Can I Still Make a Profit if I Use a Property Management Company?
This is a question we get all the time. After all, if you own several properties (or even just one that’s high-maintenance or far away), you may be considering employing a property management company. And while it’s true that a property management company is an expense, it’s still very possible to make a profit while employing one. Best of all, what you’re letting go of in money you could be making up for in service quality, convenience, and workload.
The trick to getting all the benefits of a property management company while still generating a profit? Shop around and do your research.
4 Things to Consider When Shopping Around for A Property Management Company
Figure out if a property management company is the right option for YOU
- Have a lot of free time
- Are handy around the house with routine maintenance tasks
- Can do basic accounting and bookkeeping
- Only have one or a couple of properties
- Have a fairly stable renting market
Then it may not be necessary to tag in a property management company. But if your schedule is crazy, your property list is never-ending, and you have the capital to swing management fees, then hiring a property manager might be a better fit for you as you scale your enterprise.
Run a few projections
Obviously, rent prices and your local market will greatly affect your profit and how many expenses your business can absorb. Areas with lower rent and little flexibility on pricing will have small profit margins, making hiring a property management company a more costly decision. Look back a few years and calculate the average rent increase the market could absorb to get a handle on this. Then project a few years into the future while factoring in the management expense.
Compare management fees and payment structures
Some property management companies will charge a flat rate, while others will charge a percentage of rental income from each property managed. Of course, there are pros and cons to both, so be sure to compare at least three viable management companies in your area and get a thorough sense of what makes them different from the competition.
Pick a property manager with a style and reputation you can get behind
Some telltale signs of a good property manager include:
- They have testimonials, case studies, and other social proof online and on their website.
- Their properties have few or no vacancies.
- All advertising for properties they manage is crisp, clear, and professional.
- They attract a large potential tenant pool.
- They know how to manage costs related to materials, repairs, vendors, contractors, etc.
When shopping around for a property management company, don’t be afraid to ask about things like this or ask for more information about their history and reputation. It’s your bottom line, after all!
Get Started with Block & Associates Realty
In summary, you can make a profit when you choose the right property management company for you. With our team of 11 full-time professionals dedicated solely to property management, we can serve as your eyes, ears, and local representative to ensure that your property operates efficiently and effectively.
To learn more about how our property managers can serve you, contact us today!