A question we get often is – how soon in someone’s investment career they should hire a property manager? Some investors believe they need three or five houses in their portfolio before it’s worth employing a property manager. If you’re not going to hire a property manager right away, you need to consider a few things.
Laws and Education
If you’re starting on your own without a professional Phoenix property management company, you’ll need to educate yourself on the laws pertaining to real estate. Fair Housing laws are especially important, and you need to understand the Health and Safety guidelines as well as the Fair Credit Reporting regulations. It’s one thing to know the law but when you’re emotionally involved, it’s easy to step away from what you learned. Write down your processes and procedures and stick with them. After you educate yourself, set some guidelines for yourself and run your investment like a business.
Property Management Phoenix Savings
Many investors try to manage on their own because they want to save the monthly management fee. Interview some companies and find out if you’re really saving money, or if you’re actually losing money by managing on your own. A property management company may have tools you don’t have. It might take them less time to rent out a property because they have convenient online scheduling, someone answering their leasing lines 24/7, and they may offer online applications. These things may not be available to you, so it will take you a little longer to place a tenant.
In Phoenix, the average amount of time it takes to place a tenant is over 35 days right now. However, we can place a tenant in 10 to 14 days on average. Chances are, you can earn an additional half a month’s rent when you lease your home through a professional management company. So, you make up for that monthly management fee pretty quickly with the extra rent you collected.
Tenant Retention
Another way professional management saves you money is with tenant retention. There’s a big difference between keeping a tenant for three or four years and having a tenant in place for only one year. A management company offers conveniences to tenants like auto draft and online payments, 24 hour maintenance lines, and a buffer between them and the owners. Statistics show that 80 percent of tenants prefer working with a management company. So, these tenants will stay a little longer. See what companies have for retention rates because avoiding one turnover with a management company will more than make up for your management fees.
Avoiding Risk
A professional property management company can help you avoid risk. Recently we worked with an investor who was facing a $15,000 fair housing suit. That can wipe out profits for years to come, so you want to get as much help as you can avoiding liability.
Time Management
A monthly management fee, whether it’s $85 or $100 a month, will buy you a lot of time. You don’t have to wear all the hats that go with managing a property. Your time won’t be spent showing properties, handling maintenance calls, writing advertisements, taking pictures, and educating yourself. These things are very time consuming. If you’re an investor, you might want to be out there looking for your next property. Concentrate on the investment part of it, not the management. Or, you can spend more time with your family and on your other passions.
If you have any questions about when to hire a Phoenix property management company, please contact us at Service Star Realty.
