Investment property management is crucial to holding and maintaining a successful rental property. Managing a property on your own can be fearful, especially if you are new to the game or have multiple properties to keep track of.
A professional manager will handle your property’s day-to-day responsibilities, such as tenant screening, rent collection, maintenance, and eviction proceedings. Finding and hiring the right investment property manager for your property can give you peace of mind.
This guide covers the importance of having a professional manager, their roles, and how to find the right one for you. Whether you are a seasoned pro or just getting started in real estate, this guide will give you the tools you need to succeed. Let’s get started.
What Does Investment Property Management Mean?
A third-party contractor oversees and maintains industrial, commercial, or residential real estate in investment property management. Investment property management aims to ensure that your rental properties are running smoothly and generating income for you.
The more efficiently you manage your rentals, the more money you’ll make. Investment property management companies help owners by taking care of their properties and tenants while they are absent.
An investment property manager will take care of all these tasks for you so that you don’t have to worry about them.
They will inspect your home regularly to ensure there are no problems with it, collect rent from tenants every month, provide any issues with repairs that are resolved as quickly as possible, and even help find new tenants if needed!
Investment property management can be beneficial for both landlords and tenants. Landlords benefit from having someone else deal with the daily basis issues at their rental properties. Tenants benefit from having a professional company handle their rental needs instead of dealing directly with the landlord or property manager.
One of the most significant advantages of using professional property management is that it can help maximize the return on investment for property owners.
Moreover, properties managed by professionals typically have higher rental income and see more consistent rent increases over time. Professional property management saves property owners time and effort.
According to a study by the NARPM, properties managed by a professional property management company had an average rental increase of 4% per year, compared to 2% for self-managed properties.
Another study by the National Apartment Association states that the average property owner spends around 30 hours per year managing their rental property. In contrast, a professional property manager can handle all aspects of property management in a fraction of the time.
In the long term, investment property management is critical to owning rental properties. It requires knowledge, skills, and experience to effectively manage the property and generate income for the property owner.
Types Of Property Management
|Types of Property Management||Description|
|Commercial property management||The management of office buildings, retail spaces, and warehouses that serve business purposes. Leases to tenants, property maintenance, and tenant disputes fall under this category.|
|Residential property management||Management of rental properties, such as apartments, houses, and condos, including evictions, tenant management, and rent gathering.|
|Association property management||Assisting homeowners and condominium associations with managing properties such as condos and townhomes by enforcing rules and regulations and collecting dues.|
|Vacation property management||Assisting with managing vacation rental properties, such as vacation homes and holiday apartment rentals, from screening tenants to handling bookings and maintenance.|
|Self-management||An owner is responsible for managing their properties, such as finding and selecting tenants, gathering rent, maintaining the property, and handling legal matters.|
|Remote property management||It often involves hiring a property manager to manage properties in another country or area. When the owner is not on-site, the property manager finds and selects tenants, governs rent, and maintains the property on their behalf.|
What Are Investment Property Management Companies?
If you own investment properties, choosing a property management company that will take care of all aspects of the business is essential. This will save you time, energy, and money. This is where a property management company comes in.
The role of a property management company is to provide the owner with a quality service that will ensure that their investment is managed well and to their expectations.
The primary function of an investment property management company is to manage the property for you, but they can also offer other services that may be beneficial to you.
A property management company can help find tenants who will pay their rent on time, keep up with repairs, and maintain the property, so it stays in good condition. They will also manage all financial matters related to renting your properties, including paying bills and collecting rent.
When collecting rent, some property owners prefer doing it themselves, while others prefer hiring a professional management company.
A professional managing investment properties can help you collect rent on time by following up with tenants and reminding them when payments are due.
The rent can be collected either monthly or quarterly, depending on the agreement between you and the tenant. They can also ensure that all rent payments are deposited into your account on time so you don’t get hit with NSF fees or late fees from your bank.
Dealing With Defaulters
Tenants can need to catch up on their payments for various reasons. A good property manager will keep an eye on any late charges and will inform you about them so that you can take appropriate action against defaulters.
They may also take legal action against tenants who do not pay their rent on time or at all. This will depend on the terms of your contract with them and how much notice they gave you before moving out of your property without paying rent in full.
A good investment property management company will ensure that you and your tenants are happy with how their properties are maintained.
