Step 6: The Ins and Outs of Owning a Rental Property
Congratulations are in order! Assuming you’ve gone through each of the previous steps in this series, you are the new owner of a rental property. Now you have a choice—you can self-manage the property or hire a property manager to do it for you. If the property is not in your state you may have no other choice but to hire a property manager, but even if the property is down the street, you may still opt to enlist a professional resource.
Property managers can make your life as a new investment property owner much easier. In fact, many seasoned investors enlist the help of property managers, and with good reason—they generally have a network of professionals to deal with maintenance and other issues, taking the burden of day-to-day operations off of the investor. Don’t reinvent the wheel! Property managers already have systems in place to handle things you may not have even thought of yet.
Despite the benefits of using a property manager, finding a quality one can be tough. A few things to consider when hiring a property manager are:
- How many properties do they manage currently?
- How many employees do they have on staff?
- Are they licensed and insured in the state where your property is located?
- Do they take responsibility for the paperwork, legal compliance and evictions?
- How many years have they been in business?
- Was the feedback from their references positive?
- What is their fee structure? How does maintenance factor in?
- What is their tenant turnover rate?
- What does their tenant screening process entail?
- How do they market vacant properties?
- How do they handle maintenance requests?
- How do they communicate with owners?
Thoroughly vetting your property management candidates will help you determine whether they are reputable and will serve as a quality liaison between you and your tenants. If you don’t have the time or resources to act as a hands-on landlord, the property manager could be your ticket to a lower-stress way to invest in real estate. While property managers do tack on an additional expense, typically 8-10% of your monthly rent, they can help take a lot of the legwork out of tenanting and managing your property. Just be sure to understand the terms of the contract and know what your exit strategy is in the event the relationship doesn’t work out.
If you decide to self-manage, be prepared to be on-call 24/7. Landlording is not for the faint of heart and you owe it to yourself to carefully consider what all it entails before you make the decision to go at it on your own. This article from Forbes offers a few additional considerations that may be helpful as you decide whether self-management or property management is the right choice for you. If you are still unsure, you can always start off by managing the property yourself and engage a property manager down the road if you determine that the workload is more than you bargained for. Whatever you decide, be sure to do your homework in order to be as prepared as possible.
We hope this series for new real estate investors has been helpful. If you have questions, don’t hesitate to drop us a comment or reach out to us on social media! For ongoing tips and insights into SFR investing, tune in to our podcast, The Real Investor with Dennis Cisterna, available on iTunes, SoundCloud, and Google Play with new episodes weekly. We want to be a resource for you so please reach out and let us know how we can help.