When you’re faced with the prospect of renting out a property you own, it can be a daunting task trying to figure out exactly how to go about it. You might want to hire a property management group to represent you, or you may want to tackle the job yourself. Here are some tips to be aware of which may help you choose between three different options of property management.
Management Cost
Self-managing might seem like the least expensive option because you’re not paying anyone to manage the property for you, but against that you will have to weigh how valuable your personal time is, and whether you can commit enough time to self-management. The leasing-only option will generally call for a flat fee to be paid to an agent, and this is a fairly good option if you’re willing to pay that one-time fee for help with leasing. A property management group will generally charge you somewhere between 6% and 12% of the rental cost for tenants, and of course you’ll have to pay for any maintenance fees to the property as well.
Aggravation factor
The aggravation factor will always be at its highest level when you choose to manage the property yourself, simply because the level of responsibility is so high, with everything falling on your shoulders. The leasing-only option carries significantly fewer headaches, because the leasing agent will generally take on the responsibility of getting a property leased for you. The lowest aggravation factor is associated with hiring a property manager, because they will typically handle all aspects of management.
Results
Results you get from self-management will vary, depending on how experienced you are at managing properties. Your results will also depend on how well you communicate with your tenants, and the kind of relationship you have with them. When you engage the services of a property management group, you should expect excellent results all the time, since it is their job to serve as a buffer between you and your tenants. Because their primary function is to keep both you and your tenants satisfied, and to keep the property in optimal condition, you should always see great results. With a leasing-only option, you should get fairly good results when it comes to renting out whatever property you’re working with. Any good leasing agent should be able to rent out your property a whole lot faster than you would on your own, and they’ll also be responsible for selecting the specific tenants for occupancy.
Personal Liability
Obviously, you are much more exposed in a self-management situation then you would be in other scenarios, so liability is high with self-management. In this approach, it’s very important that you have a thorough understanding of tenant and landlord laws and that you abide by them faithfully. There will be a much lower level of liability with the leasing-only approach, and because you will be provided significant assistance by a leasing agent, you’ll probably end up with a good tenant. When you engage a property management group to represent you, this will be the lowest liability factor of any of the three approaches. A property manager will be aware of all state and local laws pertaining to tenants and landlords, and they will be well equipped to handle whatever situations arise with tenants.
Time Commitment
You’ll have to commit much more of your time if you choose to self-manage your property, because you will literally be responsible for everything about the process of renting out a unit. You also have to be available around the clock, because you’ll be the first line of defense against any problems that pop up. Less time will be needed when you choose the leasing-only option, because you’ll have someone helping you, and they will probably handle the more difficult aspects of renting out your property. Your time commitment will be lowest if you hire a property manager, because that person or group will handle virtually everything which comes up with tenants and with the property itself.