Updated August 19, 2020
Buying an income property can be a worthwhile investment that provides a steady form of income for years to come. However, in order to find success and profitability with your rental home, you will need to invest into your investment. Regardless of whether you own a single-family or multi-unit home, rental properties require a significant amount of work, effort, and patience.
The amount of work, time, and effort needed to effectively manage a rental can be daunting, but investing in property management makes it possible for you to make a profit without the stress.
With the expertise of a local Northern Colorado property management company, you can make the most of your rental property.
Let’s go ahead and dive into everything you need to know about hiring a property manager!
What Does It Cost to Hire a Property Manager?
Although it does come at a cost, hiring a property manager can provide a wide variety of advantages that will quickly make that cost a worthwhile investment. Often times, the mere thought of what that cost could be deters property owners from even considering property management. By taking the time to research what a reputable local property manager charges and understanding the advantages and benefits that come from it, you can decide if property management is worth the cost.
What does hiring a property manager cost? It depends on a number of different factors, but on average property management costs between 5 and 15 percent of the monthly rent. Some companies will charge a flat monthly rate, while others charge a percentage rate. The exact cost will likely be dependent on a number of factors.
Each individual company has its own breakdown of fees with some choosing to charge a flat rate each month and others opting for a rate that is calculated on a percentage scale. The best way to determine the cost of hiring a property manager for your individual rental is to contact a company directly to request a property assessment and quote.
What Factors Affect the Cost of Property Management?
Property management fees are often calculated following an assessment of the property and the services needed. Again, some companies simply charge one flat monthly rate and others charge a percentage of the monthly rental value.
Factors that could influence the cost of hiring a property manager may include:
- Type of Property: The amount charged will greatly depend on the type of property you own. There may be one price point for management of a single-family home or townhome, while the management of a multi-family unit or a commercial property may cost more.
- Size of Property: Just as bigger homes cost more to rent or buy than smaller ones, a bigger property could cost more in property management. Bigger homes and properties require a greater amount of work to keep up with and maintain making a higher cost reasonable to expect.
- Number of Properties: If you own multiple rental homes that you want to have managed, you will, logically, have to pay more each month.
- Age of Property: Older properties may require more maintenance than a newer property as appliances, flooring, paint, and more begin to age, fade or deteriorate. This requires property managers to stay on top of more to keep the home in good condition.
- Existing Condition of Property: If you have a rental home that has existing issues, such as damages, or is due for necessary updating or renovations, you may also expect the possibility of a higher fee.
- Services for Property: Some property management companies allow property owners a degree of flexibility in the extent of services they are hired to perform. If you simply want a property manager to handle marketing and rent collection, you will likely pay less than if you hire them to handle everything from repairs and yearly maintenance to evictions and lease renewals.
What Makes the Cost of Property Management Worth It?
To many, the monthly expense of property management may seem unnecessary. It may also seem illogical to pay for services that you could perform on your own. However, keeping up with the responsibilities of managing a rental property can quickly become time-consuming and overwhelming, leaving you burnt out, tired, and preventing you from making the most of your investment property.
Responsibilities You Can Hand Over to the Property Manager
With help from a trusted property management company, you can hand over landlord responsibilities and simply enjoy the income your rental property brings in. As a property owner, you have a lengthy amount of obligations in order to keep the house and your tenants taken care of. Some of the many responsibilities landlords have to rental properties include:
- Advertising to find tenants
- Property showings
- Processing applications, background checks, and lease agreement paperwork
- Collecting security deposits and monthly rent
- Routine, preventative, and annual property maintenance
- Performing or paying for repairs
- Paying property mortgage, insurance, utility bills, property taxes, and other costs
- Managing tenant concerns or issues
- Handling evictions when necessary
Reasons for Hiring Property Management
All of the above responsibilities can take up a lot of your time, especially if you’re not knowledgeable about landlord/tenant laws or how to go about doing background checks and other tasks. Hiring a property manager for your rental property can alleviate some of the stress you’re under and give you more time to focus on other things.
Here are a few of the tasks property managers can handle and why they’re good at doing them:
- Tenant Screening – property managers are able to complete criminal background and credit checks, employment and income verifications, and reference collections in an efficient manner because it is a part of their daily task list.
- Regular Maintenance and Repairs – Property managers work closely with vetted and insured vendors so that your property maintenance and repairs are done right, the first time.
- Compliance with Housing Regulations and Property Laws – A property management company has extensive knowledge to help you navigate and make sure you are in compliance with all the local, state, and federal housing laws and regulations.
- Knowledge of Local Rental Market – You won’t have to spend hours looking through classified ads, wondering what to charge for your rental because property management companies already know what the current market values are in your area. They conduct regular market research, so you can stay competitive.
- Rent and Deposit Collection, Late Fees and Evictions – Property managers have efficient systems in place to effectively collect payments on time. If tenants aren’t in compliance, they will charge appropriate late fees and handle the eviction process. This allows you to avoid the hassle.
- Financial Records – Property managers provide monthly expense and cash account statements, and manage deposit escrows, relieving you of the bookkeeping headache. They will also provide end-of-year accounting information that you can provide to your tax professional.
- After-Hours and Emergency Calls – To prevent the headache of late-night and emergency calls, a property management company has the staff to deal with the after-hours emergencies that pop up from time to time.
- Property Marketing and Advertising Expertise – As stated above, property managers conduct regular market analysis to ensure your rent is competitive. They have years of expertise and are able to ensure your property is rented in a timely and efficient manner.
