Advantages of Using a Property Management Company
If you’re reading this blog post, you’re likely in the exciting position of landlord or may soon find yourself to be. Congratulations for embarking on your very own journey into real estate! Whether you’re building your nest egg, working towards financial independence, or supplementing your cash flow, real estate can be a powerful tool in your portfolio. The journey can be extremely rewarding, or equally as frustrating depending heavily on how the property is managed.
One of the very first decisions a rental property owner must make is the important decision to use, or not to use, a property management company. When making this decision, ask yourself the following questions:
Do I know what it takes to manage my own property?
Do I have the time to manage my own property?
Unfortunately the will for success alone is not enough, you must objectively evaluate your situation to ensure you’re set up for success. Buy and hold real estate must be treated like a business, NOT a hobby. We can’t stress enough, not being prepared can lead to disastrous results. Hefty lawsuits and even jail time have been levied along with the mismanagement of rental property. After all, your tenants have placed their safety in your hands, and you have a legal responsibility to make sure the appropriate safeguards are in place.
Our intention is not to scare new property owners, but to impress upon them the importance of taking this new role in their life very seriously. But don’t worry; MyTripify is here to help!
Let’s start with the basics, what is a property management company? Property management companies are licensed real estate firms that assist in some or all the daily operation of a rental property including marketing, tenant screening and qualification, tenant communication, maintenance and repairs, accounting and financial analysis, even perusing eviction or other litigation. There are a wide variety of property management companies, which provide a variety of different services. Some specialize in long-term leasing, others short-term or Airbnb style rentals.
Using a management company ensures best practices are in place to optimize the performance of the property. Not to say a part-time property owner/operator couldn’t provide a similar level of service, but the right property management professionals are able to make a significant difference in the following ways:
- Reduced Risk. A large part of being set up for success means knowing and understanding the laws that govern rental property, in your area. For the Charlotte area that means complying with local Mecklenburg county, North Carolina, and federal laws and regulations. On top of that, these laws are subject to change and can leave you open to complaints and even lawsuits. One mistake, or one bad tenant can put you behind thousands of dollars, all the while sitting on a vacant property.
- Better Tenant Screening. Tenant screening is one of the most important jobs of a property manager, and contributes significantly to the long term health of your property. There are many measures used to screen or qualify guests that help determine a good fit or a bad one. But be careful, anti-discrimination laws are in place to protect tenants and offer fair housing for everyone. These must be strictly observed. MyTripify adds an automated verification step to validate the guest identity and collect other critical information from our guests .
- Optimized Rental Pricing. Professional property managers are dialed into market trends, knowing exactly how each unit should perform. This takes the guesswork out of pricing your unit and prevents money being left on the table. Price your unit too high and vacancy will skyrocket, one of the largest expenses typically accounted for. Having a ‘set it and forget it’ mindset will undoubtedly leave you in one of the two camps we just mentioned. Supply and demand are constantly changing, and your competitors will be closely following the market to beat out their competition.
How do you know what to look for?
Good question! First ask yourself what is your ideal involvement in the property. Think about your skill set, and how much time you have to devote to your rental business. Also important to consider is the highest and best use of your property. Is that long-term leasing? Short to mid-term stays? Corporate rentals? The location, size, and property type all play important roles in the ideal rental strategy for your unit. This is another area a licensed property manager can be of some assistance. Reach out to a few management companies in the area and ask them what they recommend.
The Short-Term Rental Industry
Short-term rental units can be significantly more profitable than their longer-term counterparts. Couple that with frequent cleaning and inspections and your property is guaranteed to be in better shape for a lot longer. No more surprise water damage compounded with months and months of neglect. Seems like a no brainer, right?
While the benefits are clear, not every property is a good fit for the short-term rental market. Like we mentioned, an experienced property manager can help you determine if your property is a good fit. Reach out to MyTripify to see if your property qualifies. If it does, the vastly differing management requirements for this type of rental model need to be considered. A typical landlord is required to keep a property fit and habitable, while a short-term landlord is responsible for this and much more including constant marketing of the property, responding to inquiries, cleaning and turning the property over, communicating with existing guests and more.
Fair warning, self-management for a short-term rental is going to look considerably closer to a full-time gig rather than a side hustle. To give you an idea, on average It takes 8-10 hours just to list the property on the major travel channels, create house rules, optimize booking settings, and implement the necessary automations rules to improve messaging response time.
Management Models
Property Management can take on many different forms, offering varying lists of services for varying prices.
Professional long-term leasing services typically cost around 10% of the monthly rent, with a possible turnover fee which can be anywhere up to 50% the first month’s rent.
On the short-term side of things, management is typically more costly due to the more demanding nature of the job. On the bright side, the increased profit margin will outpace the added management costs with the right property in the right area. For turnkey management services you’re looking at around 20-25% of the gross rental receipts. Other companies will offer a trimmed list of services for a lesser fee. For example some companies only list and market the property, requiring the owner to communicate with guests, while cleaning and maintaining the property.
Should you use a property management company?
There is no one size fits all and not every property will be a good fit. Each owner must think about their ideal level involvement, and what that commitment means. Also consider is this the best use of your time? Should you reinvent the wheel, or is your time more valuable somewhere else.
Most property owners end up with a management company unless they plan on working on their rental property business full time. After all, creating a successful rental property business requires navigation around many different laws, regulations, and industry standards. The final decision to embark on this journey alone is yours to make.
MyTripify is a property management firm located in Charlotte, NC specializing in short-term rental properties. Our turnkey management services allow our owners to maximize their passive income while fully protecting their most valuable assets. If you or someone you know owns a property in the Charlotte area, reach out here and we can provide you with a free estimate along with more detailed information on our services.
We wish you the best of luck with your rental business!
Ryley Beaumont
MyTripify
(704) 286-6994
Ryley@MyTripify.com