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Hiring a Property Manager
Many condo buyers seek to rent their unit to tenants as an investment. Renting out your condo unit can be a lucrative and rewarding avenue to make passive income. The income you gain from rental payments may cover all or most of your carrying costs. This can create a good situation that can help you build personal wealth for years.
Landlords hold specific responsibilities, and managing your property can take time, resources, and attention. Some condo owners manage their rental units themselves, while others hire someone to do the work for them.
Should you find tenants yourself and look after any issues that arise, or hire the services of someone else?
In this article, we look at the pros and cons of hiring a property manager to help you make the best decisions as a landlord.
What You'll Learn...
- What is a Property Manager?
- The Benefits of Investing in Property Management
- Managing Maintenance and Repairs
- Screening and Interviewing Potential Tenants
- Advertising and Marketing Your Property
- Handling Lease Agreements
- Keeping Accurate Financial Records and Collecting Rent
- How much does a property manager cost?
- Perks That Lie Outside of Property Management
- What To Look For in a Property Manager
- Key Takeaways for Investors
Do I Need a Property Manager?
Key Points
What is a Property Manager?
A property manager, or real estate property management, takes responsibility for finding tenants, collecting rent, and caring for a rental property. Rental buildings have property managers who look after an entire building.
Regarding individual condo units, real estate investors who own a unit or several units but do not live nearby or who do not choose to manage their property themselves may hire property management services.
The fees you pay to have someone manage your property are often tax deductible against the income the property generates.
The Benefits of Investing in Property Management
A reputable property management company can help you stay organized and on track. Condo landlords are responsible for ensuring their tenants and guests comply with the Condo Act.
This legislation regulates many aspects of owning and living in a condominium in Ontario. Tenants must also act in accordance with the condo corporation's governing documents.
Landlords are responsible for ensuring their actions and decisions comply with the Residential Tenancy Act.
Having a quality property management company at your side can help you sift through the legal aspects of renting your condo and help you find qualified tenants, collect rent on time, keep your financial records in order, and more.
If you plan on scaling up as a real estate investor, hiring the services of a property manager can be invaluable as this can allow you to focus on investing in high-quality properties and relieve you from the daily demands of managing your current portfolio.
A property manager can:
- Manage maintenance and repairs;
- Screen and interview potential tenants;
- Advertise and market your property;
- Handle lease agreements and collect rent;
- Keep accurate financial records.
In addition to accessing invaluable guidance, one of the main reasons condo owners hire a property manager is to save time. With a busy schedule, some owners may find that working with a property manager allows them to better address the needs of their tenants promptly and effectively.
Managing Maintenance and Repairs
According to the Residential Tenancy Act (RTA), landlords in Ontario are responsible for keeping their rental units in a good state of repair, which includes the upkeep of electrical systems, plumbing and heating systems, appliances, ceilings, windows, doors, locks, lighting, and laundry facilities.
If something in your unit breaks down, a property manager can source the right person to fix the problem and ensure the work is done on time.
Keeping your property in the best condition can help your unit increase in value over time. A well-maintained condo can also help you find and retain the best tenants.
When your property is maintained to a high standard, you can charge an optimal rent to match the value you offer, presenting a win-win situation for you and your tenant.
Screening and Interviewing Potential Tenants
Finding responsible and reliable tenants is paramount when renting out your condo. Reliable tenants will help ensure you maintain positive relations with the neighbours living near your unit and the condo board in your development. Reliable rent payments will also help keep you on track financially and provide peace of mind.
A property manager can invest time in reviewing rental applications to find qualified tenants. This can involve researching applicants' employment status, income, credit record, and rental history. It can also include conducting a criminal background check and interviewing potential tenants to ensure they match your lifestyle expectations.
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Advertising and Marketing Your Property
A property manager can market your condo effectively, reducing vacancies between tenants. The right marketing can help you find qualified tenants quickly and maximize your return on your investment.
Extensive property management services often have online platforms that feature rental properties and outline their services.
A property manager will also likely list your unit on other popular listings platforms such as MLS. Long-term and short-term rentals can be advertised through optimized ad space.
