Managing a buy-to-let property is not straightforward.
There are many tasks, laws and best practices to keep up with.
For some, outsourcing these is more efficient.
So, what does a property management company do?
What is a property management company?
A property management company provides support to a landlord. It makes your life easier when you rent out a house.
The company usually offers a wide range of services. The ones you receive depend on the level of service you pay for.
If your portfolio of properties is small, you may feel capable of managing it yourself and being a good landlord.
But once it gets larger, it could be tricky – especially if your properties cover a wide location range or you have a job. (Of course, you could even hire multiple property management companies.)
What does a property management company do?
Not all property management companies do the same things. However, generally speaking, the list below covers their primary tasks.
1. Marketing
Finding tenants often requires marketing across multiple channels, including websites, brochures, etc.
Good photos and compelling descriptions need to be created for rental listings. And the property needs to be staged for viewings.
Property companies often also have a network to call on for tenant recommendations.
2. Vetting
There’s a careful art involved with selecting tenants.
It’s not entirely random whether they’re well-behaved or nightmare tenants.
Vetting tenants correctly and looking for warning signs increases your likelihood of success.
Property management companies have experience in this.
3. Collecting rent
Collecting rent can be time-consuming. You’ve got no guarantee that your renter will always pay on time.
And in this difficult situation, contacting them about it can be awkward. It may get confrontational, and you could need a strong knowledge of the law.
Property management companies can handle this. They will be proactive with your tenants to stop missed payments.
And if a payment takes too long, they can follow up with you. This includes following the correct procedures and using tactics likely to work.
4. Inspections and maintenance
This is a huge part of owning a property.
Your tenants may break fixtures or fittings (including appliances or furniture). Or they might just be there when natural ‘wear and tear’ occurs.
When this happens, your tenants can report it to your management company. They’ll arrange for an expert to review it and suggest a fix.
Then, all you need to do is sign off on the payment. There’s no time or expertise needed on your end.
Property management companies can also manage the inventories related to these at the beginning and end of tenancies. And inspections required in between.
5. Deal with contract renewals
This is one of the less exciting parts of being a landlord.
Getting the paperwork together and ensuring sufficient consideration for ‘break clauses’ and the like, is time-consuming and complicated.
Property management companies handle this for you.
6. Negotiate rent rates with your tenants
Unless you work in sales, you will unlikely have much negotiation experience.
That’s where your property manager comes in. They can convey your wishes and get the best deal possible.
This involves negotiating on price, including add-ons or amendments to the contract.
It also saves you from having to hold these uncomfortable conversations yourself.
7. Evictions
Evictions can be complicated and time-consuming.
There are set processes to follow (depending on the type of eviction).
Property management companies can handle the communications and paperwork involved.
How much do property management companies charge?
Most of the time, property management companies charge as a percentage of your rental income.
A standard package is usually around 10% of your rent. So, if you charge £1,500 per month, you’ll pay around £150 monthly to the property management company.
Are property management companies required for a block of flats?
No. A landlord is never required to hire a property management company, regardless of the type of flat they rent out (or whether it’s in a block of flats).
Advantages of hiring a property management company
Saves time
You can save massive amounts of time by hiring a property manager.
This professional can handle all communications and make regular inspection visits.
You only need to give the ‘thumbs up’ for actions. You don’t need to research and do them yourself.
Reduces stress
Being a landlord can be stressful. If you want to avoid this, you can do it.
And a property manager helps with that. Especially relating to rent negotiations or contract disputes.
Improves tenant selection
Although a management company can’t guarantee an excellent tenant, they can improve your chances.
They’ll have experience with the standard ‘red flags’ and can look out for these.
This has a direct financial benefit because payments are more likely to be made on time.
Disadvantages of hiring a property management company
Fees
Property management companies can eat into the profit landlords make.
In some circumstances, being a landlord becomes less profitable. For example, during economic downturns or after new laws favouring tenants are made.
When these occur, property management fees might make being a landlord not worthwhile.
(In these, it can be worth considering selling your tenanted property.)
Mixed results
There’s no guarantee that you’ll get an outstanding service.
Like with all professions, the level of service varies amongst different property management companies (and different employees within them).
Make sure you do your research to find the best company possible.
Reduced control
You could give your property manager permission to do things without checking and keeping a property key. This reduces your daily control.
Outsourcing tasks to them can feel stressful if you’re used to doing everything yourself.
Remember that you can get your management company to run everything past you first.
