Relevance Of Using A Property Management Company

When a real estate investor or property owner does not want to deal with the headaches

involved with leasing, tenants, or maintenance, they often hire a company or an individual to act as a property manager. Hiring such an entity involves a written contract specifying the duties and obligations of both the owner of the real property involved as well as the company or person responsible for managing it.

Companies performing those services charge a fee, typically a percentage of the monthly rent for that dwelling. In return for the agreed upon amount, they handle leasing, negotiating with prospective tenants, collecting rents, repairs, maintenance, make ready when a unit is vacated, and any other aspect involved in the day to day operations, as well as responsibility for all aspects of a tenancy going smoothly.

The most common users of a property management company are out-of-town owners of real estate. It is extremely difficult to successfully handle all aspects of management when someone is not in the same town, or at least in the near vicinity of the property in question. Logistically, it is usually not a feasible option. For investors or owners who are in the same general location of the real estate that they own, it simply depends on how involved they want to be, if they have the time and resources to handle all aspects involved, and if they feel like hiring an individual or company for that purpose is an expenditure they are willing to make.

When employing a property manager, a separate bank account must be set up to handle all relevant expenses. Rents and security deposits will be deposited into that account and maintenance, repairs, and leasing costs deducted from that account. If it is an individual house, managed by a local real estate agent, for instance, then a bank account would typically be set up with both the owner and the agent's name and require only one signature. Real estate agents are prohibited from comingling the money of clients with their own money. Most company management accounts will be separate. How a written contract with them is structured is the determining factor in how money in an account is spent.

Use a reputable property management company. Read and understand obligations under any contract before signing. Many companies use a standard form drawn up by their own attorney. If a particular provision is not satisfactory, make certain that it is changed to something both parties are in agreement with and can sign off on.

Each property management entity works somewhat differently. If there is still a mortgage on the real estate in question, be it a single home, or multi-family dwellings, make sure that mortgage payments are made in a timely manner so that credit cannot be damaged. With larger investments, such as apartment complexes, it is often best to hire an on-site management team.

by: Christine Harrell

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