Spending Money To Make Money: The Benefits Of A Commercial Property Management Company
Posted on: 12 September 2016
If you have purchased property as an investment, it's important to calculate the cost of hiring a commercial property management company into your budget. Even if you manage your first property on your own, you will soon learn that taking care of a property on your own can quickly become a full-time job. If you already have a career and don't want to be a property manager, it's time to work with a qualified management company that can do the work for you.
What a Property Management Company Costs
The cost of a property management company will vary slightly from business to business, but you will basically be quoted between 5 and 10% of the rent that you collect every month to manage your properties. It's standard throughout the industry, although you can shop around until you find one that is closer to 5% than 10%. While it may not feel worth the money in the beginning, you will make up the cost by keeping your vacancies down.
Why Property Management Works for Investors
Consider that even if you work with a management company that collects 10% of your rent as a fee, you are still making money on your property and freeing up your time. If you collect $10,000 a month in rent, $1,000 a month is a big cut of your profits. But once you own enough properties to collect $100,000 in rent every month, you are making a much bigger profit for doing the same amount of work. In general, the more properties you have, the more necessary a property management company becomes.
Your Units are Only Profitable When Full of Reputable Renters
If you have full units but you are having trouble collecting rent, this can be a nightmare. In reverse, if you have empty units, you are losing money every month. A property management company has methods to screen renters, to collect rent, and to ensure that your investment is protected. When you don't want to stress about filling your units and interviewing potential renters, leave the work up to a management company.
You Don't Have to be On Call 24/7
When there is an emergency, you may not be able to respond immediately. When a management company like Bradley Scott, Inc. is in place, they will respond to emergency repairs and take care of the needs of residents without you. This gives you freedom from your property while maintaining it as an investment and not a full-time job.
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