Should You Hire A Property Manager? What It Takes To Be An Investment Rental Landlord
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Your first investment property comes with a major decision to be made right off the bat: Should you be the landlord or should you hire a professional property manager? There are definitely pros and cons to both approaches, but you can make that decision by determining if you can be an effective investment rental property landlord or not.
How Much Does A Property Manager Cost?
You may consider hiring a professional property manager because you may not have the time. However, being your own property manager can save you money. Property managers take between 8% to 12% of monthly rent. Then there are a litany of potential fees, including new tenant placement fees, contract setup fees, maintenance fees, contract termination fees, eviction fees,
What Does It Take To Be A Landlord?
As a landlord, you will have certain responsibilities and obligations. To become your own property manager, you will need to become familiar with local, state, and federal rules and regulations for the landlord-tenant agreement.
You will need to develop some real estate skills, such as knowing the rental market, establishing the most lucrative yet competitive rental price, marketing your property with an enticing listing, and showing your rental to prospective renters.
Landlords need to communicate specifics of the rental such as length of lease, how many months rent is required upfront, late fees, cleaning fees, whether the unit is pet friendly, the smoking policy, limits on occupancy, parking situation, and lost keys policy.
Selecting The Right Tenant
You’ll want to protect your property by properly screening potential tenants by conducting credit reports, checking credit scores, making sure the renter has employment or income, seeing if the client has a criminal history, and checking to see if there have been prior evictions.
How To Be A Successful Landlord
Once you have a tenant, you will need to have a bookkeeping system to ensure that you keep track of rent payments and if the tenant paid late.
You need to have a contingency plan ready if there is an issue at the unit, such as a broken appliance or a pipe burst that causes water damage. You may want to become friendly with a local handyman or at least create a list of highly-rated and reliable professional repair companies for common home repair issues such as plumbing. You’ll be expected to remedy any issues with the property in a timely manner, and failure to do so strains the landlord-tenant relationship.
Protecting Your Investment
Accidents can happen. But accidents can also become expensive nightmares. You need to protect yourself and your investment property by taking out an insurance policy. Since your property is being rented out, you’ll need a specific insurance policy tailored for landlords. Rental property insurance will be slightly more expensive than regular insurance since there is a higher risk for damage since the tenant likely won’t be as careful since it is not their own home. Expect to pay roughly 15% more for landlord insurance compared to a regular policy.
You’ll also want to encourage or mandate that the tenant gets a renter’s insurance plan. This covers any damage to the tenant’s belongings that may happen inside the rental property.
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