Many a fortune has been made in real estate, but being a landlord is not for the faint of heart. From excuses about late rent checks to repair calls in the middle of the night, the hassles of owning a rental property are never-ending.
If you have been thinking about getting into real estate but fear the landlord blues, you may be able to make your dreams come true. Owning rental real estate can still be a great move - if you find the right property management company.
What is a Property Management Company?
The beauty of a property management is that it allows you to enjoy the advantages of owning rental property, from a steady stream of income to appreciation potential and portfolio diversification, without the downsides, like screening tenants, collecting rent checks and fixing broken toilets. In exchange for these services, the property management company takes a percentage of the rent roll, but that is a small price to pay.
Working with a property management company makes a lot of sense, especially for new real estate investors, but not all property managers are the same. If you want to build a real estate empire without the landlord blues, you need to choose your property management company with care.
Ask Your Real Estate Agent for Referrals
If you are new to real estate investing, start by working with your agent to find a trustworthy property management company. Real estate agents, especially the ones that specialize in rental properties, are typically tuned into this world, and they can provide expert recommendations on which property management companies to hire - and which ones to avoid.
Once you have several referrals in hand, you can start interviewing property management companies. You will still need to do your own due diligence and conduct your own research, but a referral from an experienced real estate agent is always a good place to start.
Research Vacancy Rates
One of the most important jobs of any property management company is finding suitable tenants for the owners they work for. Property management companies have a vested interest in keeping their apartments and houses rented - after all, their compensation is typically a percentage of the total rent.
Even so, some property management companies are more successful than others, and it is important to research vacancy rates carefully. The last thing you want is an empty rental property, so look for a property management company with a proven track record of attracting, screening and serving local tenants.
Talk to Tenants
Property managers do more than just find tenants - they also serve those tenants. Attracting tenants to their rental properties is just the beginning, and once again some companies do a better job than others.
If you really want to know how a property management company is doing, you need to go right to the source. That means talking to the tenants themselves, assessing the level of service those tenants are receiving and how happy they are with the management of the property.
If the tenants are happy, you will be happy, and you cannot afford to neglect this research. As the owner of the rental property, you are ultimately responsible for the tenants you rent to, and you need to make sure the property manager you hire is up to the task.
Owning rental real estate can be a great way to diversify your portfolio and build wealth for the future, but it pays to have expert help in your corner. If you like the idea of a steady stream of rental income but not the hassles of being a landlord, working with a property management company can give you the best of both worlds - if you know what to look for.