- You Don’t Live Near Your Property – Not being in the same geographic region as your rental property can offer some unique setbacks. A property manager is close-by. They’re ready to address any questions or concerns that may arise that you are unable to deal with because you are across town, across the country, or on the other side of the world.
- More Free Time – This is arguably the most beneficial perk of hiring a property manager. Many landlords hire property management companies because they will act as a liaison on your behalf. That way you can spend more time doing what you want to do. With more free time, you can invest in more properties, and do what you were meant to do.
Should You Hire a Property Manager?
Now that you have an idea of the benefits of hiring a property manager, should you? Here are a few reasons the answer should be yes.
- You have limited time available to maintain and manage the home
- You have a full-time job outside of self-managing rental properties
- You own multiple rental properties
- Your properties are located in another city or state from your primary residence
- You do not want to be responsible for the physical tasks required to maintain and manage the property
- You don’t want to deal with finding and working with tenants
- You are unsure about the logistics of renting out a property including setting rental rates, drawing up lease agreements, performing tenant screening, collecting rent
- You don’t want to worry about advertising or marketing the property
- You don’t want to directly address problems such as emergency repairs, tenant disputes, broken lease terms, evictions, and more
- You want to get the most out of your income property
Now that you can see what these professionals can do for you, look back at the question of what does hiring a property manager cost. Even at the higher end of the scale, a property manager takes over so many duties that they are well worth the cost.
How to Prepare Your Rental for Property Management
If you’ve decided that hiring a property manager for your rental property in Fort Collins is the right move, you may be wondering what you should do to prepare your rental. The rental market across Northern Colorado is highly competitive, making it very important to do what you can to prepare your property for success.
Presenting your property in rent-ready condition will make it easier for your property manager to establish a fair rental price, create an effective listing, and fill the vacancy as quickly as possible. To help you get your rental ready for property management, here is a list of 12 actions to take to prepare your home and make it more desirable for tenants.
- Start with a Thorough Inspection
To get the most out of your investment, you must be sure that the property is in the best condition possible for your tenants. Take the time to go through the house and carefully inspect it, looking for any repairs or maintenance needed.
You might even consider hiring a professional home inspector who can offer you a comprehensive assessment of the condition of the property and provide you with a concrete list of concerns that should be addressed.
- Make Any Necessary Repairs
Be quick to address any potential, developing, or existing problems in the home. Whether it is a leaky faucet, burned-out light bulbs, a hole in the wall, or appliances that aren’t working properly, make sure that repairs are done as soon as possible and that they are done well.
- Change the Air Filters
Air filters are extremely important for the efficiency of the heating and cooling, but they also play a crucial role in maintaining the indoor air quality of the home. Before you rent your home out to new tenants, make sure to change air filters to prevent problems down the road.
- Change the Locks
Whether this is the first time you’re renting your home, or you’ve had previous tenants, change the locks on all doors and reset any garage codes. This provides tenants with peace of mind and reassurance that their home is safe.
- Have the Carpets Professionally Cleaned
Over time, carpet can accumulate a significant amount of dirt, germs, and allergens, which can affect the appearance of your floors, while also affecting how the home smells. For the best results, hire a professional carpet cleaning company to revive dingy carpeting.
- Give It a Fresh Coat of Paint
Paint is one of the most effective ways to transform or update the look of a home. To make your rental more aesthetically appealing, have the interior of the house uniformly repainted in a neutral color. A fresh coat of paint in a neutral color will revive tired and worn walls and provide a backdrop that makes it easier for potential tenants to envision their belongings in the home.
- Make Sure the House Is Clean
One of the biggest turn-offs for a potential renter is a dirty house. No one wants to move into a house that is dusty, grimy, dirty, stained, or covered in cobwebs. Whether you hire a professional house cleaning company or do the work yourself, make sure that the house is thoroughly cleaned from floor to ceiling.
- Inspect Doors and Windows
Make sure that every window and door in the home is sealed, locks properly, and has screens that are in good condition. This adds safety to the property, while also helping to prevent loss of heat or cool air and avoid potential problems with pests.
- Upgrade Outdated Fixtures or Appliances
Although it isn’t necessary, investing in newer fixtures or appliances can add value to the home and increase what you can ask for in rent. It should also help you avoid the cost of repairs down the road.
- Do the Yard Work
The backyard is an important feature for many potential tenants, while the front yard provides the first impression of the home. Take the time to mow the grass, pull weeds, refill mulch, fix sprinkler heads, trim branches, and any other actions needed to spruce up the appearance of your outdoor space.
- Notify Mortgage and Insurance Companies
Be sure that you contact both your mortgage and home insurance companies and notify them that you will be renting the home. You can adjust your insurance policy to a landlord specific one that will cover the condition of the home in the event of a disaster as well as cover loss or damage related to tenant negligence.
- Take Advice from the Experts
As you set out on your new business venture, take a moment to gather advice from those with extensive experience in the industry. A property management company, such as All Property Services, can provide you with key advice and tips to best prepare your rental.
Ready to Hire a Professional Property Manager?
All Property Services, Inc offers professional and reputable property management for Fort Collins, Loveland, Greeley, Windsor, and surrounding areas. Since 1986, we have specialized in providing superior property management services including administration and maintenance. Call us today to learn more about our rates and how we can help you make the most of your income property. We offer the highest level of service for property management in Northern Colorado.