We’ve talked about how renting properties is a method of passive income, although it certainly takes some time. Even with a down economy, you can still be profitable by becoming a landlord to reliable tenants. However, the point of passive income is that you put in little to no work, yet still earn money. As a landlord, you’re responsible for handling repairs, safety concerns, and collecting rent. This can be a part time to full time job depending on how many units you own and the type of tenants you rent to. So how can you streamline the process and make your rental property truly passive income? You hire a property management company.
What is Property Management?
Property management is just what it sounds like: they manage your property on your behalf. A property management company acts as the liaison between yourself as the landlord and the renter. They do the work for you, including screening applicants by running background and credit checks, handling the legal documents including leasing agreements and rental insurance, and handling maintenance and upkeep of the property.
Property Management Companies vs. Property Management Software
Obviously, hiring a property manager is not going to be cheap, so it may dock some of your passive income if you hire a company to handle your rental properties for you. If you own a complex with several units, it makes sense to hire a company to handle the ins and outs for you, since there will be multiple tenants. It may also make sense if you have multiple commercial properties. However, if it’s not in your budget to hire a company with managers, sales associates, and other staff members, you may want to look into property management software.
Property management software still keeps things in your control, but puts everything on your computer. There’s different programs for sale or available to download that will allow you to control your leases, bill your tenants, track your expenses, set your budget, and even manage your properties on the go. You can allow your tenants to pay you online as opposed to writing you a check, a convenience for both you and your renters. The programs can even help you stay organized come tax time.
What to Look for in a Property Management Company
If you’re still interested in hiring a firm to handle your property management, there’s a few different things to look for:
- Costs: How much will it cost to have the company manage for you? What are the monthly fees?
- Reputation: Property management companies get a bad reputation sometimes. You want your tenants to feel absolutely comfortable living on your property. Does the company have a good track record?
- Experience: Whether you’re choosing an individual or a company, how much experience do they have? More than likely you’re choosing a property management company because of your lack of experience or lack of time. How long have they done this? Do they know what they’re doing?
Before Choosing an Online Program
Before you go the online route, you should check out reviews, see if they have a free trial, and decide if you would rather have a desktop based or online/cloud based program. Give several softwares a try before deciding on one right away. This will probably be the most cost efficient option for you, and can still yield you passive income while remaining in control.
