As full-time landlords gain momentum, they often realize they could use a few extra hands to keep things organized. Some part-time landlords that have other work to focus on come to the same realization when they cannot put as much time as they would like into certain aspects of their landlord job.
Are you finding yourself in a similar position? Are you struggling to have the time or patience to find good tenants? If so, there is a chance you are making your job harder than it needs to be!
Property management companies can help you with a selection of management aspects in your business. Do property management companies find tenants? Can they simplify your workflow by removing some responsibilities from your to-do list?
Let’s take a closer look at how property management companies find tenants and what other benefits there are to using this type of service as a landlord.
A Table Of Contents For Tenant Management Company Services
- Do Property Management Companies Find Tenants?
- Services Provided By Property Management Companies
- Pros And Cons Of Using Property Management Companies
- The Search For A Tenant
Do Property Management Companies Find Tenants?
When working with a property management company, you can decide whether or not you want to choose a package or company that helps you to find tenants. Most property management companies have different packages and offerings; landlords like you can pick and choose what they’d like to use.
Services Provided By Property Management Companies
As mentioned, tenant management companies typically do more than just managing the selection of tenants. They also manage other aspects of the rental business, such as responding to tenant problems and collecting rent.
You have some choice in what types of services you would like to opt-in to. Generally speaking, however, these are the services that are offered by property management companies:
- Advertise the property
- Search for tenants
- Collect applications
- Screen and interview tenants
- Sign the lease agreement
- Collect rent
- Manage repairs
- Manage tenant complaints
- Manage turnover between rental periods
Some specialized rental management companies might have additional services; the only way to find out what any particular company offers is to check their website or ask them directly.
Pros And Cons Of Using Property Management Companies
When investing in any type of service provided or assistance in your business, you want to be sure it is worth the investment. Hiring a property management company to assist with your properties is no different.
Let’s take a look at the pros and cons of using this type of service; use this information to get a better idea of whether this service will work for your business.
Potential Pros
Fill Vacancies Fast
If you’ve been having a hard time filling your properties because you don’t have the time or resources to devote to finding the right tenants, hiring a property management company makes sense. They have the skillset, knowledge, and resources needed to find tenants for empty properties.
Market Rates
Management companies work with a number of properties in the area, so they will have a good idea of what market rate is for rental prices. They also have a good idea of expectations, so they can help you ensure your property is well-suited for rentals. Finding information through a property management company is one of the best reasons to use one.
Allows For Passive Ownership
Are your properties held through a self-directed IRA as income properties? If so, your involvement is legally required to be passive, and there are a number of things you will not be able to manage directly. Having your IRA hire a property management company can lead to more direct, efficient management of the property’s needs.
Variety Of Options
Using a property management company is not a one-size-fits-all situation. You can pick and choose which services you would like them to take on. A company could help only with tenant searches or they could take over a property in all ways except ownership. No matter what your needs are, you can find a way to use their services.
Possible Drawbacks
Limited Control
There are some decisions your property management company will take over doing for you. This means that, in some ways, you will have less direct control over your property. While this can be disconcerting at first, it isn’t necessarily a bad thing, and you can always ask that certain decisions always come to you for approval first.
Screening Process Differences
It’s possible the property management companies you consider working with have different tenant screening processes than you do. This means their selection criteria for tenants will be different, and that could lead to some tricky situations. Make sure to check about this before you hire any company.
Can Be Expensive
Depending on your profit margins after purchasing and renovating a rental property, it may or may not be in your budget to hire a property management company. In most cases, up to 10% of the annual rent will need to go to the company’s fees, though this will vary. Make sure your company’s bottom line can handle that difference in rental income.
When hiring a property manager, be sure to keep an eye out for these top five red flags:
The Search For A Tenant
One of the primary reasons some landlords look to enlist the help of a property management company is so they can get help finding the right tenants for their property. Searching for tenants can be exhausting, and some landlords don’t have the time due to other projects or businesses they are working on.
Regardless, choosing the right tenants is one of the most important parts of the overall rental process. When deciding to work with a property management company, be sure their tenant selection criteria line up with your own list.
What do property management companies look for in a tenant?
The answer to that question will depend on the specific company that you work with; most will also give you a chance to add in your own criteria.
Here’s how to make sure the property management company has the same ideas as you in mind before you hire them to do your tenant selection:
- Ask about their tenant screening process.
- Ask what types of credit checks they use.
- Ask how you will be involved, if at all, in the tenant screening process.
- Ask what their eviction rates have been like in the past.
- Ask how long vacancies typically last for their properties.
By asking these five questions, you will get a good idea of what to expect from the company in terms of tenant selection. As long as their screening process meets your criteria, you should be a good fit to try doing business together.
Make Sure They Are Compliant
One final thing that you will want to do is make sure that any company you work with is well versed in federal, state, and local tenant screening laws. There are restrictions on what information can and cannot be used to choose tenants. If a company you hire breaks these laws, you could still find yourself responsible for the fines and implications of doing so.
Be sure you choose a reputable company that will follow the rules to protect you both.
To Hire Or Not To Hire
Do property management companies find tenants for you, and are they effective at choosing the right kind of tenants?
These companies do help to find tenants for your properties, but there isn’t a single answer to whether or not the companies are going to choose the same tenants that you would choose. As long as you talk to them about the selection criteria, however, you should be able to come to an agreement about tenant selection that keeps both parties happy.
In the long run, it is up to you to decide whether or not you want to use a property management service to simplify your responsibilities or continue to manage things yourself. Some landlords love to be hands-on; others prefer to manage from afar. Consider what position you would like to take as you move forward with your process!