When you are ready to increase your real estate holdings, it's important to be prepared. While it may not make financial sense immediately to hire a property management company, when you own more than one property, this type of service becomes essential. Unless you are going to make property ownership and the management of your properties your full time job, hiring a company that will screen tenants, collect rent, and keep track of maintenance allows you to own more property than you could without one.
The Costs of Hiring a Property Management Company
A reputable property management company will cost between 5 and 10% of the total rent you collect every month. While this fee may seem high, your overall profit will increase because you will be able to purchase additional properties without having the added stress of trying to manage these properties. While it may not be necessary to hire a property management company after you purchase your first property, you will soon find out if you have enough time to screen tenants, answer calls and collect rent without having a manager in place. If you are not interested in becoming an employer for a manager and support staff, you will need a property management company that can handle the job for you.
The Perfect Property to Own Doesn't Have to be Next Door
Once you determine that you can hire a property management company to handle your investments, where you purchase property can be just about anywhere. After you begin working with your initial property management company, you will learn how the specifics of how the process works. While you will have to hire a different company for property that is out of state, you will have the confidence you need to find the perfect company to manage your new property.
When Property Ownership is an Investment, Not a Career
While owning property is always an investment, not everyone enjoys coordinating maintenance, answering calls and interviewing potential tenants. For those that only want to own a property or two, it can make sense to manage the property alone. If you are a bigger investor, part of the cost of your investment is the 5-10% fee. As you budget for each of your properties, you should automatically budget in this fee when you assess how profitable a property will be. With a management company in place, you will have less vacancies and your rent collection rates will increase. Visit real estate investing blogs for more information.
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