They will carry out regular maintenance checks so any problems can be identified and dealt with quickly before they become more significant problems later.
In addition, if there are any structural issues, such as leaks or electrical faults, these should be identified quickly so that they don’t cost more money than they should when they need fixing.
Sourcing And Screening Of Tenants
Finding new tenants can be challenging; however, when you hire an investment property management company, they’ll do the legwork for you.
They’ll advertise your available properties and screen potential tenants before finding those who are most suitable to rent from you. The screening process helps determine whether someone is eligible to rent your property. It includes checking credit history, criminal background, and employment history.
You’ll then receive a report detailing each applicant’s suitability for tenancy so that you can make an informed decision about who to accept or reject.
You should only rent out your property to people with good credit scores because they’re more likely to skip out on paying rent altogether or cause damage to your property if they do pay their monthly dues on time every month.
Real Estate Consulting
An investment property management company will advise you on the best strategy to maximize your investment. They can assist you with finding the right tenant and ensuring they have a positive experience.
Moreover, you may be new to real estate investment or have been doing it for a long time but have yet to hire a property manager. An experienced property management team will help you find the best properties for your portfolio and ensure they are well-maintained by professional contractors.
One of the most important services that an investment property management company provides is bookkeeping. They will keep track of all income and expenses related to your property and provide a monthly statement detailing everything that has happened during that time.
This information allows you to make informed decisions about whether to sell or refinance, whether more capital should be invested into an existing property or how many properties should be purchased next year.
They will also handle things like paying taxes and filing paperwork with government agencies like the Canada Revenue Agency (CRA).
How Much Do Investment Property Management Services Cost?
The cost of investment property management services depends on several factors. These include
- The type of property you have invested in;
- The size and location of the property;
- The number of units or rooms in the property;
- Whether or not you want to manage it yourself or hire a professional; and
- Your budget.
Property management companies in Canada typically charge a percentage of the gross rent collected as their management fee.
The industry standard is around 7-14% of the gross rent, but it can be higher or lower depending on the company and location. Some companies may also charge an additional fee for leasing or other services.
Generally, a two-bedroom apartment in Toronto costs around $2,340, according to Realtor.ca, and the average monthly rent in Toronto is $1,815. If you have a larger property or one located in a prime area, then expect to pay more than that.
The cost of investment property management services may increase if you have multiple properties and need a single source to handle them. If your portfolio is large enough, hiring a full-time property manager who will keep an eye on your properties around the clock makes sense.
It’s always best to get a quote from a few different companies to get an idea of the cost of services in your area and be sure to ask what services are included and if there are any additional fees.
Is Working With An Investment Property Management Company Worth It?
When you’re investing in real estate, you have a lot of options. You can buy a property and manage it yourself or hire an investment property management company to take care of the details.
Which option is best for you? That depends on your goals and your time commitment.
Managing your property may be the most convenient choice if you want to keep your hands on the wheel.
But if you don’t have time or expertise to deal with tenant issues and other day-to-day concerns, hiring an investment property management company can help ensure that your rental property performs well.
The decision to hire an investment property management company is not to be taken lightly. It can be costly, and if you are not careful, it can cost you more than what you would have paid to manage the property yourself.
However, there are many benefits of hiring an investment property management manager that makes it worth it in the long run. Here are some benefits:
- Hiring a property manager can save property owners significant time and energy as they handle the property’s day-to-day operations.
- A property management company can help improve a property’s income by finding and screening high-quality tenants and managing rent collection and lease renewals.
- A property manager can save property owners money by negotiating with vendors and contractors for maintenance and repairs and ensuring that the property complies with all laws and regulations.
- A property manager can provide professionalism and expertise that a property owner may not have, which can help with communication and resolution of issues between landlord and tenant.
- Hiring a property manager can give property owners peace of mind, as the property management company handles most of the work related to renting your property. You must pay them a fee, usually around 10% of the monthly or quarterly rent.
According to a study by the National Association of Realtors, professionally managed properties have a vacancy rate of just 5%, compared to 12% for self-managed properties.
However, in deciding between hiring a property management company and self-managing your rental property, you should know the value of each option.
Investment Property Management
Management of your investment property is critical to its success. The right management company will ensure that your investment property is rented, maintained, and managed professionally.
