September 18, 2017 in Landlords and Tenants
Property Management Solutions for Landlords
Everyday someone, somewhere, wakes up and decides to be a landlord. Well it might be just a little bit more complicated than that, but it’s pretty close to the reality of the situation. I can tell you, most of those folks have given no thought to property management solutions.
Here’s the Scenario…
You’re a brand new real estate investor and you just purchased your first property. You have decided to be a landlord. After all, you’ve heard all about how easy it is to earn passive income from rentals. How hard can this be?
You’ve found your first property, and you made the decision to learn the business and manage the property yourself. Saving management costs is definitely something you want to do. After all, everyone says it’s easy.
Fast forward a few years down the road, and now you have a handful of properties. The management side of this business is taking more time than you could have ever imagined. In fact, it’s one giant headache. You should definitely be thinking about property management solutions by now if you haven’t already gone down that path.
The Process of Renting the Property
After running some ads online, you finally shake out a couple of potential tenants. Then it’s time to run their credit. Not everyone that applies is completely honest about their situation so this typically takes a couple of tries (at least) to find a good tenant.
Next there is showing the property, getting the lease signed, collecting rent and deposits and doing a move in inspection.
Just about now you think you have it made. You’re done. The tenant has moved in.
Then you get a few calls AKA maintenance requests right after they move in. How can this be happening? The house looked fine to you and the previous tenant never complained. Once you think about that a little bit, you realize that maybe it was the previous tenant that stopped up the toilet and the kitchen sink, and they just didn’t tell you so they wouldn’t be charged for those repairs.
You realize you are the problem. You didn’t do a proper move out inspection with the previous tenant. However, you tell yourself you’re only one person, and you just have too much on your plate. Now the new tenant wants those repairs done ASAP.
Speaking of move out inspections…you do have a procedure don’t you?
It’s Time for You to Collect the Next Month’s Rent
The first of the month rolls around and you wait for the rent to be paid. Then you wait a little longer.
What? No rent?
30 days later, still no rent. You’ve called the tenant and left messages, but they are ignoring your calls. The next step is to send a 7 day letter, and you get “crickets”.
You’ve just moved a tenant in, spent money on repairs the first week, and already you are facing an eviction. It’s right about now that you realized you really don’t want to be doing most of these things. You also realize you might have taken a few shortcuts in the whole process. It just might be time to find someone that is better suited for these particular tasks. You’re figuring out that being a landlord isn’t too much fun. It’s definitely time to find a property management solution that will work for you.
So Where Can You Find Help?
There are a lot of choices when it comes to property management. Some companies just provide basic services like collecting the rent, while full blown property managers take care of everything. Then there are the services that fall somewhere in the middle that take a lot off your plate but are much more affordable for landlords that don’t have big portfolios of properties.
Finding the Right Company for You
The first thing you need to decide is just how much involvement you want in the process. I’m going to review some companies to help you decide.
When you are just starting out, you may not choose a full service management company due to the cost.
You might want to look at transaction companies that offer software and banking solutions. These allow you to be a more efficient DIY landlord. That may a place for you to start. You will still have to deal with the tenants in this situation.
But if time is your issue and you want a more hands off role to concentrate on building a business, there are companies like My Landlord Helper that fill the gap. I personally think this is a great solution for most people whether you are brand new or you’re a seasoned investor. Having someone take your tenant phone calls and do all of those repetitive tasks all landlords have to do takes YOU out of the day to day headaches. Not only does it let you focus on building your business, but it helps prevent landlord burnout.
When Should You Think About Property Management Solutions?
I would encourage you to factor in the cost of some level of property management when you make the offer on the property. Put this cost right into your offer on the property. Trust me, you’re going to thank me for this one.
Setting out to build a business right from the start requires a different mindset than a guy or a gal that’s going to buy a couple of rentals and manage those properties. If you adopt this new mindset when you buy your first property, I can almost guarantee you a different level of success over time.
So let’s go over some of those companies and what they do. There is generally no contract required for these types of companies until you get into a full service property management company.
Here are Some Companies to Take a Look At
Cozy Online Rent Collection
Cozy seems to be an entry level choice for landlords. This company is provides a place for tenants to pay rent online. Cozy is mobile friendly and easy to use.
You can set up your properties to accept applications, and you will be notified when someone applies. If you have existing tenants you can use Cozy to collect the rents that will be deposited directly into your bank. You have the ability to share a link to your property for rent through any listing site. You can order credit reports and/ or background checks through Cozy.
You can also see how the price of your rental compares to the track average comparable rental in your area for a fee. Your tenants can also buy rental insurance for an average cost of $20 a month. The exact cost of insurance varies by area.
The Cost: Most features in Cozy are free. For rent collection, there is no per transaction charge for a bank to bank transfer. There is a fee of 2.75% transaction fee for credit or debit cards. They do charge a fee for credit reports and rent comparison reports. Cozy is a primarily a way for your tenants to pay rent online. Find out more about Cozy here.
