The towns surrounding major cities tend to have lucrative real estate markets because these communities have considerable room for growth. Gilbert, Arizona, is no exception — in fact, it ranked as the second fastest-growing city in the United States. This town southeast of Phoenix has a rosy outlook because of its growing young population.
If you own one or more rental units in this community, consider streamlining your operations with a property management company familiar with Gilbert and other promising Arizona rental markets — such as Chandler, Scottsdale and Queen Creek. Although there are a few things to keep in mind when going this route, the trade-off is favorable enough to maximize your gains.
What Are the Pros and Cons of Outsourcing Property Management to a Third Party in Gilbert?
Hands-on proper management is nonnegotiable when investing in real estate. The only question is who should handle the heavy lifting. Weigh the pros of hiring a property manager against the cons to make a sound business decision.
Property Management Benefits
The benefits of using a property management company go beyond marketing, tenant screening and rent collection.
Nailing Marketing
Some property management companies collect payment only when they move a qualified tenant into a rental. It’s in the best interests of property managers to keep your unit perennially occupied.
Property management teams generally outwork self-managing landlords in market research and advertising. They pay attention to prevailing economic conditions and analyze the latest housing data, enabling them to determine competitive rental rates and lure quality prospects.
Reputable property management companies don’t undervalue the potential huge losses associated with vacancy. Your property manager offers sound, informed recommendations to ensure none of your rentals stay unoccupied for too long. These professionals know every trick in the book — from posting high-quality photos to executing the self-showing method effectively.
Tech-driven property managers like Mark Brower Properties optimize listings using tools like ShowMojo. This property management leasing automation platform gathers data, revealing actionable insights for adjusting listings’ details and keeping rental properties attractive as market conditions change.
Conducting Proper Tenant Screening
Good tenant selection is the key to long-term occupancy. These companies observe a meticulous vetting process. They have dedicated personnel trained to spot green and red flags in background, credit and reference check reports.
Managing Finances
Using a property manager helps ensure positive cash flow. A property management company collects and deposits rental payments like clockwork. It handles security deposits and deducts funds when necessary. Your property manager tracks incomes and expenses, ensuring your real estate investment in Gilbert, Arizona, meets your financial goals.
Property managers monitor vacancy rates, unlike landlords, who primarily focus on monthly rent and maintenance expenses. The loss associated with an unoccupied rental sitting for two weeks without moving at an overly high price is the same as starting the price 10% lower. Property management companies aim to increase turnaround time to hit occupancy rate targets and avoid vacancy loss.
Administering Maintenance
Proactively organizing property inspections and repairs requires foresight, mental agility, resourcefulness and a significant local contractor network. The more doors you own, the more logistically challenging it is — especially if you’re an absentee landlord.
Addressing normal wear and tear is relatively easy. Faded paint, minor wall scuffs and worn-out carpets aren’t a matter of life and death. Reminding tenants of their responsibilities helps keep rentals clean and in good shape.
Emergency maintenance is another story. The urgent nature of a prolonged power outage, flash flood, front door damage or break-in means you should be reachable 24/7 and ready to execute safety protocols to keep things from going bad to worse. Responding satisfactorily to emergencies isn’t always humanly possible, regardless of where you live.
In contrast, all crises are manageable for a cohesive property management team. Every property manager worth their salt has a curated list of local vendors. If a contractor is unavailable, a company can quickly send another to a distressed tenant’s rescue ASAP.
Reducing Tenant Turnover
Property management companies aim to delight tenants every step of the way. Their business depends on renters’ satisfaction, so property managers move mountains to convince agreeable tenants to renew their leases.
Complying With Regulations
Most self-managing landlords find keeping up with relevant laws and regulations overwhelming. Although you can memorize every rule you must follow in each situation, one mistake may get you sued.
Staying compliant is easier when you hire a property manager. The company’s staff is familiar with applicable local, state and federal housing laws and landlord-tenant legislation. The team uses this knowledge to filter out unwanted tenants, offer eviction support and maximize rentals’ profitability within the rules.
Property management companies can intervene to prevent potential discriminatory practices. Your property manager uses algorithms for screening, which weigh different means to legally vet applicants — such as income, rental history, credit and criminal history — and create the lowest risk for you without considering prejudicial factors.
For example, a property manager can reject applicants intending to smoke on the premises without worrying about repercussions. The Fair Housing Act doesn’t consider it a discriminatory practice because stains and tobacco stench can complicate maintenance and secondhand smoke is undesirable to neighbors.
Think twice about hiring just any property manager in the Grand Canyon State. Use one that explicitly serves landlords in Gilbert to comply with obscure ordinances. A provider of property management services strictly operating in Mesa, Tempe or Avondale may be less familiar with pertinent legislation enforced in other municipalities.
Property Management Drawbacks
The downside of third-party property management is additional expenses, less control and potentially incompatible business interests.
Paying Various Fees
Hiring a property manager increases your monthly expenses. Property management companies also charge extra for marketing vacant rentals and successful lease renewals.
While these fees raise your recurring expenses by three digits, they help reduce the overall cost of property management. Working with a property manager frees up your time and spares you the stresses of managing your rentals’ daily operations. It allows you to focus your resources on other matters to expand your portfolio and grow your wealth more quickly.
Giving up Control
Using a property manager means surrendering some decision-making to a third party. Micromanaging can help you understand the ins and outs of rental management at the beginning. However, it can affect your efficiency and profitability as your unit count grows.
Using a dependable property management company is critical for achieving success in real estate. Besides, what you lose in autonomy, you can gain in expertise. View a property manager as an executive-level business manager — a skilled supervisor who independently makes decisions based on mutually agreed-upon goals and ensures your rental operations work smoothly. However, if you feel you need full control over the property, you may be better off self-managing your rentals.
Dealing With Potential Conflicts of Interest
The financial interests of landlords and property management companies often clash. Unfortunately, most fee structures reward the property manager when things go poorly for the landlord.
For example, move-in fees for new tenants incentivize turnover, and hefty maintenance markups encourage damage repairs. The property managers who retain 100% of the late fees don’t feel as compelled to find the most desirable tenants and effectively collect rent since they financially benefit from the arrears.
Mark Brower Properties is different. We set reasonable, low fees to rent properties out and don’t have large maintenance markups. Plus, our company splits late fees with landlords.
Moreover, you can’t always expect your and your property manager’s ideas to align. For instance, your property manager’s maintenance or vendor recommendations may result in higher expenses on your part. Still, you don’t have to sign off on anything you disagree with. Check lease agreements and contractor contracts diligently to identify potential conflicts of interest and discuss your concerns.
Make the Right Choice for You
Although hiring a property management company isn’t necessarily a no-brainer decision, its positives outnumber and outweigh its perceived negatives. Review the features and prices of Mark Brower Properties’ management agreements to determine whether we’re an excellent fit.
