A Landlord’s Guide to Saving Money
While you may want to be in complete control of your rental units, the best bet is to sometimes bring in a property manager to run your apartments / buildings for rent. These property managers can add a lot of value to your new source of income, in ways most people do not consider. Here are the 4 main ways that a property manager can save you money in the long run.
Cost for repairs
When dealing with property managers who have been around for many years, one of the best way to save money is by using their personal handyman for all repairs. An average apartment unit will rack up a little over $3000 in annual repair expenses, and depending on the amount of properties you own, this amount quickly begins to add up.
This is where a property manager can save you a boat load of money. Most property managers watch over a ton of apartments / rentals, so with the amount of work to give out to a single handyman, these laborexpenses drop as much as 30% lower than an average estimate from a handyman. This could be the difference in being able to afford top of the line products, to the basic standard versions (Example: purchasing standard off-white dryfast foam, compared to superior spray dryfast foam).
The other bonus to this, is besides the great discount in labor, the handyman always puts in his best work each and every day. The best feeling in the world for a handyman is consistent work being handed to them, in a profession that does not always have that luxury. This keeps the quality of work high, as well as the estimated expenses low. The last thing this handyman wants to do is inflate a quote, only to have it checked by the property manager and then relieved of his duties.
Vacancy of your rental units
An average owner trying to rent their own place takes about 60 days to find a reliable tenant. With a property manager, the vacancy of their apartments usually last less than 30 days. Due to their vast network of advertising venues, as well as a faster, more efficient screening process; property managers can fill up empty rooms quick.
It is not hard to see a property manager being worth at least one month’s rent, per unit you own, due to the fact that these property managers can usually fill the vacancy in less than 30 days. If your average monthly rate is $1200, and you own 10 separate properties, the savings alone in each vacancy that occurs is probably worth the fee the property manager is asking for.
Advertising
This is a very important thing to consider when hiring a property manager. If you have a ton of vacancies, or have just opened a new building, hiring someone to fill up all the rooms is an important task.
Property managers usually have discounted rates in specific advertising venues. Maybe they advertise so much in the newspaper that they get a lower rate. Same deal for local magazines circulating out there on rental properties. Seasoned property managers have connections with all of the various methods marketing your property, and can stretch your advertising budget as far as it can possibly go.
One thing you should be aware of, is most property managers do require a tenant bonus fee every time they place a new tenant in one of your properties. This fee can range from a few hundred dollars, to as high as a single month’s rent. Keep this in mind when opening up a new string of apartment rentals, as you may not see money coming in as quickly as you had planned.
Maximum Rental Value
Local property managers know the values of the area. They know how high tenants are willing to go for specific features and the location of the apartment. Having these property managers sit down and compare your rental units to others that they manage in the area, can provide a very accurate picture of what the monthly rent should be.
This saves, and creates, more money for you as the owner. Instead of setting a price at just the average price of nearby rentals, you can now maximize your returns by comparing this rental to other similar rental layouts (ex. one bedroom, two bedrooms, how many baths, etc…).
This tiny step is one that many inexperienced owners overlook, while this little bit of extra research could easily be adding a few extra hundred dollars a month in rental income. Don’t forget, that is a few hundred dollars extra per unit. So especially those with more than 5 rental properties, this could be a fair amount of income being forgotten.
While there are many other ways that property managers can save money, these 4 items listed above are some of the most common ways to maximize the profit of your rental properties. Take your time in hiring a property manager and start raking in that extra money!
Category: Business, Housing, Saving Money
