Passive Real Estate Investing: Why You Need a Property Management Company
What Does a Property Manager Do?
How to Hire the RIGHT Property Manager or Property Management Company
Your Property Manager’s Expertise and Capacity
How Does a Property Management Company Get My Property “Rent-Ready?”
How Does a Property Management Company Find Qualified Tenants?
Intro to Property Management
Property management is the backbone of passive real estate investing. It isn’t nearly as glamorous as Selling Sunset, but you cannot scale your real estate investing without it. A property management company that you can trust will free up your time to focus on acquiring your next great real estate deal. Contrary to popular belief, passive investing isn’t just for retired investors. It’s for those of us who have a full-time career or those of us who must move out of state and it’s ESPECIALLY for those of us who are tired of communicating with tenants or contractors. However you look at it, managing rental properties can be time-consuming and overwhelming, especially if you have multiple units. If you can’t have a quiet weekend without someone calling about a broken toilet, it’s probably time to hire a property management company. Hiring a professional property manager can save you time, money, and stress while ensuring that your properties are generating rental income and are well-maintained. Even those of us who are extremely experienced in real estate need a property management company on their team who can handle tenant inquiries, maintenance, inspections, and other time-consuming activities.
What is a Property Manager?
In essence, a property manager is the go-between for a property owner and their tenants, ensuring the day to day of managing a property runs smoothly and efficiently, and that both parties are satisfied with the arrangement. A property manager is expected to facilitate all communication and actions at the behest of the property owner including working with tenants, contractors, or other vendors in an effort to best maintain the property. A property manager might oversee one or more leasing agents and is typically either the broker of the real estate company or is supervised by the broker of the company. To manage property for others, you must be a licensed salesperson or broker in the state of California with the Department of Real Estate, but you do not need a license or any sort of certification to manage property you own yourself. If a property manager wants to offer their clients additional expertise, they can obtain several certifications offered by the California Association of Realtors (CAR), mainly the Property Management Certification (PMC) and the Property Manager Master Certification (PMM). An on-site property manager is required in California if a housing community has 16 or more units, while an off-site property manager may split their time traveling between the office and the properties they represent. Most property managers get their start in the industry by managing residential property as a leasing agent. A property manager with several years of experience may decide to specialize in a specific type of real estate asset such as retail, office, industrial or even short-term rentals for example. There are certifications that a property manager can obtain for working with seniors, affordable housing, single-family, industrial, and other commercial property types, but nothing beats actual on the job experience. It is important to work with a property manager that has experience in the type of real estate that you, the property owner, is seeking to have managed.
What Does a Property Manager Do?
Property management entails more than just collecting rent and handling tenant maintenance requests. A property manager is expected to be intimately involved in the routine operations of their client’s real estate portfolio. In short, the goal of hiring a property management company should be to maximize income, reduce expenses, reduce vacancies, keep detailed financial records, and keep the property well maintained. A property management company who can successfully execute these tasks will ultimately create passive income for their client, the property owner. To accomplish these goals there are many steps that must be taken by the property manager, all of which take time. Improving a property’s operations is not something that happens overnight, but a good property management company will strategically take action towards their client’s goals when it is most economical to do so. To best identify what a property manager does, we should attempt to understand their role in chronological order. If you are a landlord hungry for more information, we recommend taking the time to read Realicore’s e-book, “What to Expect When Hiring a Property Manager” once you’ve finished reading this article.
How to Hire the RIGHT Property Manager or Property Management Company
Now that you know about the qualifications it takes to become a property manager and what a typical property management company does, you might be wondering how to best avoid hiring the WRONG property management company. You can avoid some common mistakes by asking the RIGHT questions when you interview a property management company.
First of all, we always recommend that you interview at least two property management companies. Take good notes when asking them these questions so you can compare them to each other.
10 Questions You Should Ask When Interviewing a Property Management Company:
1. What is your level of expertise when dealing with (Type of property you are asking them to manage)?
2. How do you market the property?
3. How do you screen and qualify potential tenants?
4. Do you have experience dealing with (Insert common issue you have with your property)?
5. What day of the month will I receive my rent?
6. How do you deal with tenants who are always late on rent, causing issues with neighbors or damaging the property?
7. What software do you use to handle communication, maintenance tasks or the accounting for the property income/expenses?
