Investing in real estate doesn’t mean you have to become a full-time landlord; property management companies are essential to multifamily real estate investing. Whether you’re considering purchasing a small apartment building on your own or investing in a real estate fund, property management plays an essential role in your investment.
What a Property Management Company Does
A property management company handles all of the day-to-day tasks of running a multifamily asset. They are the face of the property, interacting with tenants and making sure everything runs smoothly. Some companies offer more services than others, but the essential duties of maintenance and repair, rent collection, and tenant screening are typically involved. This makes owning property a hands-off investment that still has the potential for steady monthly income, but how does property management add value to an investment? Let’s take a closer look at the benefits of hiring a management company.
Tenant Acquisition and Retention
Low vacancy rates and high retention rates are essential for running a profitable multifamily asset. Property management companies can help drive these numbers in several ways:
- Tenant screening: Handling background checks, income/employment verification, and application processing to help ensure vacancies are filled with high-quality tenants.
- Marketing: Advertising new vacancies to attract potential tenants who can afford to pay rents at market rate or above while also positioning the property as a desirable place to live.
- Tenant management: Being available and responsive to tenant requests, making sure issues, such as repairs, are attended to in a timely fashion.
The tenants are at the center of what makes a property profitable, and managing both the quality of the residents and their satisfaction with the facilities can help drive revenue and retention.
Repairs and Renovations
Repairs and renovations are essential for both upgrading and maintaining a property, and the management company can handle all the details for both. The best property managers will use reputable contractors and seek out competitive bids to keep costs low while ensuring the resulting work is high-quality. Having trusted emergency plumbers and HVAC contractors on call, for example, can help minimize the cost of needed repairs while giving tenants the services they need in their units. Arranging the work for capital improvements can take away the stress of improving your property while adding value to it. To learn more about capital improvements, check out our previous blog post.
Rent Collection and Finance Management
Property management companies also handle all the financial aspects of running a property, from collecting rents to generating monthly and quarterly reports. Collecting rent can be a time consuming process, and it can also be stressful for landlords. Keeping track of which tenants paid on time, which ones were late, and how many missed their payments completely can be overwhelming, but property managers have systems in place to track all this information. They also manage the payments of late fees, refunding security deposits, and taking care of any other miscellaneous collection activities.
Reports generated by the property managers make it easy for investors to see how much money comes in every month and monitor expenses. These reports may also show current vacancies, potential rent increases, and other metrics associated with your property. The management company may review reports over time to identify trends and opportunities to increase profitability, making it easy for investors to enjoy passive income instead of acting as landlords.
The best property management companies will share the goal of a property’s investors: to create a desirable place for tenants to live while also maximizing profitability. Their hard work means investors don’t have to get bogged down in the day-to-day operations of running an apartment building or complex. Whether you’re an individual investor or you’re part of a bigger investment group, having the right property management company involved can help make building long-term growth easier. To learn more about how to invest in multifamily real estate assets with DiversyFund, click here.