The decision about whether or not to hire a property management company to manage your investment properties is a difficult one for many owners. For some, they really enjoy the hands-on aspect of owning rental properties and don’t mind the extra time and effort they must put into ensuring its profitability.
For others, property management is just not something in their wheelhouse and they prefer to hire out the responsibilities to a professional so they can continue focusing on what they do best. Either way, you should seriously consider the potential benefits of partnering with a property management company, especially the efforts they take to help help you increase your net operating income (NOI).
How a Property Management Company Saves You Money and Increases NOI
Property management companies work for you. You are the client, and the property management company you ultimately chose should want to see you succeed just as much as you aspire for success. That means doing everything they can to increase your investment’s NOI by reducing expenses and increasing profitability. Here are a few ways a professional property management firm does just that.
- They seek only high-quality tenants to fill your units – Good tenants are more likely to take good care of your property and stay in it longer. Not only does this mean you may incur fewer expensive maintenance issues, but it also generally translates to a reduced vacancy rate. Fewer vacancies mean more revenue and less expense. It also means you save on turnover costs
- They ensure rent rates are in line with the market – Local property management companies are highly attuned to current real estate conditions. They’ll pull comps to see how your rent rates compare with similar properties and ensure that you are charging competitive rates.
- They standardize operating expenses (and make them the tenants’ responsibility whenever possible) – A property management company will tighten up your lease agreement so it’s clear who is responsible for what and will standardize how water, sewer and other utilities are charged. This can be one way to reduce the operating expenses you are responsible for.
- They optimize maintenance – Many property management companies have an in-house maintenance staff that can handle common maintenance issues. For those they can’t, they have established partnerships with local vendors that do quality work at a fair price.
Property management companies have the resources, skills and experience to increase your property’s performance while reducing your expenses, and though none of these actions above is particularly drastic, taken together, trend lines tend to steadily improve. That means not only does cash flow increase, but the NOI does as well – thereby increasing the value of the overall portfolio.
As you evaluate whether partnering with a property management firm makes sense for your investment, consider these benefits and don’t hesitate to ask us your questions. At RL Property Management, we take great pride in being able to help our clients improve their returns and look forward to helping you, too. Contact us today to learn more.