8. What kind of contractors or vendors do you have available to you?
9. How do you handle maintenance requests and billing?
10. What is your pricing and what services do you provide for that pricing?
Every property management company will have their own unique way of pricing their services, but the average pricing in the industry for single-family homes is as follows: 6-10% for property management and half of the first month’s rent as a leasing fee. Some property management companies may give you a discount on the property management fee for giving them multiple units to manage. Commercial property management typically has a much more unique pricing structure depending on the level of involvement required of the property management company. Managing vacant assets has yet another unique pricing structure. At the end of the day, everything is negotiable, but you’ll have to find the pricing structure and required level of services that work for you.
During your interview, it is also important to disclose to the property management company any issues that you know about the property or any on-going issues with tenants. Finding out if there are undisclosed property or tenant issues is a great way to cause some friction and ultimately find yourself without a property manager. Being up front about any issues will make the process smoother and will help create expectations for the property manager on what issues they may need to solve.
Finally, a good property management company will offer several strategies to accomplish your passive real estate investing goals which may include using their experience to solve property or tenant related issues. Creating a strong long-term relationship with your property management company will ensure that they are there to help when you need them most.
Your Property Manager’s Expertise and Capacity
One of the biggest advantages of hiring a property management company is their expertise. Property managers have years of experience managing different types of properties and handling various issues that arise with tenants, maintenance, rent collection, and legal matters. While you as a landlord might find yourself facing a new and uncertain situation, a great property management team has properly already faced that same situation many times over; and they’ll typically know several ways to handle it. They are also familiar with local laws and regulations governing landlord-tenant relationships, which can help protect you from potential lawsuits or fines. Why would you gamble potentially losing all of your hard-earned rental income when you can hire an expert to keep those profits safe? When choosing a property management company, be sure to evaluate their experience and track record. Look for a company with years of proven success managing properties similar to yours. Check their references and read reviews from other clients on Google or Yelp. This will give you an idea of how they operate and if they have satisfied customers. For example, Realicore has been in business since 2011 and has helped hundreds of happy residential and commercial landlords as noted in our reviews.
How Does a Property Management Company Get My Property “Rent-Ready?”
The process of getting a property ready to rent can be time-consuming and overwhelming, but with the right property management team such as Realicore, you can rest assured that everything will be taken care of. We understand the importance of presenting your property in the best possible light to attract quality tenants. The old saying "you never get a second chance to make a first impression" holds true in the world of investment property.
A good property manager will tell you it's essential to ensure that your rental property is in excellent condition without the need for repairs before looking for potential tenants. A well-maintained property is more appealing to renters because it shows that you care about the property and the tenants who will live there. Once your property is in tip top shape, your property manager should have photos taken. I’m not talking about a blurry photo with their Nokia cell phone. At Realicore, we take professional photos, and we can also create a video walk-through that showcases your property’s unique features and highlights its best attributes so that it’s shown in the most appealing light. We understand that tenants are looking for a home that is not only functional but also comfortable and attractive. That's why we pay attention to every detail to ensure that the property is ready to be rented out.
Additionally, your property manager should also always perform a move-in inspection to document the condition of the property before tenants move in to avoid disputes down the line. With Realicore Property Management, you can trust that we'll handle everything necessary to get your property ready for rent, leaving you with peace of mind and more time to focus on other important things.
How Does a Property Management Company Find Qualified Tenants?
Another benefit of hiring a property management company is their ability to find quality tenants quickly. Property managers use effective marketing strategies to attract prospective tenants and conduct thorough screening processes to ensure that they are reliable and financially stable. This reduces the risk of having problematic tenants who could damage your property or fail to pay rent on time.
At Realicore, we understand the importance of finding qualified tenants for your property. That's why we take a thorough approach to the screening process. Whether you own a single-family residential property, multifamily apartments or a commercial building, our property management team has established specific criteria to qualify a potential tenant's ability to pay rent on time and their likelihood of taking care of your property. To ensure that you find the ideal tenant while complying with housing regulations, it is crucial as a prospective landlord to adhere to the Fair Housing Act and other relevant local laws. Rent control laws in California have changed significantly in the past couple of years during Covid-19. To stay in compliance with all of the new California rental laws, Realicore recommends hiring an experienced property management company like us to handle the compliance in regard to giving proper legal notice.
