Should I Hire a Property Manager?
It seems simple enough. You have a rental home and need to rent it. How hard is it to place an ad, rent it out and collect rent each month? Why pay someone to do what you can do yourself? These are good questions and while it seems reasonable to think we can handle things like renting and maintaining a home, like many other things in life, it is not quite as simple as it seems.
Let’s start with renting the home. The first step is to price it appropriately. If the price is too high, it will sit and become stale, not drawing the attention you need. If it’s too low, you are missing out on income and sometimes you miss out on good renters who suspect there’s something wrong with that underpriced property. While it’s not hard to find nearby rentals online, it takes some homework to make sure those nearby rentals are actually comparable.
Once you have determined the price, you need to market the home in a way that makes sure it gets seen by qualified tenants. Any ads must be careful to adhere to fair housing rules, not steering toward a certain demographic with your wording or making decisions which could be considered discriminatory. You also need to be available to show the home as many times as necessary.
Many people brush off this next step, but it is one of the most important ones in property management – screening the tenant. There are several pitfalls here, from not screening enough to violating fair housing regulations. Potential tenants should fill out an application, which should give permission for you to screen the tenant. Credit checks should be run, and any denials addressed appropriately. A good property management company will check employment and rental history as well. All this needs to be documented to minimize liability.
A good lease is important. California has many, many housing rules and regulations and unless you have actively researched them and are using a current lease with necessary addenda, you are very likely to violate one or more of these regulations. Some examples of issues that must be addressed are bed bugs, pets, lead-based paint disclosure for pre-1978 properties, CC&Rs, smoke detectors, mold, and water conservation. Any resident age 18 or older should be a signer on the lease. The more detailed your move-in process is, the better protected you are when the tenant leaves.
After the tenant is in place comes the maintenance part. Property management companies have an after-hours system in place for property emergencies. When you are self-managing, you are always on-call, and unfortunately the problem calls often come at the most inopportune times. You also need to plan for ongoing maintenance and property inspections to prevent more calls. Having all the finances clearly laid out and receipts filed for tax time is important as well.
The bottom line is that self-management is possible. The question you must ask yourself is whether you are willing to spend the necessary time to ensure you are doing it in a manner that protects you. And is there another way you would like to spend your time?