Before you decide between managing a property by yourself or by a specialized company, you need to understand what property management process with rental destination involves.
A novice investor may see a rental property as a simple equation such as: rental income – (mortgage + administration expenses) = profit, but although this formula is the basic mantra from a financial point of view, in that equation you have to include the invested energy. A lot of investors have managed their rental properties on their own as a way to reduce administration costs. To decide which option is best for your portfolio, let’s take a look at all the obligations of the owner that you will have if you manage by yourself or if you could involve a property manager to take care of it. This remuneration covers the tasks listed below, as well as the necessary time allocated to them.
Properties for rent require more energy from the landlord or from the administrator, as it is known that a landlord produces less usage than a tenant.
Owning a rental property involves managing routine and emergency maintenance. Routine maintenance may involve work such as: overhauls of equipment in the building, intermediation of the relationship with utility providers, care of green spaces, replacement of equipment – the list is not limited, costs that are borne by the owner, but performed by the property manager.
On the other hand, the costs related to emergency maintenance, such as damage to the facilities and equipment of the building, are the responsibility of the property manager.
In the context of the above, a balance between the effort of the property manager and the financial support of the landlord can keep the properties in excellent condition and the tenants, happy.
When a property for rent is vacant, identifying the next tenant should be a short process. Finding your next tenant involves more than posting an ad on real estate promotion platforms. Don’t forget the visits to the property, the discussions with the potential tenants and the accomplishment of their requests. In addition, you will need to give priority to examining the tenants. A profitable investment is based on good tenant screening. As part of this process, you need to look for information about the potential tenant, the legal history (through the legal portal), even recommendations from the past landlords. And this time, investing in a property manager can give you the best chance of having a rental situation without eviction.
Communication and availability in the relationship with tenants
A good manager will check the tenants at least once a quarter. This record may refer to seasonal maintenance reminders or to the question if everything is working normally within the property, or to a series of requests that are not directly related to the property (example: “Neighbors’ dog barks again! Can you help me?”) and addressed at inappropriate times (during weekends or after hours). Regardless of the situation, the property manager will know how to manage things and will be a buffer in your relationship with the tenant.
Collecting the rent should be easy enough, but what if the collection doesn’t show up in your statement? It’s time to call your tenant, listen to his apology and wait for extra time to receive your money. And what happens if the tenant doesn’t tell the truth?
All the “reasons” that make it difficult to collect the rents can usually be managed by a property manager, who can use online rent collection software, which will allow him to issue signals and initiate actions to identify the non-payment situation which will eventually lead to the collection of the rent.
Other responsibilities of the owner that may also be delegated to the property manager:
Property managers charge for residential properties in Romania between 10-15% of the monthly rent, this remuneration including part of the maintenance costs of your property, in accordance with the above.
Purchasing rental properties is a great way to build equity and diversify your portfolio.
At the same time, property managers have made a career out of understanding the rental market. Their presence in this market keeps them connected with the changes and updates of the legislation in force. They can prove instrumental in managing a property.
When choosing between investing your time through self-management or transferring management responsibilities to a property manager, understanding of all the tasks required to maintain ownership within a satisfactory yield and correlating them with your lifestyle are extremely important.
Note: Article originally published in Real Estate Magazine no.24, Winter Edition: