Even if you and/or your clients plan to open your home as a vacation rental for two weeks during your local prime season of snow skiing or big wave surfing, managing a rental property requires three things:
- tenant finding and vetting
- day-to-day communication
- constant physical upkeep of the property itself
Just the first task of tenant finding and vetting requires that “someone some how” has to…
- verify employment of the prospective tenant
- obtain current references on the prospective tenant
- calculate the prospective tenant’s debt to income ratio
Now add on the tasks of daily communication with the prospective tenant plus the constant upkeep of the property and you may decide to hire a professional property manager even if the property you’re managing is your very own owner-occupied house.
Now imagine if you plan to manage other properties on top of your owner-occupied home in locations other than your own neighborhood or state. Have you the time, the patience, the skills, the network of qualified people to get the job(s) done?
Other things to have at your fingertips when you choose to manage your own (or another’s) property (ties) include:
- knowing the local housing laws of the state where the property (ties) are located, such as
- how non-payment is handled
- whether or not tenants can deduct money from their monthly rent check for repairs
- how rent increases occur
- having skilled, responsible, trusted contractors and subcontractors on hand when repairs/fixes are necessary
- considering all aspects of liability insurances from health hazards to payment disputes and everything in the middle.
No matter what anyone may say or tell you, owning and managing property or properties may generate extra income for you BUT that income, like every other type of income, is NOT passive. (Passive, to me, means no extra time/energy/work.) You can, however, determine the amount of that extra income based upon how much active attention you yourself may choose to give it.
Gary Beasley, the CEO and co-founder of Roofstock, the country’s first online marketplace created exclusively for investing in single-family rental homes with over $1B in transactions, said, “It’s generally better to buy near where you live…” if you would like to self manage and handle responsibilities yourself. “Otherwise, find a local property manager who is experienced, has the appropriate scale and has good systems and reporting to ensure your property is managed well and that you have visibility into its performance.”
Generally, the standard charge for professional management is between 8%-12% of the property’s monthly rental value.
Thanks to Veronika Bondarenko and InmanNews.