Benefits and Drawbacks of Property Management

Property management deals with maintaining, marketing and accounting the property of owner with the help of rental management companies. Property management mainly includes management of personal property, equipment, tooling and physical capital assets that are acquired and used to build repair and maintain end time deliverables. Property management is the liaison between the ownership and the actual tenant. Property management provides buffer for those owners who desire to distance themselves from their tenant constituency.

Owner has to consider that whether he is prepared or not to hire a property management company as it is a major decision related to his property. There are some benefits as well as some drawbacks of the property management companies.

• Benefits:
  
  
  • Increased revenue:

A good advertisement has access to larger pool of potential renters. A property management company has a better understanding of the local rental rates, putting them in a position to maximize the amount that can be charged per property.

• More free time:

Once the property management company is allowed to take care of the owner’s property, the owner has free time in their hands. The property management company becomes the owner’s one point of contact for all things related to their property, eliminating the need to juggle a number of different vendors and services.

• Reduced direct costs:

Property management companies are able to perform preventive maintenance, reducing the direct costs to the property owner.

• Drawbacks:
  
  
  • Cost:

Property management companies charge an owner between 3%-12% of property’s gross monthly rent to manage it. Additional charges can also be charged for creating or renewing leases, performing maintenance and advertising vacant properties.

• Possibility of developing a bad reputation:

Most of the vocal tenants are unhappy with the property management companies and give bad reviews on the website of the companies. This develops a bad reputation in the market.

• Potential for inadequate record keeping:

In most of the cases Property Management Company is solely responsible for all the record keeping and if it does a poor job, the owner may be left with no proof if a tenant files a legal complaint.