7 Benefits And 2 Tradeoffs Of Hiring A Property Management Company
Should you hire a property manager?
Property ownership is not a passive investment like throwing a hunk of gold in your safe.
A ton of work goes into upkeep and maintenance, and that’s just if you leave it vacant.
If you plan to rent it out, tenant management is a time-consuming process that can jeopardise your property value if not given the attention it demands.
The Lemmy team therefore asks homeowners to give professional property management a chance.
Now, in case it isn’t blatantly obvious, Lemmy is a property manager.
We can’t say our thoughts are entirely objective.
For that reason, in addition to the benefits of property management companies, we’ll also explain what tradeoffs a homeowner should be prepared to make.
Our goal is to present you with the facts, and here’s how we’ll break it down:
- 7 benefits of property management
- 2 tradeoffs of property management
- The big yes / no question to ask yourself
Let’s begin.
7 benefits of hiring a property management company
We can’t speak on behalf of the entire Malaysian property management industry.
Instead, these benefits are based on core services we provide homeowners who engage us to manage the renting out of their properties.
1. More optimal rental pricing
Property managers know current market rent prices better than most anyone, and can help you set a rental rate that maximises your income while still being attractive to prospective tenants. We believe this is the biggest advantage of working with a property manager.
They facilitate a win-win for everyone, and for homeowners, that means swiftly renting out their units for a fair price, which usually results in better long-term tenant retention.
2. Help securing high quality tenants
Property managers build relationships that give access to high quality tenants, and in Lemmy’s case, our tenant pipelines consist of:
- Corporate tenants from major organisations
- Selected tenants from visa agencies (such as retirees or families)
As we undertake the necessary but time-consuming task of background checks on potential tenants, the channels above give us a reliable stream of tenants who are both financially stable and can be trusted to keep your property in good condition.
When you partner with a property manager, you gain access to this pool of tenants.
3. Help with managing tenants
Property management companies keep both homeowners and tenants happy, and a homeowner can reliably get a quality tenant who always pays their rent on time without ever meeting them face to face!
Lemmy for example provides the following as part of our tenant management service:
- tenant screening
- application management
- ongoing support
- rent collection
- tenancy renewals, and
- evictions
Essentially, we facilitate all landlord-tenant communications, so two parties who don’t really want to see each other don’t have to 😄
4. Assistance with necessary legal work
A property management company has access to legal services that specialise in drafting tenancy agreements to a homeowner’s specifications. For example, not all homeowners want an expat clause, and those that do may want specific stipulations.
Also, an unfortunate part of tenant management is collecting outstanding rent or, failing that, evicting said tenant. A property manager can help resolve these conflicts legally to protect the homeowner from breaking laws or breaching tenant rights.
5. Remove hassle of property upkeep
We mentioned at the start that property ownership is no passive investment!
Property management companies also have a list of vetted professional handymen that attend to any issue with a property, giving homeowners the following benefits:
- Better rates
- Proven work quality
- Tenants contacting the property manager to make requests
In short, the property manager assumes full responsibility for property upkeep.
As this is a frequent sore spot for homeowners, Lemmy makes it a point to proactively maintain properties in our care. This extends to vacant units which get regular site visits from our team.
6. Help with property financial management
If you hate dealing with utility bills, service charges, property tax (quit / parcel rent, tax assessments etc), and various other financial obligations that come with property ownership, you can outsource all that to a property management company.
To be clear, we hate it too, but we’re better at it so we get it done fast to make time for the next property showing!
7. Full overview of your property’s key stats
When you engage a property manager, you can expect regular updates about your unit, including:
- rental income
- expenses
- outstanding payments
- tenancy status
- maintenance works, and
- property inspections
Just to name a few.
Some property managers update homeowners via email, but the really amazing have mobile apps so homeowners can instantly access their property information from their phone
We’re actually working on a web portal that does this - stay tuned!
2 tradeoffs of hiring a property management company
Unlike the benefits above, we can say with confidence you will experience these drawbacks when engaging any property manager, good or bad.
1. You pay for it!
In exchange for managing every part of your property’s maintenance and tenancy, a property manager takes a percentage of its monthly rent on top of any marketing fees, and assuming you absorb this cost, it means less profit for you.
The standard rate is 8 - 10%, and you can check out Lemmy’s service charges here.
At risk of sugarcoating this tradeoff, we have to add that you don’t just pay for convenience, but expertise and experience that saves both time and money in the long run.
2. Less involvement in property management
While most readers love the convenience, we know some see it as taking the fun out of homeownership. If renting out your unit is a labour of love, we understand wanting to be involved in the maintenance and tenant selection process.
And while that doesn’t mean zero upsides to engaging a property manager, a significant part of the benefits would be lost on them.
The big question for homeowners
Which of these two options sounds more appealing to you as a landlord?
- Option 1: Keep all of your rental income by doing all of the work.
- Option 2: Keep almost all of your rental income while doing almost none of the work.
If you chose the second option, you’ve chosen to let Lemmy manage your property!
