A property management company can cost anywhere between 3.5%-8% of the monthly rental income and you know what? Maybe you don't want to pay that.
So the only other option is to self manage your property.
But you have some questions. How difficult is it? How much time will it take? Is it a hassle?
Before you can decide if you're able to self manage, you need to ask yourself some questions.
- How many hours a week do you work?
- Do you know how to read a credit report?
- Do you know what to do if a tenant does not pay their rent?
- Are you willing to be on call 24/7 for emergencies?
- Do you have a list of maintenance workers you trust?
Some days, you don't need to do anything with your rental property. Other days, there is lots to do. If you're working a full time job during normal business hours, it can be especially hard to accommodate the necessary time into your busy schedule.
What if there is an emergency? Not only will you have to work during your normal off time, but you will also have to spend the time driving out to your property and dealing with tenant problems when they arise.
What if you need to show your rental? Sometimes during the week is the best time to show prospective tenants and if you are at work, you're missing out.
If your unit is vacant, or when it does become vacant (which at some time it will), will you know what to do?
Vacancies are the largest expense for any rental property. Say your property rents for $2,500 a month. That means every day your unity is vacant, you are missing out on $83 of income a DAY. This vacancy cost adds up extremely fast.
How do you select a quality tenant? Where are the best places to post an ad for rent? Craiglist is usually the best place to post an ad for rent in 2012, but property management companies have many more outlets and a much larger reach than just people looking on Craigslist.
Typically, it takes a property management company a much shorter amount of time to fill vacancies. They are the professionals after all!
Once you find a tenant, they need to fill out a rental application and then you need to run their credit. Do you know what red flags to watch out for?
Evicting a Tenant
This happens a lot more than people think.
Tenants lose their job and then all of a sudden they can't pay rent. What are you going to do? What's worse than a vacancy is a tenant occupying the residence, but not paying rent.
Do you know the eviction process? Tenants will attempt to occupy the residence (for free) as long as they can after they know they can't make their rent payment.
Unfortunately today, the courts have a much higher favorable bias towards tenants than landlords. Do you know the legal paperwork and time frames that they must be sent to the tenant to have the fastest eviction process possible? Even some experienced property management companies don't get this right (be careful who you choose).
Not only that, but tenants always have a sob story. There is always a reason they can't pay their rent this month and then a different excuse will come up for the following month.
Are you going to be able to look past their personal issues and sob stories to take the right, corrective action?
Property Management companies are experienced with this and know that your return on investment (ROI) is of most importance. They are always quicker to start an eviction process than the property owners themselves.
They do happen. Often. It is irregular for a property to have less than four emergencies a year. What are you going to do when one comes up?
What happens is a water pipe bursts and starts flooding the bathroom upstairs at 3:00 AM. Are you going to be able to answer the phone? If not, you're property could be destroyed by morning.
This is where property management companies shine. The best companies offer 24/7 emergency support to handle situations just like these.
If this is too much of a worry, it is probably best to hire a property management company.
The best thing you can do for your property (besides having it always rented out with paying tenants) is keep it properly maintained.
The secret to getting the highest ROI is preemptive maintenance - fixing the small problems before they turn into major problems costing you tens of thousands of dollars.
What can look like an old patio cover could be a lawsuit waiting to happen. What if a strong wind or a tenant accidentally hitting a post causes it to fall and crush the tenant and their child?
That is the owners responsibility and you could be sued for negligence. Property management companies do inspections in between tenants to watch out for things just like this.
Do you know what to look out for?
If you think this is all overwhelming your best bet is to go with a property management company.