At Realicore, we perform credit checks to ensure that potential tenants have a reliable financial history, and background checks to check their criminal history. We also verify their rental background and speak to their previous landlord, where we can gain valuable insight into their character and behavior as a tenant. We also verify their income and employment status to ensure that they have the financial means to pay rent consistently. Additionally, we screen any pets that may be living on the property to ensure that they are not a risk to the property or other tenants. With the right guidance and preparation, you can turn your rental property into a hassle-free and profitable investment.
Why Are Follow Up Skills Important in Property Management?
In the world of property management, follow-up skills are essential. A good property manager is constantly juggling between checking in with that potential tenant to see if they are still interested, to keeping a close eye on the status of maintenance projects from vendors, to checking in with you as the landlord to ensure you’ve filled out all the required compliance paperwork on your end. People are busy, and some important tasks do tend to fall in the cracks, but that’s where a great property manager with excellent follow up skills comes in handy. They’ll continuously follow up to ensure that nothing is missed! These skills are particularly important when managing multiple properties or units, as the workload can quickly become overwhelming without a systematic approach to follow-up. Hiring a property manager with strong follow-up skills can not only save landlords time and hassle but can also help to ensure that properties are well-maintained and profitable in the long run.
Vetting Vendors
One of the biggest challenges for landlords is finding reliable and trustworthy vendors to help maintain their properties. While there is no shortage of vendors available, finding one that will also offer you a fair price for your project is a whole headache in and of itself! Not to mention, as a new landlord, or one that may not have run into many maintenance issues before, you may be unsure of what the fair pricing in your area even looks like. That’s wherehiring a property management team with years of experience can save you. They know what projects should cost in your area, and they might even be able to score a discount if they have a good relationship with that vendor. Your property manager should also have a set of vetted vendors, or a fine-tuned criteria for vetting new vendors that meet your property's specific needs. When you work with Realicore, we take that burden off your shoulders. We have the experience and resources necessary to handle this aspect of property management with ease. Our team will source and vet vendors for you, ensuring that you get quality workmanship and competitive pricing. Whether you need a plumber, electrician, or landscaper, we have a network of trusted professionals who can help keep your property in top shape. We also make sure that our vendors are available weekdays and weekends for any emergencies that may arise. With Realicore, you can rest assured that your property is in good hands.
Communication
A good property manager should prioritize clear and frequent communication to ensure that everyone involved is on the same page. This type of effective communication can make all the difference in ensuring a smooth and stress-free experience for property owners and tenants alike. When you hire a property management company like Realicore, you can be assured that communication is a top priority. We understand that clear and regular communication is essential to maintaining positive relationships with both property owners and tenants. Our team will keep you informed about any maintenance or repair issues that arise, rent collection, and any other important issues related to your property. We make ourselves readily available to answer any questions or concerns you may have, whether it's through phone, email, or in-person meetings. Our proactive approach to communication ensures that everyone is on the same page and that issues are addressed promptly, helping to avoid any potential misunderstandings or conflicts. With Realicore as your property management company, you can trust that we will keep you informed every step of the way.
Upkeep
Maintenance and repair coordination is another task handled by property management companies and is quite possibly one of the most important tasks. After all, you can’t continue to rent out a property if the property is in a hazardous state of disarray. So let your property manager oversee the repairs needed on your property and coordinate with contractors to get them fixed promptly.
At Realicore, we understand the importance of keeping your property in top shape. Our team will conduct bi-annual property inspections to identify any maintenance issues that need to be addressed. And in addition to inspections, we'll schedule routine services like weed abatement, pest control, backflow inspections, fire alarm testing, and roof debris and drainage clean-up. We know that preventative maintenance is key to avoiding costly repairs and ensuring tenant satisfaction. That's why we take a proactive approach to upkeep and ensure that your property is always well-maintained.
