With the shifting economy, more people find themselves in the position of needing to rent their home. Whether you have transferred because of a job, or need to downsize and don’t have enough equity to sell the home, renting is a great way to maintain the equity in your home and keep your credit clean.
A property manager takes care of all aspects of renting your home. That includes advertising for renters, screening renters, collecting rent, arranging for repairs and if necessary, serving evictions. Your contract with the property manager should clearly spell out the property manager’s rights for making repairs and establish dollar amount limits for repairs the property manager can authorize without getting your approval.
If you live in the same geographic area as the home you want to rent, then location is not necessarily an issue in managing the rental yourself. However, if you move out of the area, property inspections, repairs, and rent collections can quickly become a problem, especially if the renter is a deadbeat who is aware that you’re not around to keep an eye on your asset. (see reference 1 for section)
A property management contract usually assigns a percentage of the rent collected as the fee for the property management service. For example, if the property management contract calls for a 10% property management fee and the house rents for $1,200 a month, then the property manager is paid $120 a month to manage your property. The property manager often includes placing a renter in the property with the percentage payment. Repairs and legal fees are billed to the owner.
There are many questions to ask yourself before you decide to manage your own rental property. Do you know how to advertise for renters? Do you have the ability to perform background checks and credit checks on renters? Do you know contractors to use for repairs and maintenance or do you have the ability to make the repairs yourself? If a renter does not pay, can you knock on the front door and ask for the money? Do you have the backbone to evict someone for non-payment of rent? If you answered “No” to any of those questions, then you need to consider using a property manager to rent your home.
The enormous benefit to hiring a property manager is the savings on your time and aggravation. The property manager takes the phone calls and wades through the list of prospective applicants for the rental. The property manager receives the phone call in the middle of the night when the air conditioning breaks. The property manager tracks down the delinquent renter and deals with the legal aspects of eviction. The only things you have to worry about are repairs over the dollar-amount set forth in the management contract and how long you want to maintain the home as a rental.