Re: Property management companies…Are they a wise choice? - Posted by Dave T
Posted by Dave T on April 25, 1999 at 13:30:07:
Conclusion: Assuming that you hold rental property for the long term, I would recommend professional property management if your cash flow can support it.
You don’t deal with tenants or toilets, the management company either has a maintenance person on staff or has a working arrangement with local contractors. Ask the management company for a list of their on-call maintenance contractors.
The management company never takes a vacation, they usually have an after hours emergency number when tenants have problems outside working hours. To a large extent, your time is your own.
The management company knows the landlord-tenant law in your area and knows how to enforce the lease terms and protect your interest in the property. The management company is experienced at screening potential tenants, and should be well versed in the eviction procedure.
You can move out of state and not worry about your rental management.
A good management company will require you to give them a maintenance escrow on each property (anywhere from $100-300). This will allow them to make emergency repairs and to pay the bills without first having to be reimbursed.
Management costs are deductable on Schedule E.
A small company may not have the staff to adequately deal with multiple simultaneous activities. Hint – call the company during business hours several times throughout the day. Note how mamy times you were able to speak to a member of the staff, and how many times you were forced to leave a voice mail. If you can’t get to them, your tenants won’t be able to either, and maintenance problems may end up unreported and unfixed.
The management company that is an arm of a realty office does not have to make its living on property management. The staff in this operation may be smaller and less experienced than a management company whose only business is property management.
Fees and incidental costs eat into your cash flow. Look for a company that will at least give a multiple property discount on the monthly management fees.
A good management company will require you to give them a maintenance escrow on each property (anywhere from $100-300). If you have multiple properties, a large escrow deposit is idle and earns no return on investment.
Property Management Agreements often have a clause requiring a commission on the sale of the property if you sell to a tenant. This may be an issue if you want to L/O or owner finance your property to a current tenant.