Below is an article I put together for a presentation last evening in Campbell River with Savannah "Rich Mom" Ross, organized by our sales representative George Roach. I borrowed very heavily from the website acknowledged at the bottom of the article, added a bit of Canadian content and edited a few things, but otherwise, major thanks to nolo.com for the article.
What Does a Property Management Company Do?
Management companies deal directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, routine and mandatory inspections and, if necessary, pursuing evictions. A good management company brings knowledge of legislation affecting Landlords and experience in dealing with tenants and should help you avoid some of the pitfalls of being a Landlord. A management company is an independent contractor, so you avoid becoming an employer.
Property management companies can be a huge asset to your rental portfolio business. Here are some points to help you decide if hiring a property manager is right for your business:
When Should You Hire a Property Management Company?
You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you're likely to benefit from a management company.
You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar.
You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property. Consider whether you want to deal with maintenance and repair requests or rent collection in the case of delinquent tenants. Management companies can be a tremendous help when it comes to pursuing litigation or evicting tenants that do not pay. Rental companies collect their fees from rental charges, so if the rent doesn’t get paid, neither do they.
A management company will also make sure local and provincial laws are followed. Residential tenancy laws in BC put the onus on the Landlord to use the proper forms and follow the proper procedure. For example, the tenant may be entitled to return of the damage deposit, even in a case where damages are evident, if the proper procedure has not been followed.
Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote to your business, especially if property management isn't your day job. And if you prefer to spend your time growing your business, including searching for new properties, arranging financing for renovations, or changing your business structure, then a management company may be a good way to spend your money.
You can afford the cost. Hiring a property management company is an attractive option but of course there are fees. When interviewing companies, expect to hear quotes ranging around 10% of what you collect in rent revenue plus tenant placement fees and other possible fees. Make sure you ask about other fees, as some property management companies charge administration fees for writing cheques, providing statement, or organizing maintenance to name a few. Weigh and measure the ‘opportunity cost’ of doing the work yourself rather than working at your day job or spending time with family and friends.
You're suddenly inundated with management tasks. If your business is growing, at some point you may find that you need a substantial amount of help to manage everything properly. At that point, it might make sense to hire a management company.
You don't want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You'll have to handle payroll and deal with a host of other legal requirements and considerations. But, because a property management company isn't your employee (it's an independent contractor), and neither are the people who work for the company, by using one you avoid the hassles of being an employer.
Regardless of your decision, the final responsibility for your property rests with you. Make sure you read and understand the Residential Tenancy Act of British Columbia, or whichever jurisdiction your rental properties are located. Remember, virtually every action you take as a Landlord requires documentation, so if you’re not sure which one to use, contact the Residential Tenancy Branch. If you decide to manage your properties on your own, make sure you have full understanding of the regulations and legislation. If you hire a property manager and you don’t understand a document or action that your property manager recommends, ask for clarification.
Owning a rental property can be very rewarding both financially and psychologically. Everyone needs a place to call home, but not everyone wants to purchase or is in a financial position to do so. Owning investment properties and providing safe, clean housing for others is a valuable enterprise for our society in addition to being personally rewarding.
Residential Tenancy Branch of British Columbia http://www.rto.gov.bc.ca
CENTURY 21 Arbutus Realty – Property Management www.bestrentoptions.ca
BC Landlords Association http://bclandlords.ca
Edited from information at: