Property Management Saves Time and Money; 5 Concrete Ways a Property Management Company Can Save Time and Money for an Owner
In this article, I will show you how property management can save the owner more than just the cost of the management fee. Let’s say we have a property that rents for $1500/month. As a San Diego Property Management company our average fee in our area is 6-10%. So, let’s use 8% of $1500 which is $120/month. I’ll show you how a property manager can save over $1200/year by using a professional in the business.
1. The first way a property management company can save you money is by maximizing rents. Property managers understand rental prices and what a tenant is willing to pay for a certain unit in a certain area. Property managers also have an edge on advertising and showing. They know all the right places to advertise and are available immediately to show properties to get them rented for the best possible price. On average a property management company can save at least $50/month over 1 year which is already $600
2. The second way a property management company can save you money is by minimizing vacancies. Your average owner takes about 60 days to fill a vacancy depending on the market of course. With a property manager, they average less than 30 days. Again, with an average rent of $1500, the professional saves you over 1 year $1500 from this one area.
3. The third area a property management company can save you money is by advertising. Property managers have discounted rates with websites and newspapers. They can usually save at least $150 in advertising over 1 year versus an individual owner.
4. The fourth area a property management company can save you money is through maintenance and repairs. Most property management companies have access to vendors at discounted rates. Our company saves as much as 30% the regular cost to an individual owner. For an average single family house the cost of maintenance and repairs over 1 year averages about $1200. With a 30% savings this saves the owner $360 over 1 year.
5. The fifth way a property management company can save you money is by finding a good qualified tenant through our screening techniques. Most property management companies have less than a 1% eviction rate because of the thorough screening procedures that they have implemented. The “bad apples” know that they can’t pass a property management company’s screening process so they rent from the individual owners and sell them on how good of a tenant they will be even though they have no credit, or no rental references, or no ID, or a lot of other excuses they use. This alone saves the owner the cost of eviction which in our area averages about $1,000, the cost of loss rent of about 1 month of $1,500, and the cost of repairs of about $1,500. This thorough screening process alone can save the owner $4,000!
Most owners only think about the management fee that they’re losing and not about these 5 areas that a property management company can save them money. With these average estimates above, a professional property management company can save them owner over $7,450 in year. And what was the cost of that property management company? Only $1,200 for the year. This would have saved the owner $6,250 by using a professional.
Image Credit: Flickr – o5com