Compliance
Legal Compliance
Staying compliant with the ever-changing laws and regulations in the real estate industry can be a daunting task for any landlord, especially if you own multiple properties. If you own properties in more than one state or even out of the country, a property management company who is familiar with the local laws is worth its weight in gold. Compliance is complicated, and it’s something that you don’t want to make any mistakes with since those mistakes could turn into costly legal issues. That's why at Realicore, we make sure to stay up to date with all the latest laws and regulations to ensure that you and your tenants are protected.
We can handle everything from creating and enforcing real estate attorney-approved leases, enforcing CC&R's, and sending legal notices such as a 3 Day Notice to Pay Rent or Quit, 30 Day, 60 Day, or other notices. And if necessary, we'll oversee evictions to make sure the process is handled properly. With Realicore, you can rest assured that your property is in compliance with all local, state, and federal regulations.
Insurance
If you have a full-service property management company, they should assist you with issues regarding insurance. Issues caused by the tenants may require your property manager to send a notice to cure or may require an in-person visit with an insurance inspector. Keeping your home insured is important and may not be optional especially if you have a mortgage on the property. Your lender is going to want to ensure that their loan is secured by an asset that has active insurance. If you let your insurance lapse, you better believe that your mortgage company is going to force insurance coverage which will be exorbitantly more expensive than any policy you as a property owner would have purchased.
Handling Finances
Managing the finances of a rental property can be overwhelming and confusing. From collecting rent to reconciling CAM charges, navigating the world of real estate finance requires a level of expertise that can be hard to come by. Not only would you have to handle the finances on the day to day if you handled your property completely alone, but you’d have to keep them in a neat easy to find order in case you need to review records or reference them during tax time. If that doesn’t sound fun or doable for you, don't worry, there's a solution that can make your life easier and more profitable: hiring a good property manager!
At Realicore, we understand that handling finances can be a major headache for landlords. That's why we offer comprehensive financial management services to make it easier for you. We'll provide monthly statements and an end-of-year profit and loss statement for your accountant. We'll collect rent and fees on your behalf, - we'll also provide electronic rent payments straight to your bank account at no extra charge. With Realicore, you can rest assured that your property's finances are in good hands.
Ease of Use
Lastly, when choosing a property manager, you should assess how they incorporate technology into their management systems to provide a more seamless user-friendly experience for both you and your potential tenants. Nowadays there are so many different types of technology systems out there that your property manager should be utilizing. These tools make life easier for everyone involved in managing your investments. However, you need to ensure that your property manager is choosing the right tech and using it correctly. For example, there’s no point in hiring a property management company to collect rent if their payment website is always down.
At Realicore, we've made it easy for you to manage your property online. Our online rental portal is available for both owners and tenants. You can review leases and raise rents accordingly from the comfort of your own home. We are a trusted company that provides property management services to property owners and tenants. Our commitment is to offer easy and accessible solutions that make property management more convenient for our clients. We've created an online rental portal that allows property owners to manage their properties remotely, saving time and effort. Our portal provides a convenient platform for property owners to review lease agreements, communicate with tenants, and adjust rent prices as needed. Our tenants also benefit from our online rental portal as they can pay their rent online and request maintenance services. Our focus on convenience and accessibility is a testament to our commitment to providing efficient property management solutions that prioritize the needs of our clients. By choosing Realicore, property owners can be confident that their properties are in safe hands, and tenants can expect a hassle-free rental experience.
Conclusion
In conclusion, hiring a property management company can offer many benefits to property owners. With the day-to-day tasks of managing properties taken care of by professionals, owners have more time and energy to focus on other important aspects of their lives. Additionally, property management companies often have access to resources that individual owners may not have such as maintenance teams and marketing tools.
One interesting statistic is that according to a survey conducted by All Property Management, 75% of landlords who use a property management company reported being satisfied with their services. This highlights the importance of choosing the right company for your needs and doing thorough research before making a decision. Overall, partnering with a reliable and experienced property management company can lead to greater peace of mind and financial success in the long run.
A top tier property management company is a smart investment for any property owner who wants to streamline their operations and maximize their profits. With Realicore Property Management’s knowledge, skills, and resources at your disposal, you can rest assured knowing that your properties are in good hands. So why not consider partnering with us today?
