Third Party Property Management Pays For Itself
Having a third party to deal with delinquency and tenant evictions alone will allow professional property management companies to pay for themselves. There are many heated debates about the value of third party professional property management. Most green, but even some experienced, landlords insist on managing their own rental properties, and argue that it helps them save money. On the other end of the scale, busy professionals and sophisticated investors would rarely ever even dream of self-managing their real estate portfolio. DIY management, may not be a money saver, but it can feel like a good fit for those that enjoy do-it-yourself, and being a hands on landlord for other reasons.
For those still struggling with the math, here is one single factor which illustrates the benefits of hiring a professional property management company:
Dealing with Delinquency & Evictions
Dealing with tenant delinquency and evictions can be an expensive minefield. Handled well, it can be relatively painless. Amicable win-win scenarios can be carved out – regardless of the circumstances. Dealt with poorly, these situations can rapidly escalate into nightmare scenarios. The improper handling of an eviction can ultimately drag down an entire rental property portfolio, destroy real estate businesses, and even result in personal bankruptcy.
On the surface, dealing with late payers and evictions can appear very simple. In fact, nine times out of ten, these issues can be remedied with a calm conversation, a little negotiation and some timely notices. Unfortunately, it is that one out of ten than can really be a major problem. Sadly, despite best intentions and efforts, landlords can make little mistakes which end up turning out to be major blunders.
10 Silly DIY Landlord Mistakes that can Cost Serious Money
- Poor record keeping
- Not being aware of when rent can be denied, partial payments should be turned down, and when rent must be accepted
- Failure to attempt a soft approach first
- Failure to maintain good relationships, and build tenant loyalty from day 1
- Using the wrong notices
- Incorrect information on forms and notices
- Not keeping up with landlord – tenant laws
- Not realizing tenants may have better lawyers
- Not realizing tenants may be better educated and have more experience than them
No matter what landlords are trying to achieve, and how right they are, it is critical to have a better appreciation for how savvy renters are today.
Today’s Super Savvy Tenants
Today’s renters are far better protected, educated and prepared to defend themselves. They are more experienced as tenants. Many current renters have been property managers, Realtors, and landlords in the best and may know the law and how to use it far better than their existing landlords do. They have access to Google and the same online real estate forums and lawyer Q&A sites rental property owners and investors do. They might even be reading your online comments right now.
Many renters have prepaid legal services on call, and great attorneys. While not wanting to be malicious, they certainly can be, especially when they feel they are being done wrong. After all, they are trying to keep a roof over a family’s head.
The Consequences of Poor Property Management
Imagine a scenario where, through no major fault of either party, the rent isn’t presented for a couple weeks past the due date. Yet, the landlord rushes to hand off an eviction notice full of erroneous information. The renter will no doubt feel threatened, especially if they have young children at home. Unless a calm, logical and objective discussion can be had quickly, things are likely to spiral out of control.
At best, this will likely result in no more rent coming in, while the renter looks for somewhere else to move. Many will have the grounds to sue landlords and stay rent free for months, and may even claim damages from the landlord. All of this while using the money which could have been paid in rent, against the property owner.
All but the most ethical tenants are going to want to make the landlord pay. In addition to holing up in place for months or more, this can mean trashing their reputations online and in the local community.
The Advantages of Professional Property Management
Specific to delinquency and evictions, professional third party property management provides a partner who is on top of constantly evolving landlord-tenant law, provides a buffer from liability, harm, and stress, and can help to avoid these situations in the first place.