If you need to move but don’t want to sell your home, you have other options. The rental market has been heating up, and rents have been keeping up with (if not outpacing) inflation, rising almost 3% annually around the country. Renting your home instead of selling it may be a great way to make extra money and avoid selling at a loss. My wife and I recently became landlords, and we decided to hire a property manager to help us handle the process of renting our home.
What is a property manager?
A property manager can be a single person or a firm consisting of several people who manage rental homes for homeowners and act ask their representative with the new tenants. Property managers handle every aspect of renting out your home. They are responsible for finding new tenants, screening them, collecting rent, evicting non-paying tenants, hiring maintenance crews when things break, and a host of other tasks that you may not want to handle. They act as the middleman between the homeowner and the new tenants.
How to find the best property manager
Like most service industries, you do not want to simply pick a property manager out of the phone book. This company and their employees will be managing one of your biggest — if not the single largest — assets. Don’t trust your home and its value to just anyone. One of the best ways to find a great property manager is to ask for referrals from people you trust.
Do you have a friend or coworker who just rented their house? Who did they use? Even if they had a bad experience with a potential property manager, you want that information so you’ll know who to stay away from. Your realtor is another good person to ask for a reference, but be careful — they may try to steer you to their firm, which might handles rentals.
Once you find three different property managers, you will want to interview the property manager and ask a lot of questions before you hire them.
What fees do they charge?
Property management firms typically take 10% of the rent as their fee for managing your property and interacting with the tenant on your behalf. So, for example, if you rent your home to someone for $1, 300 per month, then the property manager will receive $130 and then send you the remaining $1, 170 balance every month (assuming no other expenses were incurred).
This is the standard rate in most states, but fees might vary a bit depending on where you live. Property managers may also charge homeowners one-time fees for advertising the property on the MLS network and other websites, and some may charge a fee each time that they you a new tenant.
Why you would want a property manager
Some people who either have the time or are handy with tools may want to forego the expense of hiring a property manager. Others may not want to deal with pesky tenants, or they may even live outside of the area. Just because you are moving to a new state doesn’t mean you want to sell your home. Hiring a local property manager to keep an eye on things can be a great help.
While the decisions for how your property is handled and maintained still rest with you as the homeowner, a property manager helps take care of the day-to-day operations and interactions with your tenants leaving you to draw a passive income. There are also tax benefits that help defray the cost of property management, as such expenditures can be deducted from your income taxes.
Why you may not want one
Hiring a property manager may be an expensive convenience. Your margins may be so tight that their fees could be the difference between earning a profit and suffering from negative cash flow each month. Some homeowners may also be uncomfortable with the lack of control that comes from hiring a property manager to screen tenants, collect rent, and schedule maintenance.
What about you? Do you own rental property? If so, do you use a property manager to help you with it?
Excellent information. Property managers can save you time and money if you have multiple rental properties to manage. The challenge is choosing the right one you can perfectly work with.
Some investment owners think that property managers will them money not realising that property managers will make money for them. For as long as you hire a really good property manager, the benefits of having one will outweigh the fees.
Hiring a property manager is necessary for property owners who have many rentals to manage and whose rentals are in a different city from where they live. The fees can be a little bit expensive but will prove cost beneficial in the long run.
Great post. Hiring a property manager for property management tasks is very beneficial. To confirm they truly are a reputable and capable,you can check company relations and history with both tenants and landlords, before hiring process.
This is very helpful, thank you. I live far away from my property and my husband has no interest in it rather than sell it, unfortunately. Thank God, I saw these website as I was desperately looking for solution of my problem and one thing I love about it is they also tell how much should a manager get paid :)Thank you again.
Looking for a PM to hire in tempe, mesa, and chandler area. I didn’t find one. Please please let me know another good association to find great pm’s please
thanks
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Teri-A solid place to start to look for a local property manager would be NARPM (National Association of Residential Property Managers) you can search a number of cities and different types of property management companies. This organization stresses Ethics, continuing education and a sharing of information within the group.
Someone suggested above, talk to other people you know that are having a good experience with their property manager. If you start shopping online, follow up with review sites or the BBB. You can also look up any property manager on the Board of Realtor site for your State. You may not get first hand knowledge but you can see if Property Management is a side job or they are a TRUE property manager/company along with any issues they may have had. Be wary of real estate agents doing this as a side line. Most are not equipped with appropriate software, bank accounts, understanding of the laws, etc. You are better off keeping your real estate agent your real estate agent and hire a property manager to do property management. They are not the same animal.
You may also try your local Appartment Association. I hope that helps and good luck.
What websites or online places do you suggest to find these companies? Do rental search sites help?
Managing a property would be my biggest hesitancy about owning rental properties, so a good property manager would be a definite need (as opposed to a convenience).
Compliments to Tammy’s comment. I would also highlight another important quality in a property manager: their understanding of “asset management”.
I have managed properties myself, and I’ve had other people manage them. The greatest property managers always had good people skills, yes, but they also had a solid grid for recommending profitable capital expenditures to me, as an owner.
If real estate lingo is not your forte, I simply mean they are good at telling you when and how you need to upgrade or substantially repair your property. This helps keep your overall investment safe, but also keeps it yielding the highest returns possible.
I will be moving out of my house in maybe 6 months. I would like to rent it rather than sell it. This all depends on if I can make a decent return on my equity already existing in the house. If I can sell the house and make more by investing elsewhere, I will go that route.
I know a few landlords in my area including the one I rented from prior to buying my house and a couple people at my old job. I will inquire of them if they want to manage my property or if they would refer someone who does. I don’t have the expertise to handle it myself and I will be relocating about an hour drive away from the house.
Being a Broker/Property Manager myself I want to throw out there that your only talking about the $$$. I respect and appreciate that the bottom line is VERY important…but in circumstances where a property owner doesn’t know enough (or anything) about Fair Housing, Tenant/Landlord Laws and codes can cost you way more in the long run. You are paying for a property managers knowledge and expertise in these areas. Many owners that have been previously managing on their own don’t know the first thing about how to legally charge a tenant on a move out and then end up in court believing this is just how it is after any tenant moves out (true hollywood story).
I place tenants for some property owners that manage afterwards and do very well but on the other side of that coin many “problem properties” I pick up are from the “Do it yourself property owners”. Thinking that I can collect a rent check and call a repair guy.
To add to Mr. Colemans article one of the biggest things you should be asking yourself when searching for property management is; is the level of management or involement I want with this company meet my expectations and comfort level? Once you’ve found a company/property manager that meets this criteria the rest is easy.
We own a duplex and do not have a property manager, this does mean dealing with the little issues that pop up but it saves us about $50 month which is worth it to us. If we get another property or we move, however, we will get a property manager because of time and travel issues.
I’ll be moving out of my condo in about a year and if I stay in the area I think I’ll manage the property myself. But if I move out of the area, then I think a property manager is a must.