Are property management companies smart to go through to rent your house until the house prices go back up?
Can anyone tell me how they work?
Maybe. You are talking about becoming a landlord. 1 in 10 people have the personality to become successful in landlording. The property manager finds a tenant and collects the rent. Some do a excellent job. There was an article in days gone by’s paper by a landlord whose manager had not found a tenant in 4 months. He called someone else to go check on the property and all the kitchen cabinets had been removed./
Property management companies are paid by the title-holder of the leasing unit. They usually charge some upfront fee to secure the tenants and then the title-holder pays some percentage of the rent (usually 7-8%) as the monthly management fee.
For a renter, vacant through a management company has lots of upside and very small potential downside.
One advantage is that the management company is usually very responsive to maintenance requests. If they manage enough places, they either have staff or on-call maintenance people to respond quickly to these issues. Also, you have a management office you can call for anything, rather than trying to track down a landlord. Some places also allow you to pay your rent on-line. And, getting your deposit and such back is instant and simple.
The only potential downside is, since the title-holder is bringing up the rear 7-8% of the rent a month to the management company, they might charge a small more in rent than someone who is managing their leasing themselves.