Is It Better To Transfer Your Property To A Management Company Or Do It Yourself?
Though rental income is often mentioned as passive, rental business still involves some tasks to perform. Here is an indicative list of tasks related to the rental business:
- Finding tenants;
- Property maintenance;
- Dealing with paperwork;
- Dealing with rental disputes;
- Move-in and move-our check out;
- Cleaning the unit and arranging it for new tenants.
Note this is hardly a complete list, as each of the tasks comprises numerous sub-tasks you have to handle. Of course, you can do it yourself. But wouldn’t it be better to hire a management company?
Why you need to entrust the rental of real estate management company
The main advantage of hiring a management company is they have rich experience in the business. Thus, they can perform the aforementioned tasks much better than you. For example, they know the market and will easily adjust the rental to current market trends. Besides, they deal with a great number of leasing brokers. This means they will rent out your real estate assets faster than you. At last, they can save you a lot of money.
How using a real estate management company can save you money
You may not believe at first, but using a real estate management company can save you money!
First, let’s speak about expenses you have to incur anyway. In other words, we are talking about your maintenance bills. For example, at BSO we have strong relationships with many highly qualified vendors and reliable suppliers. Due to this, vendors and suppliers offer better pricing and pleasant discounts. Thus, when you entrust your property to a specialized agency for management, you can enjoy your lower maintenance and repair bills.
Second, your other opportunities to save money concern the time amount you have to spend, your need to comply with the local legislation, and the taxation issues.
Time is money
Renting property steals a lot of your time! First, finding a tenant could be a time-consuming process. You could spend more than a few dozen hours showing your unit to potential tenants and negotiating your terms and conditions. Second, tenants could blow your mind and waste plenty of your time with their maintenance requests (real or faked, day or night). Third, rental disputes are not unheard of, and resolving it via the Rental Disputes Center (the RDC) also takes your time. At last, add there your time spending on move-in and move-out inspections, documenting, cleaning and other tasks.
If you solve all these issues in your working hours, you can easily calculate the money you lose. Just multiply the number of hours spent on your earnings per hour. If you solve all these issues in your off-duty hours, your losses are trice higher as your leisure hours are beyond price.
So, hiring a letting agent to find tenants and perform other tasks undoubtedly save you a lot of your time. In other words, it saves a lot of your many.
Management company knows the law
No matter what your business is, you need to run it in accordance with local legislation. When you entrust your property to a management company, you can be sure each and every tenancy contract clause written as well as each and every action taken comply with the law. Besides, company’s rental layers help to avoid, prevent, or successfully manage tenancy-related problems due to their deep knowledge of the legal field.
For example, a competent real estate company in Dubai, such as BSO, is highly familiar with:
- Jurisdiction and compliance terms;
- Tax legislation;
- Laws that regulate relationships between landlords and tenants;
- Laws that determine the increase in the real-estate rentals;
- Unified form of a tenancy contract;
- Legal requirement to register a tenancy contract with EJARI;
- Cases to evict tenants prior to the expiry of the tenancy period;
- Terms of notification and eviction-related procedure;
So, with a property manager, you will not have to apply for numerous rental layers and attorneys in order to know your rights and stay updated with local legislation. In other words, using the agent will save you money regarding legal assistance as well.
Though in Dubai, the housing fee (so-called rental tax) is included in a DEWA bill and, hence, paid by a tenant, there is also a value added tax (VAT) you have to pay. Of course, if you rent out residential property, VAT is out of your concerns. However, leasing commercial property, compliance with VAT obligations is your duty.
Fortunately, the government allows you to recover VAT paid on expenses related to the commercial renting business. To clarify, when you sign a contract with a specialized management company, you can exclude these expenses out of the tax base.
To sum up, if you entrust us your rental property, you are very likely to earn more money while bearing no problems on your shoulders. So, appoint BSO and make your leasing business the one with truly passive income.