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When to Hire a Property Manager

Hiring a property manager can be a beneficial decision for real estate investors or property owners who find themselves overwhelmed with the responsibilities of managing their properties. Here are some situations when you might consider hiring a property manager:

  1. Limited Time or Availability:
    • If you have a busy schedule or live far away from your rental property, a property manager can handle day-to-day tasks, saving you time and travel. The low cost of a property management company is tax deductible and will free up your time to do more of what you love – spend it with your friends, family, traveling, or just not being bothered by issues when they arise.
  2. Multiple Properties:
    • Managing multiple properties can become challenging. A property manager can efficiently handle the demands of multiple units, ensuring that each property receives proper attention. They have the tools setup to manage work orders, tenant lease ledgers, documents, and other necessary items and issues.
  3. Lack of Expertise:
    • If you’re not familiar with property management laws, tenant-landlord regulations, or property maintenance, hiring a professional can help you navigate these complexities and avoid legal issues. Massachusetts has very strict landlord-tenant laws and they vary by town/city which makes it more difficult to know each one but more important to hire someone who works in those dedicated areas.
  4. Tenant Issues:
    • If dealing with tenant-related matters, such as screening, leasing, and handling disputes, becomes burdensome, a property manager with experience in tenant management can be invaluable. It’s important to know what to say and how to communicate with tenants so that you are not crossing any boundaries or risking any legal issues. What you might think isn’t a big deal could actually be illegal.
  5. Property Maintenance Challenges:
    • If you’re not equipped to handle maintenance requests, repairs, and emergencies, a property manager can coordinate and oversee these tasks, ensuring the property is well-maintained. A good property management company will have trusted and vetted vendors as well as in-house technicians. In the current business environment, finding good vendors who will schedule, show up, and charge appropriately is becoming increasingly difficult. Many are not taking on more clients, and if they do, they will schedule a month out, which is not beneficial for you, the property, or your residents.
  6. Desire for Passive Income:
    • If your goal is to generate passive income and you don’t want the hands-on involvement of day-to-day management, a property manager can take care of the operational aspects for you.
  7. Legal Compliance Concerns:
    • Property managers are often well-versed in local, state, and federal laws related to property management. If you’re concerned about compliance, hiring a professional can mitigate legal risks.
  8. Financial Management:
    • Property managers can handle rent collection, financial reporting, and budgeting, ensuring that your investment remains financially sound.
  9. Scale and Growth:
    • As your real estate portfolio grows, managing properties becomes more complex. A property manager can help you scale your operations efficiently.
  10. Stress Reduction:
    • If the stress and pressure of managing a property are impacting your well-being, hiring a property manager can provide peace of mind and allow you to focus on other aspects of your life or business.

Before hiring a property manager, it’s essential to carefully consider your specific needs, budget constraints, and the qualifications of potential candidates or management companies. Additionally, thoroughly research and interview candidates to ensure they align with your goals and expectations for the property. A good property management company should provide clear communication, have systems setup for tenant and work order management, rent collection, and monthly owner statements. You should confirm what fees they charge – both advertised and hidden (such as charging a percent ontop of vendor bills, charging for scheduling, lease creation, etc). Find a company that is aligned with your financial goals who charge monthly management fees as a percent of rent and not charge fees ontop of vendor bills, for scheduling, leasing, or renewals to name a few.

How to Properly Handle Tenant Lease Renewals

Handling lease renewals is an important aspect of property management, whether you’re a landlord or a property manager. Here are some steps to help you navigate the lease renewal process:

  1. Early Communication:
    • Initiate communication well in advance of the lease expiration date. This gives both parties ample time to discuss and negotiate terms. You want your residents to know what to expect and notifying them early will help them with their planning.
  2. Deciding to Renew or Not
    • A landlord is not obligated to renew a lease to a tenant nor is a tenant entitled to receive a renewal. If you plan to send a non-renewal make sure to check the lease and any local regulations that may require additional forms and steps to be taken. Sending this early can also help the tenant plan for their move.
  3. Assess Current Market Conditions:
    • Research the current rental market to ensure your proposed rent increase or renewal terms align with the current rates in your area.
  4. Review Lease Agreement:
    • Thoroughly review the existing lease agreement to understand its terms, conditions, and any clauses related to renewal. Most leases have a clause when renewals can be sent, make sure yours is at least 180 days in advance to reduce vacancy loss and allow both parties enough time for future plans.
  5. Evaluate Tenant Performance:
    • Assess the tenant’s payment history, property care, and compliance with lease terms as well as the way they interact and communicate about issues. This evaluation can help you decide whether to renew the lease or make adjustments to the terms.
  6. Consider Property Expenses:
    • Each year property and ownernership expenses increase. Rent increases should cover expense increases such as maintenance repairs, real estate taxes and other local property-related taxes, insurance, utilities, tax returns, and more when factoring in the renewal rent.
  7. Determine Renewal Terms:
    • Decide on the renewal terms, including the duration of the new lease, any changes to rent, and any other modifications to the lease agreement.
  8. Communicate Proposed Changes:
    • Clearly communicate any proposed changes in terms, including rent increases or modifications to the lease agreement, to the tenant. Provide a written notice outlining the proposed terms. Do this by sending the renewal offer and the renewal lease at the same time.
  9. Negotiate if Necessary:
    • Be open to negotiation. If the tenant has concerns or requests changes to the proposed terms, be willing to discuss and if it doesn’t work out then be prepared for the tenant to move out.
  10. Execute Renewal Agreement:
    • Both parties should sign the renewal agreement to make it legally binding. Ensure that all necessary parties have a copy of the signed agreement. Have this done within two weeks of sending the initial lease renewal agreement
  11. Plan for the Future:
    • Use the renewal process to plan for the future. Consider whether there are improvements or changes that can be made to enhance the landlord-tenant relationship and property management processes.

Maintaining open and transparent communication with your tenants is key to a successful lease renewal process. Completing your lease renewal season early allows the landlord to rest easy when a tenant decides to renew and allows a tenant to rest easy knowing their home is secure for another year. On the other hand, if the tenant does not want to renew – it gives the landlord time to find new tenants, and also gives the tenant time to find a new place if a renewal option isn’t offered.

Reach out to MerGo today to see how we can help you with your renewal process and make it easier on you.