Can I Make a Profit If I Hire a Property Management Company for My Investment Property?

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Whether you own one property or many, you may find yourself thinking about hiring a property management company out of necessity or simply convenience. If you find yourself considering a property management company for your investment property, it is quite possible to continue making a significant profit, while reducing your workload and taking a more passive approach to your investments.

How Hiring a Property Management Company Affects Profit

In many cases, hiring a property management firm will reduce your overall profit, at least initially, but a good property manager can also help to increase your profits. How much profit you will make after hiring a property management firm will depend on several factors:

  • Management fees: How much the property management company charges for its service will directly affect your profit. Many companies charge a small percentage of the monthly rent per unit, while others charge a flat fee.
  • Rent prices: The amount of rent you charge and your pricing flexibility can also affect your profits. If your rental property is in an area with low rents and low profit margins, and the market offers little room for rent increases, your profits may be low. If you have a decent profit margin or can increase the rent slightly, you can enjoy significant profits even with a property manager.
  • Management style: With a good property manager, you will have fewer rental vacancies, better advertising, and a larger tenant pool. The right property manager can also reduce contractor, vendor, and material costs through industry connections, make improvements to the rental units that warrant higher rent prices, and generally reduce costs, leading to overall higher profits.

If you have only a few rental properties, plenty of free time, some maintenance and accounting skills, and minimal flexibility in your rent prices, it may not make financial sense to hire a property management company. However, if you have a busy schedule, numerous investment properties, and the flexibility to absorb the management fees, hiring a good property manager will likely be the best option, freeing up your time for more important endeavors, and allowing you to enjoy a more passive source of income.

Services That Property Management Companies Provide

When you pay the management fees for a property management company, you receive significant value for the price. Depending on your specific agreements, a property management company can provide numerous services, including:

  • Advertising and filling apartment vacancies
  • Collecting rent and setting rent prices
  • Lease negotiation and management
  • Screening and interviewing potential tenants
  • Responding to tenant inquiries and complaints
  • Performing background checks on tenants and staff
  • Accounting, reporting, and bookkeeping
  • Janitorial and cleaning services
  • Building construction, remodeling, repairs, and maintenance
  • Code compliance and property inspections
  • Hiring staff, vendors, and contractors

A property management company can minimize your involvement in your investment properties, and if you purchase property with the expectation of hiring a property manager, you can adjust your offer accordingly to maximize your potential profit.

Property Management Companies in Maryland

At Tidewater Property Management, our team can help you manage all of your investment properties, while focusing on maximizing your profit potential. We offer services for commercial and residential properties throughout Maryland. Contact us today at (443) 548-0191(443) 548-0191 to learn more about our property management services!