The most important person on your team when you are buying rental properties out-of-stateis your property management company. They’re your boots on the ground, and they’re your most important asset on the ground. If you don’t trust them then you might as well not have these rental properties out-of-state.
While they can be replaced and you could find new ones, it’s better just to find a good one from the get-go so that you don’t have any further problems down the line. Many investors when they’re first starting ask questions like, ‘Why do I even need a property management company? I want to manage it myself and save all the fees and all the expenses.’ In my opinion those fees and those expenses that you’re paying to these property management companies are well worth what you’re paying them to do.
So what does a property management company actually do for you?
Every month, whether they have electronic payments, or they collect the payments in cash. The property management company is going to go out to your property or collect rents from the tenants. They get in touch with the tenants and make sure that they pay the rent on time.
Your property management company should be set up in a way where only if they collect the rents then they get paid. If they don’t collect rents then they don’t get paid. You want to make sure you have aligned interests with your property management company.
Fill Vacancies and Screen Tenants
The second very important thing that your property management company does is they fill vacancies and they screen tenants for you. Filling vacancies is very important and you want to minimize the amount of time that your property is vacant. Especially for single-family homes, if there’s no tenant in there that means there’s no income and you’re a hundred percent vacant. So you want to fill those vacancies as soon as you possibly can, or else you’re not making any money.
Screening tenants is also very important, and property management companies have this down to a tee. They have very specific tools and numbers that they’re looking for in order to analyze these tenants. They’re meeting these tenants face-to-face. They’re learning about their background, where they lived before, how long they live there, etc., so they could find the best tenant to place in your property. They also have the subscriptions and access to all the tools to do the background checks for you, and this is all part of the cost that you pay to the property management company.
Manage Maintenance Requests
The other thing that property management companies do is they manage all the maintenance requests. If the toilet breaks or anything happens to the property, the tenants call the property management company and the property management company handles it for you.
You can request to have the property management call you every time a call request comes in. Or you can have it so that if a maintenance request comes in less than $200 they don’t call you or text you, and if it comes in over $200 or $250 then you have them reach out to you to get your approval. This helps to limit the amount of phone calls that you get from the property management company.
Once the property management company gets a phone call from the tenant about the maintenance request. They’ll handle the work order and get the contractor out there. They’ll go and verify that the work has been completed. They’ll make sure that the tenant is happy with what has been done. And then they’ll take that balance and put it on your online portal for you to pay for through the rent roll. Normally that’s how we pay it. We’ll get the rents in and then we’ll just pay all the work orders with those rents so we don’t have to take any cash out of our own pocket to pay for those work orders.
Lastly, hoping that this never happens to any of you, property management companies also manage evictions.
They’ll show up at court for you. They’ll find a lawyer to go to court and fight your case. They’ll manage the entire process with the sheriffs and the lawyers and the court and all the people involved, and they normally do it for a very low fee. You have to pay the lawyer, which is his own separate fee, but the property management company doesn’t take much. They don’t make money from evicting tenants. If they did, then that wouldn’t be an alignment of interest.
Especially being an out-of-state landlord, managing the eviction process is very beneficial. If you’re trying to manage properties out-of-state and eviction comes up, you have to have somebody physically present to go to the court. The property management company is there for you as your boots on the ground to manage all of these things. They get the eviction done on time, so that they can rent it out again so that they can start generating revenue for you, which therefore generates revenue for them.
If you’re interested in seeing the properties that we currently have available view our current inventory. If you would like to talk to us and ask us more questions, feel free to schedule a call with us.