A property manager will take professional photos of your property, upload them, and create a listing for your unit with its description, a list of the amenities available in your development, and beneficial information about the surrounding area. Bookings for short-term rentals may sometimes be made directly online, as with a hotel booking.
Property management services will also arrange for your suite to be cleaned for a new tenant and oversee the formal exchange of keys.
Handling Lease Agreements
A lease is a written, legal, and binding contract between a tenant and a landlord that outlines the terms of use and how much rent will be paid. You might have a fixed-term or periodic lease agreement based on weekly, monthly, or yearly periods.
A property manager can ensure lease agreements are handled effectively. They can also go through this lease agreement with you in detail so that you understand your rights and responsibilities as a landlord as well as your tenant's rights. Some of the information in a lease agreement includes:
- Landlord and tenant rights and responsibilities;
- The agreed-upon rent amount;
- A required security deposit;
- Rental due date;
- Consequences for breach of contract;
- The duration of the lease, and more.
These services can be beneficial if you own multiple properties, as they can meet your legal needs and those of your tenants.
Keeping Accurate Financial Records and Collecting Rent
A property manager can also keep track of all financial transactions related to the upkeep and rental of your condo. They can take responsibility for collecting rent from your tenants and ensure shorter vacancy cycles, and keep track of billing and payments made to maintenance service providers such as contractors, plumbers, or electricians. If rental payments are not made on time, a manager can track this issue and alert you to situations before they become problematic.
How much does a property manager cost?
Property management costs vary depending on your condo's location and other factors. Rental property management fees may be calculated as a percentage of the unit's rental value, capped at a particular value, or come at a flat monthly rate.
These fees typically add up to about 6% to 8% of your monthly rental revenue for your unit if you seek a full array of services. Specific tasks, such as advertising an empty unit or evicting problematic tenants, may come at an added cost, depending on your agreement and the company you work with.
Depending on the property management firm and the services provided, there can be a variety of ways property managers charge their fees including an initial setup fee, a monthly management fee, tenant-placement fee, maintenance fee, eviction fee, and early-termination fee.
Property management software is ever-evolving. Some management companies offer apps at a very low cost that you can use to track your tenants, make online payments, list your property for rent, and more.
Perks That Lie Outside of Property Management
Each management company can be different. Unit and pre-delivery inspections for newly constructed condos are generally paid for separately from routine monthly property management fees. In addition, a management company may require that all landlords hold landlord insurance, which may not be included.
Landlords who live outside of Canada will also most often need to fund their non-resident income tax forms. Finally, landlords must pay for any legal fees incurred by the property management company as a result of managing their unit, as a separate charge.
You want your property manager to take the work off your shoulders, and as such, they will often deal with issues without contacting you or requiring your approval. However, this isn't without bounds, and your management company may set a price point at which they will contact you before moving ahead with a solution in a given situation.
For example, the ceiling may be set around $250. Following this rule, if a pipe requires fixing in your unit and the plumber's estimate for completing the work comes to $300, your property manager will contact you before approving the work. In some cases, you can appoint a friend or family to be this contact point if you wish.
What To Look For in a Property Manager
First and foremost, look for a property manager with the required licenses and certifications in your area. It is also wise to seek out a company that is familiar with your type of property and has a solid reputation. Conduct some research and ask to speak with current customers who can provide insight into the services offered. Research the vacancy rates in the properties the company currently manages and look for a low vacancy rate along with strong policies and exceptional customer service. The contract you sign should be transparent, and you will want to ensure you understand all parts of the agreement so that nothing comes as a surprise.
Key Takeaways For Investors
You may be wondering, do I need a property manager? Our answer is, it depends. If you own multiple condo properties, hiring a property manager may be essential to cover all your required bases in a timely manner. If you own just one or two properties and you are located nearby, you may find you can do it all yourself.
Do your research and determine if paying for service makes sense. Take time to find well-respected, reputable property management and look for trusted testimonials and referrals and a solid track record of quality service. Write down what you want taken care of and the scope of your budget. Your property manager should be flexible and be able to provide you with no more or less than the services you require.
If you have further questions, contact your Platinum Agent. Our leading agents are happy to assist you to help make the most of your investment.
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