Real estate investors are principally concerned about one thing – their property’s bottom line. Whether they’re trying to maximize profits from a real estate investment or minimize losses for a home they couldn’t afford, one of the main goals is to keep expenses low without sacrificing their asset’s value. And when aiming to keep expenses to a minimum, hiring a property management company may seem like an unnecessary expense. However, hiring professional management for your rental property could actually save real estate owners and investors a ton of money and realize them higher rentals, both of which substantially increase return on investment. Let’s look at specifically how property management companies can drastically increase profits, lower expenses and improve property values in the long run.
The first, and maybe most important way that property management companies increase profits for real estate rental property owners is by preventing vacancies. Preventing vacancies greatly improves cash flow over time by ensuring that a property is consistently rented and, thereby consistently generating income. Good property managers not only get tenants, but also get qualified tenants. Tenant procurement is a specialized practice, best left to those with experience and the necessary tools to properly vet prospective tenants. A property management company, such as C.A.B Group, LLC in New Jersey, can help decrease the likelihood of evictions, nonpayment of rent and unruly and problematic tenants. A property management company can also quickly respond to tenant complaints and property maintenance issues, which, when left unaddressed, can turn even the best tenants into the worst tenants.
Property management companies typically have a structured process for collecting rent and other fees from tenants. This ensures timely and dependable cash flow for owners as well as proper management of security funds collected from tenants at the beginning of their lease. This allows owners to avoid legal problems with tenants and guarantees they will have accurate accounting records should any payment issues arise between landlord and tenant. A good property management company will also supply its owners with regular financial statements that can be provided to their accountant at tax time or used to evaluate the financial health of their property investment. C.A.B. Group regularly provides its owner clients with Owners Statements and can run ad hoc reports on anything from rental cash flow to property expense details.
Property owners must be prepared to spend 1 to 2 months rent on property maintenance issues annually. However, by hiring a property management company that is knowledgeable and budget-conscious when it comes to property maintenance, an owner can cut that annual figure in half. Lower cost maintenance and repairs can save property owners a lot of money, thereby increasing overall profits from their real estate investment. Furthermore, a company like C.A.B. Group, that also has an expansive and experienced construction division, can anticipate and stave off property damages before they occur by implementing routine smart property maintenance. An experienced manager knows that little inexpensive problems now oftentimes become big expensive problems down the road when not addressed immediately. A property management company with construction experience also knows certain things that can be done in the short-term to prevent large maintenance issues in the long-term. Quality work in a property helps keep tenants happy and encourages them to take better care of the property. A well-maintained property improves the long-term value of the property thereby increasing the value of the investment.