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Home / Articles / Property Management / Increase Your Real Estate Profits – Use A Property Management Company

Increase Your Real Estate Profits – Use A Property Management Company

October 1, 2016 By Jorge Vazquez

Real Estate Investing ProfitsReal estate investors can increase their profits by using an experienced property management company, which also allows them to continue meeting the needs of people choosing to rent a home.

We assist clients all the time, as real estate wholesalers, by recommending property management companies that can increase profits through effective management of investment property. So in this article, we share our experience by reviewing 8 benefits of using a property management company, while also sharing information from an article by Jordan Muela.

#1 Property Management Yields Higher Quality Tenants

Real estate investors generate higher profits when their properties are leased to higher quality tenants. Typically, these tenants:

  • Pay on time.
  • Abide by the terms of the lease.
  • Often renew their lease.
  • Seldom terminate their lease early.
  • Don’t engage in illegal activities on the property.
  • Don’t abuse or destroy the property.

Therefore, a property management company that avoids problems by carefully screening applicants, increases the investor’s profits over the long term.

#2 Fewer Legal Problems

Landlords hate dealing with legal problems, mostly because of the time and expense required to resolve issues in court.

Effective property management companies minimize the risk of legal action against the landlord, because of their knowledgeable adherence to local, state, and federal laws.

And because they carefully screen applicants to avoid potential problems, while working to detect situations early that could become issues in the future, property managers can positively impact a real estate investor’s bottom line.

#3 Shorter Vacancy Cycles

The longer a rental property is vacant, the less profit it generates. Using a property management company that quickly turns vacant properties can be the difference between generating a good profit and losing money.

Here are 6 ways a property management company can shorten vacancy cycles:

  • Use property management software to bill tenants direct for utility bills, thus avoiding a delay in turning a property due to a delinquent tenant not paying the utility company.
  • Perform maintenance and repairs while the property is occupied, reducing the time to turn the property.
  • Quickly clean and repair vacated properties.
  • Make property improvements to attract tenants.
  • Competitively price rental properties using area rental comps.
  • Maximize the advertising budget to quickly generate prospective tenants.

#4 Better Tenant Retention

When a tenant vacates a property, the land lord incurs the expense of cleaning, painting, repairing, etc. the property. Then, there is the expense of leasing the property to a new tenant.

If tenants renew their lease year after year, rather than having to be replaced with a new tenant each year, the property expenses are lower and profits are higher.

For example, a rental property with 2 tenants over 5 years, compared to having a different tenant each year, can potentially produce 300–500% more profit, as a result of cost savings.

As a result, real estate investors who use property management companies that increase tenant retention, significantly increase their profits through cost savings.

#5 Superior Rent Collection Process

The best property management companies use an online management system that also provides a way for tenants to pay rent. This allows the management company to expedite the rent collection process, and immediately address issues.

Higher profits result from using an expert property management company to collect rent, because there are fewer late payments, and immediate action is taken to resolve problems when tenants miss their payment date.

#6 Lower Maintenance and Repair Costs

A good property management company is able to increase profits for investors by either using in-house staff to do a great deal of the maintenance and repairs, and/or having superior relationships with contractors to keep costs low.

Property management companies also increase profits by implementing a planned maintenance program that decreases repair costs over the long term.

Furthermore, well maintained properties result in higher profits by increasing tenant retention and shortening vacancy cycles.

#7 Increased Property Value

The maintenance of investment properties is very important to preserve value, keep expenses low, and have the leverage to charge top rental rates. In addition to this, good property management companies also add value to properties though forced appreciation.

Forced appreciation occurs when a rental property increases in value as a result of actions taken by the owner.

The best property management companies make suggestions to property owners about improvements they can make to force appreciation, which results in a higher property value, higher rental rate, and increased profits.

#8 Personal Benefits for Owners

Using a professional property management company also has personal benefits for property owners.

Most of all, property owners are freed from the day-to-day grind of managing rental properties to pursue a more lucrative career. Property owners are also freed from the stress associated with property management, while also free to travel without being tied down to their rental properties.

To learn more about the benefits of property management, review Jordan Muela article in ManageMyProperty.com.

Graystone Investment Group

Graystone Investment Group is an experienced Investment Group, wholesaling single-family and multifamily investment properties in metro Tampa Bay.

Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.

To learn more about profitable real estate investments in the Tampa Bay area, fill out our Investor Profile or contact us direct.

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