Whether you’re renting out a vacation home to earn some extra income or invest in rental properties, certain challenges come with property management.
Managing a rental property can be tough. Whether you’re renting out a vacation home to earn some extra income or investing in properties for a living, there are specific challenges that come with managing properties in which you do not live.
Depending on the type and size of the space, homeowners must do certain things to make sure a property is managed correctly. Tenant finding and vetting, day-to-day communication, and constant physical upkeep are all things that need to be done constantly to generate rental income.
“Employment must be verified; current landlord references obtained, debt to income ratio calculated; basically the entire vetting process must be accomplished somehow by someone,” David Norod, a Virginia real estate broker and CEO of WJD Management, told Inman. “[…] Unless the investor has a network of trustworthy individuals near the property who can accomplish all of this, the obvious next best choice would be to hire professional property management.”
Inman News turned toward experts for the best property management tips for homeowners and investors:
- Go Professional:
Those who invest in properties on a serious level hire management companies to take over day-to-day operations. The standard is to charge 8 to 12 percent of the monthly rental value, but then you can hand it over to a team of experts and not worry about everyday tasks that come with managing a property — things like finding tenants, collecting rent and communicating with current residents.
“Unless the investor has a network of trustworthy individuals near the property who can accomplish all of this, the obvious next best choice would be to hire professional property management,” Norod said.
- Have A Network Of Dependable People:
Sometimes, homeowners feel they can manage a small property themselves — some find it fun while others do not think they rent it out often enough to justify using a professional service. (Still, others supplement their real estate income by becoming property managers).
In that case, experts advise having people who can help you out all along the way. If you live far from the site, you may need to enlist family and friends who can check in on it or a list of professionals who can be called upon for individual tasks.
“If you want to self-manage and handle the responsibilities yourself, it is generally better to buy near where you live,” Gary Bearsley, the CEO and co-founder of Roofstock property management company, told Inman. “Otherwise, find a local property manager who is experienced, has appropriate scale, and has good systems and reporting to ensure your property is managed well and you have visibility into its performance.”
- Brush Up On Local Housing Laws:
Investing in a property that’s far from where you live is not always as easy as buying and then waiting for the money to roll in. How non-payment is handled, whether tenants can deduct money for repairs from the rent check and how rent increases occur can vary widely from state to state — these are all things that those who invest in properties outside of their home state need to think twice as hard about.
“You need a tolerance for ambiguity and problem-solving skills,” Jake Beeson of Beehive Property Management previously told Inman. “Every day is different. Today I drafted a budget for a new HOA, helped to install a security camera in an apartment complex laundry room, and later I’m negotiating a lease extension with a tattoo shop.”
- Have Contractors On Hand:
As many who have rented out a home know, the need for repairs and general upkeep never ends. You will need a contact list full of builders, painters, landscapers and general maintenance workers you can contact both in emergency and for regular upkeep.
“[Management] can prove challenging even if you live right next door to your investment property,” Norod said.
- Never Forget Liability:
Renting out a home comes with an increased level of responsibility. From everyday health hazards to payment disputes, there are many ways landlords can get sued by their tenants. A good property manager will take all of that into consideration and know the rules of the game before the first renter moves in.