Becoming a landlord entails a good deal of thought and work, even if you only have one residential property to rent. One of the first questions you must answer is whether you want to run things yourself or if you would rather hire a property manager. There are advantages to both strategies, and understanding them can help you to make this important decision.
What does a Property Manager do?In general, a property manager takes over all aspects having to do with renter contact. This includes marketing your property, renting it out, collecting rent, tending to maintenance and repair matters, taking tenant complaints, and handling evictions. An experienced manager can relieve you of a great deal of responsibility when it comes to the daily management of your property. You can breathe easier knowing that your rental property is in the hands of a manager with direct experience in all aspects of tenant services.
Property managers also tend to be experts in the laws and regulations that must be followed when renting out a property. A good property manager will know your state's rules and will stay current on any new and upcoming rental laws so you don't have to worry about them.
Here are just a few common rules that must be followed:
- Issuing Pay or Quit notices when the tenant fails to pay rent
- Checking batteries in smoke detectors every 6-12 months
- Installing Carbon Monoxide detectors in the rental
Property Management Costs
When making the decision to hire a property manager or manage the property yourself, the topic of the costs associated with hiring a property manager may play a large role in your decision. If you've never tired managing a property yourself, you may feel that the property manager is being paid a significant amount of money to simply collect rent and then pay you the proceeds. If this is the case, here are some real life examples of the challenges owner-managers may experience:
- Not knowing where to running ads or what price to ask for rent
- Having multiple applications and not knowing which one to select or how to determine which is the best tenant
- Waiting around for an extra 45 minutes on a Saturday because the potential applicant got lost trying to find the property
- Having to follow up with and listen to the excuses of why rent was late or why they can only pay half righ now
- Maintenance issues and having to coordinate a repair man to come out at a time that is convenient for the tenant as well as when the repair man is available
Typically property managers use one of two pricing models, a fixed flat rate or a percentage based rate. Depending upon the area you live in and the average rental amount flat rates can range anywhere from $75 to a couple hundred dollars, whereas percentage based rates can range anywhere from 5-10% of the gross monthly rents. When evaluating different property managers it is important to understand exactly what is included in the property management fee. For example, some property managers charge a lower percentage of rent however they may take 100% of the fees collected from the tenants.
Going it AloneIf you prefer not to pay the cost of retaining a property manager or if you live near your rental property and don’t mind spending time there and getting your hands dirty, self-management may be a viable option. However, keep in mind that issues can—and often do—crop up at the most inconvenient of times such as holidays and weekends. Many landlords who choose to handle their own property care find themselves doing everything from unclogging stopped toilets to buying and replacing malfunctioning appliances. Most difficult of all are issues that can arise if a tenant proves to be undesirable. Many self-managing landlord have spent several stressful months learning about his or her legal rights in eviction procedures. Forcing a tenant to leave—even if you have airtight proof that he or she must go—is no easy task.
Help from the ExpertsA property management company exists for the sole purpose of taking such burdens off the owner's shoulders, and often a property owner is more than happy to pay the fee. Whether you live around the corner from your property or hundreds of miles away, you might not be a hands-on type of person. Handling the minutiae of finding a tenant and performing daily maintenance and repair can consume a surprising amount of your time and energy. Why not entrust your rental property to a manager who can ensure that both you and your renters are treated fairly and that the house is well-maintained?
In short, there are several good reasons to hire a property manager:
- Quick access to your property if problems arise. This is particularly important if you don’t live locally.
- If you view this property only as an investment, let others take care of the nuts and bolts.
- For those with limited time, property managers can take on the tasks you simply don’t know how to fit into your busy calendar.
- Property managers know the ins and outs of real estate law. This is particularly helpful if your property is considered to be affordable housing.
Related Post: Find the Right Property Manager