17 Oct Why Investors Must Pay Upfront for Monthly Property Expenses
Real estate investing can be extremely rewarding, especially during uncertain economic times. A rental property can often provide investment stability and impressive returns when other investments in the stock market aren’t proving successful. That’s why many financial experts say that real estate investing is so fruitful during periods of high inflation.
There are many ways to go about real estate investing, but it’s always advisable to partner with an experienced and reputable Austin property management firm. When you do so, you’ll know that the property management company has your best interests in mind.
During your investment experience, you may question why you have to pay for your rental property expenses upfront. This is a good question to ask, as savvy investors will typically look to reduce their upfront investment expenses whenever possible.
Below are three reasons why 1836 Property Management investors may pay upfront for monthly rental property expenses.
It Expedites the Management Process
There’s a lot that goes into the property management process. An experienced Austin property management firm like 1836 Property Management will handle all of this for you, so that you don’t have to worry about any part of it.
To do this, though, the property management firm needs to have the cash on hand to cover the investment expenses. For example, leasing fees must be paid as soon as the property is leased. When maintenance is needed on the property, those costs must be paid upfront, before the rental property can be leased.
By paying for these rental property expenses upfront, investors provide 1836 Property Management with the ability to immediately handle all these tasks, which allows your rental property to hit the market sooner.
The good news is that when owners send in funds to cover rental property expenses, they will typically receive some of these funds back sooner, compared to if they had outstanding balances on their rental property. Once the rent is collected and bills are processed, the available funds are distributed to the real estate investing partners.
It Protects Against Potential Legal Violations
Local laws that govern real estate investing and financial deals in general can be quite complicated. Having the necessary funds on hand to pay for your rental property expenses allows 1836 Property Management to help you avoid violating local laws.
If your Austin property management firm has authorized work on your rental property, the money to pay for these investment expenses has to come from somewhere … but where?
Some real estate investors may prefer that those funds come out of future rents, but that would be in violation of trust accounting principles. In essence, your property management firm can’t use money in someone else’s bank account to pay for your rental property expenses.
That’s why an experienced and reputable Austin property management company will put the upfront money you provide to pay for your rental property expenses in a trust account. This allows them to ensure they don’t “commingle funds” or “misappropriate funds” from one account to pay another, as that would be considered a Trust Account Violation.
From a logistical standpoint, having these funds on hand in a trust account allows your property management firm to establish and continue long-standing relationships with trustworthy vendors. It will be hard to find vendors to do business with if you won’t have the ability to pay them for 75 days, for instance.
It Establishes Trust in the Working Relationship
It’s extremely important to establish a good working relationship with your Austin property management firm, just as it is with any partner you have. You need to know that when something at your rental property needs to be handled — whether it be compliance matters or the services of a locksmith — your property management partner has your back.
It’s also important to trust that your real estate investing partner will be able to keep your risk down so you’re not legally liable for lawsuits or violations of state law.
This is what 1836 Property Management brings to the table. Our team stays up-to-date on all legal compliance matters related to your investment. We have an on-retainer attorney that’s paid out of the capital of the business — a resource that you don’t have to pay for.
Any time you want to check in on the progress of the financial aspect of your rental property, you can do so through our Owner Portal. The software doesn’t just provide monthly statements. Owners have 24/7, real-time reporting access on everything from billing, to approved expenses, to disbursement, to what’s been paid and what hasn’t.
Choose 1836 Property Management
Real estate investing in the Austin, Texas, market can be very lucrative, but only if you have the right partners. As a rental owner, one of the best things you can do is partner with an experienced Austin property management company to assist you with all your real estate investing needs.
While you have to pay upfront for monthly property expenses, there are good logistical and legal reasons for it. Know that your money is being put to good use, and that your upfront investments of rental property expenses will only result in bigger and faster returns for you in the end.
At 1836 Property Management, we have years of experience helping investors just like yourself be successful in leasing rental properties. Contact us today to find out how we can help you improve your real estate investing ventures.
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By: Kayla Gonzales, 1836PM Marketing Manager