Editor’s Note: This biweekly sponsored column is written by Rick Gersten, founder and CEO of Urban Igloo, a rental real estate firm that matches up renters with their ideal apartments, condos or houses. Please submit any questions in the comments section or via email.
You’ve decided to dive in to the landlord pool. Don’t start your landlord adventure with a belly flop. Some landlords have no trouble managing rentals themselves, but others need some help, especially new landlords. Hiring a property manager can save time, headaches and even some legal troubles, but is it right for you? Here’s what you should consider:
How much time do you have?
Do you have the time to devote to managing a property? Getting tenants in the door is just one task on a laundry list of property management to-dos. Even before you find the right tenants, you will need to set up your business, educate yourself on landlord tenant law, prepare your marketing plan, determine your tenant qualifications and find services for credit reporting and lease documents.
While you’re marketing the property, you’ll need to talk to prospective renters and show the property. For a first time landlord, navigating through these tasks can be overwhelming and can cut in to work and leisure time. Once you have tenants, collecting payments and handling maintenance issues also dip in to your time. Are you able to handle a leaking shower during your Tuesday staff meeting or an A/C unit on the fritz during your vacation? Some things can’t wait.
How much does it cost?
In general, property management services are broken down into leasing the property and then ongoing property management. The general cost for leasing is one month’s rent, and ongoing property management is generally 8% of the monthly rent. For a $2,000 unit, the leasing will cost $2,000 and the management for a 12-month lease costs $160 per month or $1,920 for the year. Total cost is $3,920. To some, that sounds like a good bit of money, but to others, that’s a small price to pay to keep the business running smoothly.
Other considerations.
If you live out of town, a property manager may be necessary. They are nearby to handle emergencies and check out other maintenance issues to determine the best solution. It’s impossible to do that on your own when you’re out of state or out of the county.
Some renters will favor renting a professionally managed unit over one managed by the landlord themselves, especially if the landlord isn’t local. A property management firm (or leasing agency) likely will rent your unit faster than if you try to rent it yourself, which in turn can actually save you money.
So you need to weigh that cost in addition to the cost of your time. A property management firm is also going to make sure you get paid. If you don’t, they’ll be the ones handling collections, court and evictions. So while hopefully this is never an issue, it’s good to have someone familiar with that process to help you out. Lastly, a property manager knows the rules. They understand landlord-tenant law and relations, and will make sure you are doing things by the book. This can also save you time and money in the event that a tenant has a complaint or issue.
Be sure to find a licensed property manager. Check their references, and be sure to understand your contract. For most landlords who are new to the business or have only one property, a property management company can save a lot of headache as well as money.
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