Many things can go wrong with your rental property. Sometimes, a tenant will not pay rent on time or at all. Sometimes they break something, sometimes they damage something, but most importantly: they may cause damage to your property and your reputation.
That’s why it’s crucial to have someone looking after this investment who knows what they’re doing. An excellent rental property manager will make sure your tenant stays current on their rent, keeps the house in good condition, and, if needed, evicts them from the property if they fail to do so themselves.
|Professionals handle all management aspects, freeing up your time.||Management fees can be costly.|
|Can provide expertise and experience in legal compliance and marketing.||You may not have as much control over decisions,|
|Can handle multiple properties easily,||May not have a personal relationship with tenants,|
|Can handle emergency repairs and maintenance promptly,||May not be able to tailor property management to specific needs and preferences,|
|Can keep up with legal regulations and requirements||Dependent on the quality of the management company, it may not be as profitable as self-management in the long run.|
Self-management is the most common method of managing an investment property that involves letting tenants handle their finances and maintenance issues while you provide oversight from afar.
This option best suits investors who live in another state or country or need more time to manage their properties in person.
However, self-management can be affordable for many investors if you’re on a tight budget or want to avoid hiring a property manager.
|You have complete control over the property and can make decisions quickly.||It can be time-consuming, as you are responsible for all management aspects.|
|It can save money on management fees.||May not have the expertise or experience in certain areas, such as legal compliance or marketing|
|Can build a personal relationship with tenants||It can be not easy to handle multiple properties|
|Can tailor property management to specific needs and preferences||May not be able to handle emergency repairs or maintenance promptly|
|May have more control over financial aspects of property management||It can be challenging to keep up with legal regulations and requirements|
Who Should Manage Your Property Investment?
When looking for property management to take care of your investment, the first step is understanding your options and determining what type of property management service is right for you.
Many people in the real estate industry will recommend hiring a leasing agent or property manager. While it is true that these professionals can help with finding tenants and collecting rent, they are not necessary for every investor.
Investing in real estate requires a lot of work, but deciding who should manage your properties shouldn’t be one of them. By understanding what each option offers, you can make an informed decision about whether or not you need a leasing agent or property manager.
Leasing Agent Vs. Property Manager
A leasing agent is someone who works for a brokerage company and helps tenants find apartments or houses to rent. These agents usually have access to listings posted online or in newspapers and magazines.
If a tenant wants to see a particular property, they will call the agency and schedule an appointment with one of their employees.
The agent will take them around town, looking at apartments and houses until they find something suitable. Once they have found something that meets their needs and budget, they will help negotiate on their behalf and prepare all the paperwork required by both parties, tenant, and landlord.
They typically charge a one-time leasing fee or a percentage of the first month’s rent. Leasing agents are often less expensive than property managers.
Still, they may not have the same level of experience and expertise in handling the day-to-day management of a property.
|Typically less expensive than property managers||May not have the same level of experience and expertise in handling the daily management of a property|
|Specialized in finding tenants and handling the lease agreement process||Typically does not handle rent collection, maintenance, or expert in managing tenant relations|
|It can save landlords time and effort in finding tenants||May not be able to provide the same level of service as a property manager|
On the contrary, the property manager is responsible for maintaining your rental property, collecting rent, and interacting with tenants. They typically charge a monthly management fee; usually a percentage of the rent collected.
Property managers have more experience and expertise in handling the various aspects of property management, but they can be more expensive than leasing agents.
|Experienced and knowledgeable in handling the daily activities of a property||Typically more expensive than leasing agents|
|Responsible for rent collection, maintenance, and tenant relations||They may not be as specialized in finding tenants and handling the lease agreement process|
|It can save landlords time and effort in managing the property||They may not be able to provide the same level of service as a leasing agent in finding tenants|
|Can increase return on investment and tenant retention||A bad experience can occur if the property manager is not the right fit.|
In summary, if you’re looking for someone to handle the day-to-day operations of your property, a property manager may be the best choice. A leasing agent may be a more affordable option if you’re looking for someone to find tenants and handle the lease agreement process.
What To Look For In A Property Manager?
When looking for a property manager, it’s essential to consider your needs and the qualities of the service they offer. Choosing a property manager is a big decision that should be carefully considered when interviewing potential candidates.
