What’s the most expensive part of owning a rental property? (Hint: it’s not property management fees)
Choosing the right property management company is a task that shouldn’t be taken lightly. Not only will your property manager be a reflection of you and your tenants, but they will also be a major deciding factor in how much money you’re making on your investment.
Many landlords begin their search for a property management company by finding the lowest priced services so they have more rental income money to pocket. Makes sense, right? If a property leases for $2,000, and you can pay either $100 a month or $160 a month, why would you pay more per month?
The reason is actually pretty simple. It’s vacancy. Vacancy (when the property is not tenant occupied and therefore no rent is being collected) is the most expensive part of owning investment property. It’s really not the property manager’s fees. Part of the property manager’s role is reducing the vacancy period, therefore earning you, the investor, more money.
Let’s go back to the $100 company vs the $160 company, and keep using the $2,000 rental rate as our example. Last year, the average days on market on the St. Louis MLS for rentals (the multiple listing service is the database where agents list properties for lease and sale) was 43. Meaning, it took roughly a month and a half for the property to be rented once it was advertised. Last year, in the same market, our broker’s average days on market was only 18, meaning it took about a week and a half for the property to be rented.
The difference between 43 days on market and 18 days on market is almost an entire month – 25 days to be exact. That’s a matter of $1,666.66 of rent not being collected (vacancy cost). That $60/month you’re “saving” by going with the “cheaper” company may end up costing you more in vacancy costs. So spend the extra money and choose a quality property manager that will, in the long run, generate a greater profit for you.
So much goes into choosing the best property management for you and your property, and no two companies are created the same. Don’t let yourself fall victim to the lowest price gimmicks.
Call Keyrenter St. Charles Property Management at 636-242-5856 to get started today.