Whether you’re looking for your first piece of investment property or you’ve managed your residential property for a long time, every investor needs to consider the benefits of having a professional residential property management company manage their investment real estate.
As someone who works for a property management company in Chico California, I interact with real estate investors all the time. One characteristic that I’ve found consistent with many great investors is they are shrewd. They look for the best deals. Before one dollar goes out of their pocket they ask themselves if this is a necessary investment. They aren’t playing games and they don’t make purchase decisions unless it makes the utmost sense to their bottom line.
Many times their retirements and their children’s inheritance is tied up in them making wise decisions, so every choice is weighed carefully before they pull the trigger. Here is why I believe professional property management makes the utmost sense when investing in real estate.
1. Save time and energy
Here’s what I’ve found to be true: In life you have to make wise choices not only with your finances, but more importantly with your time and your energy. If you think about it, life is made up of a series of moments of time. What you do with your time is essentially what you do with your life. Therefore, your decisions must factor in how much of your time will be invested in each real estate venture.
Too many first time investors focus solely on cap rates, ROI, and purchase price and totally disregard the time investment needed to manage the property for the life of the investment. These people are typically the ones who call me a year down the road stressed out and overwhelmed. Professional property management is able to give you a beautiful deal – a small percentage of the rent in exchange for more time and energy to be invested in your marriage, family, and community.
2. Leverage the expertise of professionals
Have you ever made a mistake? Obviously all of us have. Some are just dumb mistakes that cost us a little pride, others are large mistakes that can dramatically change our lives. When it comes to investment property, you’re dealing with thousands and sometimes millions of dollars. This is not the time to go to the school of hard knocks to get your education.
An African proverb says “If you want to go fast, go alone, if you want to go far, go together.” Winning with investment real estate is all about playing long ball and utilizing teams. You can be the person self-managing one or two properties, being a jack of all trades, and proud of how much money you save yourself, or you can be the person with more than 20 properties, all managing themselves while you enjoy the new American dream of being truly financially free. The only way you will get to the latter is by utilizing a team, and a great property manager will be a necessity.
Hignell Property Management has been in business for over 40 years, managed hundreds of properties, and seen multitudes of stories play out. We have an accurate formula for measuring credit worthiness; we know when we can trust a co-signer and when we need to pass. This experience is priceless and only comes with time and experience.
3. Get the best deals from vendors
Vendors aren’t dumb. They know if they can develop a good relationship with a property management company they will have an abundance of work. Typically, how they do this is through giving discounted pricing and excellent service. They know if they don’t do a good job, it could mean missing out on hundreds of other repairs in the future.
For us at Hignell Property Management, we actually have our own in-house home maintenance services, including plumbers, electricians, heating and air technicians, painting, cleaning services, and general construction. None of the rental property owners have to choose to use our company, but we always offer an hourly discount on all repairs and maintenance when they’re working on properties that we manage. Discounts and purchasing power like this give you an advantage when having to maintain your rental property.
4. Marketing services
Anyone can take pictures of bedrooms with their smartphones and post to Craigslist. A brief time spent perusing Craigslist and you’ll be able to see the difference between amateurs and pros. A rental property management company is going to take professional pictures and post them not only to Craigslist, but a whole host of other sites including Apartments.com, Zillow, Trulia and others.
We also own a dedicated site called HignellRentals.com that gets thousands of hits a month of local prospective renters looking for homes and apartments in Chico California.
As a property owner you want to rent out your property to the best tenant as fast as possible. The more eyes that see your property, the more likelihood you’re going to get a good tenant in a timely manner.
5. Grow your portfolio
I have friends that are quite proud of the fact that they can manage their own properties without a professional management company. The problem is, as smart and talented as these guys are, they will never grow their portfolio beyond a certain point. They may be able to manage one, two, or maybe three properties, but eventually they will run out of capacity. Some of us think we are the proverbial Superman who can handle anything on their own. While this kind of positive evaluation of ourselves can lend itself to great confidence, it can also be surprisingly limiting.
According to bestselling book The E-Myth, author Michael Gerber says that in every business there are technicians, managers, and entrepreneurs. To grow your portfolio of investments you cannot be all three. You must let technicians do the technical work, managers manage, and you need to focus on being the entrepreneur. There is so much more to say about that, but unless you have a team mentality, you will never grow your portfolio past a certain point.
6. Venture into the best markets
Hignell Property Management is located in Chico, California, a college town where investment property is huge. Every year we have tens of thousands of new college students who come into town that need a place to rent for 4 to 6 years. They aren’t picky and they don’t care about luxury laminate flooring or granite countertops. They pay premium rents for anything close to campus. Most owners are able to purchase rental units fairly inexpensively, and with minimal upgrades get a healthy cash flow from rents.
If the property is in the right location, you’ll always have a strong demand for your unit. If you live out of town, it can be very time consuming to drive to another city to interview tenants, do a walk through, or periodically check the exterior of your property (you want to make sure the students didn’t light their couch on fire on your front lawn, right?). Hiring a residential property management company allows you to research great rental markets like Chico, California and invest anywhere without having the pressure to take one weekend a month to check on your property.
7. Stay compliant with rental laws
When I first started working for Hignell Property Management it wasn’t long before I started to see legal issues pop up. Unfortunately, it’s common place to have renters threaten to sue us because we charged them for professional carpet cleaning when they left the unit.
Our company has seven different lawyers contracted with us, and they all specialize in a different area of real estate law. One of our property managers told me, “When I first started working here I hardly ever had to call for legal advice, now I don’t even have to look up their number because I have it memorized.” Yikes.
If you manage property you must know and understand the law. This is non-negotiable. Ignorance is not a defense when a renter takes you to court for breaking a law you didn’t even know existed. A good property manager will make sure you’re always in compliance with the law.
8. Freedom to do what you love
Managing your residential property for a long period of time isn’t easy. The reality is that it takes skill, knowledge, time, and energy that the average investor just doesn’t have. For most people, hiring a property management company is the best way to mitigate your risk of making some major mistakes. Every investor understands how to use financial leverage to increase their profit margins. When you partner with a property management company, you’re able to leverage finances, time, experience, knowledge, and manpower of seasoned real estate professionals with years of experience under their belt.
By hiring a residential property management company in Chico, California like Hignell Property Management, practically any investor can have a well-managed property while simultaneously freeing up time and energy to engage in what they are truly passionate about. So, get a hobby, travel the world, be an active grandparent, go live life, and set yourself free from the chains of managing your property.