Here are some tips to help you find the right person for your needs:
Experience And Credentials
The first thing you want to do is make sure that the person you are considering hiring has experience dealing with similar properties.
It doesn’t mean they have to have worked with the same type of property as yours, but if they have yet to experience dealing with residential properties, this could be problematic later on down the line.
You also need to ensure that they have the proper credentials and licenses required by law; otherwise, they might not be allowed to work on your property!
Property management fees vary widely depending on where you live and the size of your property. Another factor is whether or not your property manager will charge a percentage of rental income or an hourly rate.
They may also charge additional fees for certain services, such as setting up utilities or managing tenant move-outs. Ensure you understand all costs before accepting an offer from a potential property manager.
When it comes to real estate, licensing is important because it shows that your property manager has been vetted by their state or local government. When considering whether or not a person is qualified for this role, make sure they have some license or certification.
Comfort and Communication
You want someone who will be easy to work with and has a good personality. You will be working with this person regularly, so having them be easygoing can make things much smoother.
You also want them to have strong communication skills so that if there are any issues with tenants or repairs, they can communicate these things effectively with both parties involved.
A good reputation is essential because it will help you know if the company has been around long enough and whether or not it has any complaints against it. Check online reviews or ask friends who may have used them before.
Ask for references from past clients and check them before deciding who to hire as your property manager.
Check Out Questions to Ask a Prospective Property Manager:
List Of Property Management Companies In Canada
- Buttonwood Property Management
- Property Management Toronto
- Northview Apartment REIT
- Maple Ridge Community Management
- Brookfield Residential Property Services
- Westcorp Property Management Inc.
- Korecki Real Estate Services Inc.
- Fahel & Co
- Macdonald Realty
- LandLord Property & Rental Management Inc.
- Greenwin Inc.
Are Property Management Companies Profitable?
The answer to this question depends on various factors, such as the property type, location, and market condition. However, most of the time, property management companies are profitable. Here are some examples:
An apartment building or condominium management company can charge a monthly fee from the owners for managing their properties. In addition, they also receive a percentage of rent from tenants every month.
A commercial property management company charges an annual fee from its clients for managing their properties. This annual fee can be anywhere between 7% – 14% of the gross revenue generated by the property.
Do You Tip Property Managers?
It is rare to tip property managers. Everyone has a different opinion. Those who think you should tip your property manager for a good job and those who believe you should only tip them for exceeding their job description disagree.
You do not have to tip your property manager, but here are some things to consider before making a decision; e.g., your relationship with your property manager can play a significant role in whether or not you choose to tip them.
If you have had a positive experience with your current property manager, rewarding them for their hard work may be worthwhile by giving them a small cash gift or bonus at the end of each year.
However, suppose your relationship with your current property manager is strained, and there has been no improvement. In that case, it might not be worth giving them any money as this could cause more problems than it would solve.
Is A Property Manager A Landlord?
Property management is a profession that needs to be more understood. Property managers are not landlords. They have no legal right to your property and cannot evict you.
A property manager is an agent who manages the day-to-day affairs of a rental property. Their job is to ensure the home has a qualified tenant, collect rent and maintain the property.
Furthermore, they will not be liable for any debts or taxes associated with the property. Still, they may be responsible for negligence if they fail to perform their duties properly.
Depending on their specific responsibilities, a property manager may be referred to as a building manager, real estate agent, or leasing agent.
What Is The Best Property Management In Toronto?
It is difficult to determine the best property management company in Toronto, depending on the landlord’s needs and preferences.
It’s always best to do your research, ask for recommendations from other landlords, and read reviews before deciding which property management company to use.
Some of the well-known property management companies in Toronto are:
– Buttonwood Property Management
– Bridgeway Property Management
– ICC Property Management Toronto
– Property Management Toronto
– Royal York Property Management
Property management is a great way to maximize your investment’s potential. If you’re ready to start making money off your rental property but want to avoid dealing with the hassles of managing it yourself, look into hiring a professional property manager.
We hope this guide has helped you better understand the benefits and considerations of property management. Consider all of the types of control before making a decision on which one is right for you and your business needs.
So, don’t let the stress of property management hold you back from realizing your investment goals. Let’s dive in and unlock the full potential of your investment. Don’t hesitate to contact us if you need help deciding what type of management is best.