Should you Hire a Property Manager?
The lure of investing in rental property is just as strong as ever;
perhaps more so in light of historically low prices. When considering
investing in rental property; however, you must consider whether you
want to manage the property on your own or should you hire a property
manager. On one hand, many people take a look at the options and wonder
how difficult it could be to handle it on their own; especially if it
means they are able to save the cost of paying a professional property
manager.
Before you make a rash decision, it is important to consider all that is
involved in managing your own investment property. Not only will you
need to determine how much rent you need to charge, but you will also be
solely responsible for marketing your property and attracting quality
tenants. You must also make sure you have and fully understand a written
rental agreement and make decisions regarding under which conditions you
will rent out your property. For instance, will you allow pets? If so,
is there a weight limit? What about other exclusions? Will you rent to
smokers or only non-smokers? Finally, you will need to make sure you
only rent your property to tenants who are least likely to cause
problems and who will pay their rent on time. Once all of that is
accomplished, you will still be responsible for maintenance and repairs
on the property; whether it is the middle of the day or the middle of
the night.
Now, while you might well be able to handle all of this on your own;
when you stop to consider all that is involved, the fee paid to a
professional property manager might not sound like such an expense after all.
Property managers are typically responsible for marketing the property
to attract prospective tenants as well as showing it to interested
applicants. They will also handle everything related to performing
credit checks, criminal background checks, employment verifications and
rental histories. In addition, the property manager can negotiate the
terms of the rental agreement and collect the security deposit and first
and last month's rents.
Other tasks commonly handled by the property manager include conducting
inspection, handle repairs and working with condo and homeowner
associations. All of this is to ensure the owner of the property does
not have to handle the day to day problems that can often come with
owning investment property.
The fees paid to property managers can vary, but are usually based on a
percentage of the monthly rental fee. The most common fee is 10% of the
monthly rent. The rent for a condo or a single-family home can vary
quite significantly as well. For instance in some areas, rent can be
around $500, but in other areas can go up to $1,500 or more. Basically,
the higher-end the home, the more the rent. Higher-end homes also
typically rent out much faster as well.
When considering hiring a professional property manager, there are a few
tips that should be kept in mind. First and foremost, check to see if
property managers are regulated in your state. In most cases, property
managers also work as fully-licensed Realtors. You should also inquire
about the manager's experience and education as well as check their
references. Find out if they belong to any professional associations.
Before agreeing to anything, be clear about what their duties will be.
The duties for a property manager can be far-ranging and it is best to
negotiate everything in advance. For instance, some managers will act as
a type of all-point person on behalf of an absentee owner and will
handle everything from collecting rent to being the contact person when
there is a repair issue in the middle of the night. On the other hand,
some property managers are only responsible for marketing the property
and the owner will handle everything else. Whatever the terms of your
agreement are, you can expect the fee to be commensurate with the level
of expected duties.
Still not sure whether you want to handle everything on your own or pay
a property manager? Sit down and carefully consider what you have time
to realistically handle and what you do not. If your budget does not
allow for hiring a professional property manager to handle everything,
but you feel you also do not have time to handle all of the necessary
details, you might consider hiring a property manager to be responsible
for a portion of the tasks. This can be an excellent investment that is
also a good way to leverage all of your resources.
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