the market, ensuring your property’s rent is competitive and maximizing its income potential.
  • Effective maintenance – Ensure your property is always in tip-top shape, preserving and enhancing its value over time.
  • Emergency repairs – No more midnight calls. Have a team ready to address unforeseen issues anytime.
  • Quality tenants – Reduce the chances of rent defaults or property damage by securing trustworthy and reliable tenants.
  • Higher retention rates – Happy tenants mean stable income. Professionals ensure tenant satisfaction leading to longer stays.
  • Reduced liability risks – Good management team minimize potential legal risks and costly lawsuits through diligent practices.
  • Legal compliance – Stay ahead of the ever-changing property laws and regulations.
  • Accounting assistance – Receive regular financial reports and tax documentation, making your financial management hassle-free.
  • Reduced expenses – Effective budgeting and cost-saving strategies ensure more money in your pocket at the end of the day.
  • Safety standards procedures – Ensure the well-being of your tenants and reduce potential liabilities with rigorous safety procedures.
  • Rent collection services – Ensure timely and consistent rent collection, improving cash flow and reducing stress.

Investing in top-notch professional rental management might come with costs, but the long-term gains are undeniable.

How Much Does It Cost?

The exact cost of administrative and maintenance services depends on what property management companies do for the landlord. Most of the companies follow similar guidelines for getting paid between 8% and 12% of rental income, which should be stated in the contract you sign up when you hire them. Additional charges may apply for tenant screening services (credit or background checks), repairs, advertising, or accounting.

At Swell Property, for instance, a full-service rental property management package is priced at 8% service fee of your monthly rent ($175 minimum) and one-time leasing fee of $500. Whereas a tenant placement only package costs only half of the first month’s rent (minimum of $750.00).

How To Find a Good Management Company?

While there are plenty of companies out there, it may be difficult to pinpoint which one would be the perfect fit for your needs. We have compiled several useful tips to help you with your search:

  • Review references and qualifications
  • Check their marketing and advertising techniques
  • Consult with local apartment association for guidance
  • Search for accredited and licensed managers (the National Association of Residential Property Manager’s – NARPM, California Dept of Real Estate, North San Diego Association of Realtors, CAA)
  • Interview the managers before signing up
  • Read the contract thoroughly
  • Read online reviews on Google or Yelp

Why Choose a Boutique Property Mng Agency?

If you are unsure whether to use a large real estate franchise, or a small boutique agency, we will help you decide by pointing out a few key advantages of boutique agencies, so you can have a better understanding of what would suit you best.

Some of the advantages of working with a boutique property management agency are:

Superior Customer Relations

Since boutique agency property managers are responsible for handling a smaller number of properties at a time, they will be able to deliver exceptional customer service to both the tenants and you (the owner). You will get to enjoy a highly personalized level of service that is 100% customer-focused.

Increased ROI

Choosing a local boutique manager means having an expert who will be solely, and 100% focused on your rental unit, with a stellar level of service. This, in turn, will bring you higher returns and steady income flow.

Open Line of Communication  

One of the major advantages of collaborating with boutique agencies is having direct access to your designated property manager at all times. Fast and honest communication is a vital foundation of strong and long-lasting business relationships.

The Bottom Line: Increase Profit & Save Time With Property Management Company

Owning a rental property entail dealing with the upkeep, tenant troubleshooting, legal matters, accounting and so much more. It takes a lot of effort, time, experience and knowledge to perform all of these duties on a daily basis. Property management companies are experts at what they do and are well worth the extra fee. Hiring a good property management company can grant you extra time, increased revenue, reduced vacancies and a stress-free rental business experience. A team of managers, maintenance techs, realtors, legal advisors, and various other contractors all work together to bring you success in your rental business. Therefore, if self-managing is not for you, or if you lack time to manage the property yourself, do not hesitate to take advantage of a property management company’s services. Your tenants will be happy and well taken care of, the property will be kept in its best condition, and you will be able to grow your rental portfolio faster.

About the Author

David Miller is Real Estate Advisor at Swell Property. With over 30 years of experience in real estate, negotiations, and contract management, I’m equipped to handle all your needs with the highest level of professionalism, integrity, and trust. Whether you’re eyeing a new home, an investment property, securing the best mortgage, or aiming to enhance your property’s value, my focus is on providing personalized guidance and strategy for your success. I listen to your needs attentively, ensuring that my expertise aligns perfectly with your real estate goals. My clients’ satisfaction and referrals are the true measure of my success in San Diego’s dynamic real estate market. If you’re searching for a real estate professional who’s deeply committed to your success, I’m eager to demonstrate my expertise and win your trust. Let’s connect and start this journey together.

David Miller Real Estate Advisor

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