Real Estate Investors: Is it Time to Hire a Property Management Company?

You just bought an investment property, and now it’s time to rent it. And although this seems like a straightforward process, how can you be sure you’re following the appropriate state laws and protocols? Especially if you live in a different state than your new investment property. Laws are constantly changing, and each state sets its own rules, but there’s a simple and affordable solution: hire a seasoned property management company to help you take the pain out of your profit.

The purpose of a property management company is to help investors maximize their time and profit while ensuring their tenants and homes are cared for efficiently. Taking a proactive approach to property care can significantly reduce and often prevent the costly and time-consuming issues that often make independently renting a property a headache for landlords. Here’s a basic breakdown of what a good property manager does:

Sets Rental Rates and Markets Properties

• Property management companies thoroughly analyze each property to ensure investors get the maximum monthly rents possible. Factors that affect a property’s rental rate include the location, square footage, condition, and even the time of year the property is for rent. Typically, renters don’t like to move during the winter months, so vacant properties during this time tend to rent for less than they would in the Fall, Spring, or Summer.

Background Checks

• Property managers run comprehensive background checks to review all applicants’ criminal, credit, rental, and employment history. Renting to a tenant with a history of paying their rent on time and who doesn’t have previous property damage or violation complaints is imperative to a rental’s profitability.

Lease Agreements and Deposits

• If an application is approved, property managers will draft lease agreements- binding contracts between the landlord and tenant- that meet their state requirements. Once the prospective tenant has signed the agreement, a deposit is collected from the tenant to ensure there’s money available for damages caused to the property during their tenancy.

Rent Collection

• Although it varies, most property management companies request rental payments between the first and fifth days of each month. Payments received after the cutoff date are subject to late fees, and unpaid rent will result in a 72 Hour notice to remedy or a 30-day notice to vacate the premises, which can lead to timely stints in eviction court.

Property Maintenance

• Property managers should perform yearly walk-throughs and regular exterior inspections to ensure each rental is in good condition and to look for preventative maintenance issues. Preventative maintenance typically includes re-caulking; smoke and carbon monoxide detector replacement; furnace filter replacement; making sure faucets, toilets, and water heaters aren't leaking; and ensuring the exterior siding and landscaping of each property is in good condition. In addition to yearly walk-throughs, High Country Property Management also conducts frequent drive-bys to inspect our properties’ exteriors. If it's below our expectations, we schedule an interior walk-through with the tenant.

How Much Do Property Managers Charge?

This number varies based on each client’s needs, but property managers typically charge a new client setup fee, monthly management fee, tenant placement fees, consulting fees, and lease renewal fees. Here’s a breakdown of what that looks like:

Setup Fee

• Setup fees are around $100 on average. This fee covers the time it takes to onboard new owners.

Monthly Management Fee

• Monthly management fees range from 5% to 10% of the set rental rate- typically landing somewhere in the middle. This fee begins once a tenant has moved into your rental property. 

Tenant Placement Fee

• The standard tenant placement fee is 50% of the first month’s rent; however, High Country Property management caps our placement fee at $800.  This fee includes advertising, property tours, drafting lease agreements, and collecting deposits.

Consulting Fee

• Some property management companies charge consulting fees while assisting new investors with questions regarding their investment properties. High Country Property Management offers a free rental analysis to prospective clients and is happy to assist with any questions regarding new investment properties free of charge. 

Lease Renewal Fee

• Lease renewal offer letters will be mailed to tenants 90-days before the end of their lease, and if a tenant decides to sign another lease, you will be charged a lease renewal fee, which includes a maintenance inspection, and the drafting of a new lease agreement. This usually costs around $100 per renewal.

With the ever-changing laws surrounding rental properties, it’s no wonder so many real estate investors choose to have their rental properties managed professionally. Your time is valuable, and hiring a seasoned property management company will ensure you’re able to spend that time how you see fit. So take the proactive approach, and let your property manager deal with the costly and time-consuming issues that can make renting a property such a headache for real estate investors.