How Can a Property Manager Save You Money - Article Banner

We expect that you’re investing in real estate because you want to earn money.

Your job is to look for ways that you can earn more and spend less on your property. This might be adjusting your rental value to meet the market or making some cost-effective upgrades and improvements that will make your property more competitive on the market. Perhaps you can pay off your mortgage faster so you’re earning more cash flow.

A great way to save money while increasing what you earn is by leveraging the expertise and resources of a property manager. 

If you’re not currently working with a property manager, you could be facing a huge opportunity cost. 

When you manage your own rental property, you spend a lot of time, and time is money. 

When you manage your own rental property, you also miss some of the savings that professional managers can provide. 

It seems counter-intuitive, maybe, since professional management companies charge fees for their services. However, those management fees are tax deductible. And, if you talk to most experienced investors, you’ll find that property management more than pays for itself. 

Here’s how.

Rental Values That Reflect the Market

Earning more rent will always save you money. If your rents aren’t at market level, you’re losing money every month. And, it’s harder to catch up. Every time you renew the lease agreement with the tenants who have grown comfortable paying less than what your property is worth, you’re selling yourself short. 

Maybe you’re not raising the rent at all, which is another potential problem.

You never want to price your rental home at below market values, because it leaves money on the table. Attaching the right rental value to your property impacts cash flow, ROI, and how quickly you’re able to find and place a good tenant. 

A lot of self-managing landlords aren’t even sure where their best rental value is likely to land. It’s hard to judge what you should be asking for in rent. You’ll need to compare your property to similar rental homes in your neighborhood. Where can you find that data? 

Property managers have it. The data we collect and analyze is far more reliable than using Craigslist or Zillow to estimate what your rental property is worth. We can compare your property to the competition and settle on a rental value that’s both competitive and profitable. 

Lower Vacancy and Turnover Costs 

With better pricing, you have less vacancy. 

Good tenants are educated. They’re not going to pay more than they have to, no matter how much they love your rental home. 

When you’re working with a professional management company, you’re less likely to face long vacancy times. As you know, this translates into real savings because every day that your rental property is vacant is a day you’re losing money. 

There are also material risks to a vacant home. It’s a target for thieves and criminals who may want to steal appliances. With no one living in the home, there could be a maintenance emergency that goes undetected. 

All of these things are costly, and that’s why it’s so essential to avoid long vacancy periods. If you’re managing on your own, you might struggle to make time for proper marketing. Maybe you can’t manage to meet tenants to show your property. Working with a property manager, you can access a lot of leasing expertise that reduces your vacancy risk and cost. 

Let’s not forget turnover. 

Turnovers will also be less of a financial risk. A good property manager will have a tenant retention plan in place designed to keep your current tenants happy and renewing their leases year after year. If you do have a tenant moving out, we’ll be able to clean, repair, and prepare the property for a new tenant in far less time than if you were doing it on your own. 

High Quality Tenants Earn You More

Are you attracting and placing the best possible tenants? 

This is important, because bad tenants can cost you a lot of money. 

Property managers also save you money by placing better tenants. 

Unqualified tenants can lead to:

    • Late rent.
    • Unpaid rent.
    • Eviction.
    • Lease violations.
    • Lease breaks.
    • Criminal activity.
    • Property damage.

All of these issues create additional expenses for you. Why waste your time chasing down late rent or threatening eviction? Do you really want to confront your tenant about the unauthorized Pit Bull that is terrorizing the neighbors? 

Property managers protect your investment and your earnings by seeking out and screening the best possible renters for your home.  Your property management partner will have fair, consistent, and legally compliant screening systems, marketing strategies, and lease documents. 

Leverage a property manager’s experience with on-time rent collection and lease enforcement. 

You’ll be surprised at how much money you can save when a good tenant is in place. It contributes to higher earnings and a better rental experience altogether. 

Vendor Relationships Lead to Cost Effective Maintenance 

Maintenance costs are going up, as you have surely noticed. This is due in part to inflation and the rising costs of all materials, supplies, and products. Labor is more expensive, too. 

While professional property managers cannot do anything about rising costs, we can help you keep those costs contained. Our maintenance policies are generally geared towards preventative maintenance. This cuts down on those expensive emergency repairs. It protects the condition and value of your asset. 

More importantly, we have a great team of vendors and contractors who offer us their best rates when we call them for help. An independent landlord won’t get much of a discount when they need plumbing work or landscaping. 

But, property managers provide vendors with a large volume of work, thanks to all the rental homes we manage and maintain. 

That loyalty results in better pricing. A good property manager will pass those savings on to you. 

Save money on maintenance by working with a management company to handle repairs, renovations, and routine work. Our list of preferred vendors will keep costs manageable, even while the quality of work remains impressive. 

Avoiding Legal Mistakes With Your Rental Home

Do you know the difference between a service animal and a companion animal? 

Are you familiar with the Fair Housing Act and the Americans with Disabilities Act? What about the Fair Credit Reporting Act? 

There are numerous state, local, and federal laws to know when you’re renting out a property. If you’re not following a consistent screening process, you could find yourself responding to a fair housing complaint. If you don’t understand the timeline for returning a security deposit, you could find yourself in court, facing steep penalties. 

It’s not enough to simply know the laws. You have to comply with them. This can be difficult for a lot of landlords; you’re likely too busy to attend classes and conferences that protect you from legal risk and liability. What happens if a tenant’s guests fall down the stairs outside of your property? Who is responsible for a tenant’s dog attacking a neighbor? 

Property managers not only understand the laws, we protect you from violating them. Most legal mistakes are unintentional, but recovering from them is always expensive. Don’t put yourself at risk. Get some support and advice from a property manager, whether you’re trying to evict a tenant or even hold them accountable to their lease agreement. 

Saving Money on Tax Deductions 

Finally, your property management fees are tax deductible. This will save you some money when you’re reporting the income associated with your rental property at tax time. 

There’s more to your tax situation than the tax deductible property management fee. You’ll be able to access a number of tax benefits when you rent out a home. If you’re not working with a management company or a professional accountant, you might not know what you’re missing. Some of the most common tax benefits for rental property owners include:

    • Depreciation
    • Deductions on professional fees like property management, attorney fees, and real estate commissions
    • Deductions for maintenance
    • Deductions for mortgage interest

Make sure you’re taking all the tax benefits to which you are entitled. Your property manager will offer additional tips on how to best position yourself at tax time, whether it’s recommending a 1031 exchange or showing you where you can save extra money on deductions and tax breaks. 

The idea that professional property management costs you more money is not entirely accurate. With the right property management team, you can save money on expenses associated with your rental property and earn more in both the short term and the long term. Make smart updates so you earn more money. List your home at the right time and in the right places to attract a wide pool of tenants. 

Lean on the expertise and leadership of local property managers. 

tax computationsIf you’d like to hear more, please contact us at Stripe Management. We work with owners, investors, and both residential and commercial properties in Prince George’s County, Montgomery County, Washington, D.C., and anywhere in the DC metro area.