I know that probably sounds like a silly question to a lot of property owners; Philadelphia property management costs money—how can it save you money?
There is a lot to unpack concerning this assertion of property management awesomeness—and we'll lay it out fully—but the main reasons are:
- You probably don't 'pay yourself' for your work or calculate the cost of your time.
- Expertise saves you from rookie mistakes that cost you.
- Economies of scale.
Let's take a look at each of these in-depth to see how an exceptional Philly property manager like Rentwell can save you money—plus, a lot of other important things (like sleep and sanity).
1. What Is the Value of Your Time?
A good business owner calculates the value of their time to ensure their business is reaping them the right rewards. Take, for example, that one crafty friend you know who is selling her hand-sewn, embroidered masks on Etsy. You might have laughed at her asking $20 for one and scrolled by—but did you consider the four hours it took to sew and embroider?
At that rate (minus materials), she is making less than $5 per hour to make them—and you start to see what a bargain it is. This is a fictional example, of course: crafters who make a living selling their wares instead of using it as a hobby would charge a lot more because they know the value of their time.
How much is an hour of your time worth? This is a question with a pretty complicated answer, but you can make a decently good estimate by looking at the wage you're willing to accept at a job and using that. Let's assume, for the sake of all that is math, that the total time you spend managing your investment each month is as follows:
- Collecting rents and accounting: 20 minutes (this assumes your renters are good about paying the rent).
- Repairs and maintenance issues: 2 hours per month averaged across the year. Does this include coordinating handymen and service techs to come out to the property? If not, add time.
- Property inspections: 40 minutes. You drive by once per month, and the property is 20 minutes out of your way.
You spend, on average, a minimum of three hours per month with a really good (and fictional) renter who is pretty handy and doesn't give you too much trouble.
If you make $50 per hour, you're spending $150 of your time each month to manage your property—plus whatever maintenance costs it takes to make those repairs or call in technicians or specialists. Apples to apples, you'll want to find a discount Philadelphia property management company, and you're set! Or are you?
What about property turns and leasing? Midnight phone calls? Are you willing to work for $50 an hour at three in the morning—or does that number get higher? What if your property is older and your renters put every last thing in as a work order? Do you have to call to collect?
Sometimes you don't get the perfect resident, and your month might look more like this:
- Collecting rents and accounting: 1 hour consisting of three voicemails and a 20-minute explanation about why the renter needs three more days to pay rent. Two more calls three days later to get them to actually pay it.
- Repairs and maintenance issues: 5 hours per month averaged across the year. This renter is harder on your home, and things you expected to last are getting the heavy end of wear and tear fast.
- Property inspections: Two hours because you have to drive by three times per month (at least) to ensure they are taking care of the lawn because you keep getting fined by your HOA.
Suddenly, this scenario is costing you $400 a month of your time—and even luxury Philadelphia property management companies are going to be a bargain.
2. Expertise: No Costly Rookie Mistakes
True fact: Expert property managers have actually heard and seen it all by their third year. Otherwise, they probably bit the dust early—and that's not someone you want managing your rental property (or properties) anyway!
These Philly property pros know what to look for to avoid trouble when it comes to rental homes because they've developed the chops. They also know how to save you money on costly mistakes such as:
- Overpaying for repairs and maintenance requests
- Using vendors with a bad reputation
- Renting to 'Professional Tenants'
- Putting the wrong upgrades into a property.
3. Economies of Scale
Philadelphia property management companies manage a number of rentals—and thus, based on that college econ class you took five or six years ago, have fantastic systems in place to do it.
Are you working with an online renter or owner portal yet? You pretty much have to these days to collect rent on time and get paid. What does that cost? Are you allowing online maintenance requests and tracking or using an all-in-one property owner program? That probably runs as much as monthly property management costs alone when you only have a handful of properties.
Working with a professional Philly property management company means you get to benefit from all of the technology and service providers of the company—without the price tag for each benefit. Online ticketing and maintenance systems alone can be the reason your renter decides to stay five years instead of one year.
These are just three ways that working with a Philadelphia property management company can save you money. Unless you have the perfect 'unicorn renter,' you're probably better off taking the time you spend managing your rentals and spending it with your family—after all, that time is priceless.