Property management deals with maintaining, marketing and accounting the property of owner with the help of rental management companies.
Property management mainly includes management of personal property,
equipment, tooling and physical capital assets that are acquired and
used to build repair and maintain end time deliverables. Property
management is the liaison between the ownership and the actual tenant.
Property management provides buffer for those owners who desire to
distance themselves from their tenant constituency.
Owner
has to consider that whether he is prepared or not to hire a property
management company as it is a major decision related to his property.
There are some benefits as well as some drawbacks of the property
management companies.
- Benefits:
- Increased revenue:
A good advertisement
has access to larger pool of potential renters. A property management
company has a better understanding of the local rental rates, putting
them in a position to maximize the amount that can be charged per
property.
- More free time:
Once the property management
company is allowed to take care of the owner’s property, the owner has
free time in their hands. The property management company becomes the
owner’s one point of contact for all things related to their property,
eliminating the need to juggle a number of different vendors and
services.
- Reduced direct costs:
Property management companies are able to perform preventive maintenance, reducing the direct costs to the property owner.
- Drawbacks:
- Cost:
Property
management companies charge an owner between 3%-12% of property’s gross
monthly rent to manage it. Additional charges can also be charged for
creating or renewing leases, performing maintenance and advertising
vacant properties.
- Possibility of developing a bad reputation:
Most
of the vocal tenants are unhappy with the property management companies
and give bad reviews on the website of the companies. This develops a
bad reputation in the market.
- Potential for inadequate record keeping:
In
most of the cases Property Management Company is solely responsible for
all the record keeping and if it does a poor job, the owner may be left
with no proof if a tenant files a legal complaint.
