“An example of good debt is the debt on the apartment homes I own. That debt is a good debt only as long as there are tenants to pay my mortgages. If my tenants stop paying their rent, my good debt turns into bad debt.” – Robert Kiyosaki
Do you own a property investment portfolio consisting of properties to let out? Or, do you perhaps only own one property? The number of rental real estate that you own is not relevant to this discussion.
The salient point of this discourse is to discuss why it is preferable to rent out your properties via a service-focused HOA management company rather than manage the letting process yourself.
The Advantage Of Using A Property Management Company To Manage Your Rental Properties
The reality of utilizing a property management company to manage your rental properties is that the advantages far outweigh the disadvantages. However, this statement must be considered simplistic as it does not provide any detail or the rationale for the statement.
Therefore, for the sake of completeness, let us delve into the benefits as well as the motivation for these advantages.
While there is nothing wrong with managing your property investment rental portfolio, it is preferable to hire a professional firm to do the job for you. A professional company hires staff who are well-trained and skilled in managing property rentals (both commercial and residential.
Thus, they will manage the home maintenance, ensure that the house is adequately prepared for any new tenants coming in, and finally, they will ensure that all monthly monies due are collected.
Let us assume that the purchase of each investment property requires the successful application of a mortgage. The reality of the matter is that very few people can pay cash for a home. Statistics recorded by Statista show that mortgage loans “amounted to approximately 10.52 trillion U.S. dollars in the third quarter of 2019.”
And, according to Bloomberg.com, over 60% of all residential properties are purchased via a mortgage. Therefore, the mortgage needs to be repaid every month. Thus, if your tenants do not pay the rent, you are not able to service the mortgage. Consequently, as the quotation mentioned above by Robert Kiyosaki notes, this is when “good debt turns into bad debt.”
There are a large number of laws, ordinances, and regulations instituted by city, state, and federal government that require homeowners to comply with. And, it is reasonable to think that it is a simple matter to overlook one or more of these ordinances; resulting in the attachment of fines and penalties due to the non-compliance thereof.
The good news is that property management company employees are skilled and highly proficient at ensuring that all of these legal matters are timeously and promptly taken care of; thereby, saving the homeowner time and money.
It is reasonable to conclude that, based on the content above, the most cost-effective, efficient, and professional way to manage your residential property investment portfolio is to engage a property management company to administer it on your behalf.
Shortland Horne is an award-winning Estate and Letting Agents based in Coventry. With over 150 years of combined local experience, we are your knowledgeable estate agents.