Managing a rental property.
The nice part about being a landlord/lady is the passive income stream, meaning you don’t have to present to make money, but that doesn’t mean there isn’t plenty of work to be done as well as unexpected expenses to pay. You can do all the work yourself, or hire a property manager to do all or part of what you don’t want to do. So which makes the most sense for you? According to WomenWhoMoney.com, many new rental owners aren’t prepared for the work it takes to be a landlord.
Updated upscale properties are more expensive to purchase initially, but it may be worth it when it comes to managing them. Generally, the tenants tend to treasure their credit scores more, so they have better records as tenants. They tend to show more respect for the property or why bother to lease something so nice? They are more likely to understand that the rental is a business and are likely to lease the property for longer periods, allow automatic debit for monthly rent payments, and pay steeper deposits. If you have a home warranty on the home, the tenant makes the midnight call to the warranty company instead of to you.
Properties in less desirable neighbourhoods may be more affordable to purchase, but you could have more problems with maintenance and the types of tenants you get. You could face more vacancies, transience, evictions, and higher maintenance costs.
The main thing to keep in mind is that if you manage the property yourself, you’ll have to do all the jobs that a good property manager would do on your behalf. You should manage your own rental property if you are:
- residing reasonably close to your rental
- financially able to carry the costs of your rental while vacant
- prepared to run your rental as a real business
- able to market your rental yourself
- able to meet potential renters for showings and negotiate leases
- able to do background and credit checks on potential renters
- willing to collect the rent and enforce late notices and fees
- willing to address tenants’ complaints in a timely manner
- willing to deal with problems at any hour, day or night
- handy with tools, or have a good reliable handyperson on call
- unafraid to deal with conflict
- willing to evict bad renters legally
- willing to abide by court decisions in any tenant-landlord dispute
Your Berkshire Hathaway HomeServices network professional can provide some or all of the services you need. You can list your property for rent with them, and for a fee of approximately one month’s rent, your listing agent will market your property, vet renters through credit reports, references and background checks, draw up the rental agreement and get it signed, set up automatic rent payment debits, and delist your property once it’s rented. This is an excellent option if you want to get the best renter possible but manage the ongoing rental yourself.
If you want to hire a professional property manager, you should interview several professionals before choosing. They should be experienced with the type of property you’re renting, be familiar with the area and be willing to take on every aspect of the job or to share responsibilities with you. But the most important job they do is handle tenant move-in and move-out, including collecting keys, changing locks, and determining how much should be deducted from security deposits for damages or wear and tear. You should hire a property manager if you:
- live out of town, out of the province, or out of the country
- work a full-time job that makes you unavailable to handle problems quickly
- are unable to physically manage and maintain the property yourself
Depending on where you live, how many properties you own, and which services you require, you can expect to pay 5 to 15 percent of your monthly rental fees to a property manager.