This company is another entry level choice for landlords, but it does have a few other features. It offers tenant screening and online payments, and you can also track and respond to tenant requests. Much like a couple of the other companies they provide credit reporting so tenants can build their credit. This is a real bonus in my book.
eRent allows for one time and recurring late fees, it has a reminder system to help keep tenants on track and you can also monitor rental income and property expenses. This company is mobile ready and they can make phone payments as well.
The Cost: eRent has “a la cart” pricing. Their standard plan is $3 per transaction. There are no monthly, set-up or activation fees. You can also choose the “Plus Plan”. This costs $10 per month which includes up to 5 transactions. Other transactions will be billed at $1 per additional transaction. There is a minimum fee of $10 per month on this plan.
Credit reports are obtained and paid for by the tenant directly through Transunion and cost $30 which is a $5.00 discount off their regular price. They also offer credit and debit card processing for an additional fee. Find out more about eRent Payment here.
Rentec Direct – Property Management Software
This company provides a really comprehensive system for an affordable price, however you still do the work. If you want to be hands on, this one might be for you as it has a lot of features.
They provide a complete property management solution for property managers and landlords. This includes a professional website, the ability to take online payments including ACH payments and electronic checks. It integrates with Quickbooks and you get a complete bank ledger and property ledger. This allows you to track rents, repairs, expenses etc. Rentec allows you to publish vacancies to Craig’s List and over 20 other sites. You can upload pictures, leases and other documents.
Rentec is mobile friendly, and there is built in email and texting which is really convenient.
They also have a blog which is a real bonus for landlords of all levels, but especially for those just starting out. I like Rentec. They have a nice system, but you still have all of the tenant side of the business on your plate.
The Cost: There are different levels of packages beginning at $35 a month. They also have a free trial which is nice.Find out more about Rentec Direct here.
Appfolio – Web-based Property Management Software
Appfolio is a comprehensive system designed for companies with a larger portfolio of properties, however you are still the one doing the work. If you have an in house property manager or assistant you might want to take a look at this one.
This company has all of the features Rentec has. It too offers an email and texting feature and it has both owner and resident portals. They mentioned insurance on their website however I wasn’t able to find any more information. There is only very basic information provided on their website. You can fill out a form and someone will contact you, but it looks like you will need to talk to an actual person to get set up.
Appfolio is mobile friendly.
The Cost: They charge $1.25 per month per unit however there is a $250 per month minimum which is quite pricey for most people. There is also a $400 minimum onboarding fee. This company is really set up for folks that have a larger number of properties. Find out more about Appfolio here.
The Next Level – My Landlord Helper
If time is your issue, Secure Pay One /My Landlord Helper fills that gap. They are a level up from the other companies I have reviewed so far, and they have a great service for landlords with any size portfolio.
Their role functions as a lite version of a property manager offering you affordable pricing, that allows you to outsource a lot of the headaches. You will be working with a partner vested in your cash flow and your growth.
They understand that to grow rent must be collected, leases renewed, violations issued all simultaneously while you are on the MLS or at the auction trying to save thousands on purchasing your next property. They take care of almost all of the day to day operations of your business. You will still be responsible for tenant screening and placement.
They take all your tenant calls and they collect all your rent. When a tenant is late on the rent they call them, and they will issue any legal notices needed to comply with your local laws for rent collection. They will also remind you 90 days before the lease expiration and send out the letter to renew the lease without your input. They really take all of these mundane tasks off your plate.
My Landlord Helper is the SWEET SPOT between doing it yourself and hiring an expensive management company. They are also for the landlord that wants to grow their portfolio while maintaining decision making control of their properties and avoid the daily stress. My Landlord Helper is positioned as an affordable, mid-level solution for your business.
The Cost: $50 per unit per month with no set up fees. They have a 30 day free trial if you want to give them a try. I have to tell you, this is a great price for all that they do. Especially since you no longer have to take ANY tenant calls. Find out more about My Landlord Helper here.
Full Service Property Managers
If you want a completely hands free rental business, a full service property manager will fit that bill but it’s going to cost you.
How much? Typically it will cost you between 8 to 12% of the monthly rent. You will also be paying for repairs and there may be other fees.
There are companies out there that charge a flat fee, but you will find that these companies generally have fees for their other services. You will have to determine for yourself if this is the route you want to go. This is definitely the high end solution. I would caution you to be very careful when reviewing the contract that the rental company provides you. It is a legal document that locks you in where costs are concerned, and the length of term will typically be for at least one year.
Here is a graphic that shows some of the differences in services each type of company provides.
At the end of the day, you have to decide what works best for you. I would encourage you to step aside as quickly as possible and let someone else handle the day-to-day tasks of your rental business. Don’t forget, that you went into this business to make money; for passive income. You didn’t go into the buy and hold business to sit your butt in a chair, answer phones, take maintenance requests and listen to tenant complaints. Let someone else do that.
Save your sanity and outsource so YOU can build a real business.
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