For many people, the idea of renting out your property is something that they have wanted to do for a long time, however have avoided because of the risk associated with it. Due to the size of investment that a piece of real estate is, renting it out can be a daunting and stressful task. To help reduce the stress associated with renting out your property, it is suggested that you hire someone to fill the role of “property manager”. Many people assume that the main role of a property manager is to collect the rent, while that is obviously an important part of the role, there is a lot more to the job.
Some of the Many Tasks within the Role of a Property Manager
-Making sure that all utility accounts are paid and up to date
-Screening all perspective tenants prior to leasing
-Provide financial statements
-Provide and update the tenancy agreement as needed
-Complete a comprehensive screening of property inventory
-Attend court on behalf of the property owner if serious disputes with tenants occur
-Complete regular property inspections
Because of the amount of tasks that fall under the property manager umbrella, it is important to realize that in order to hire a qualified property manager that will do a good job, you will have to pay for it. Sometimes this can cost up to 10% of the weekly rental income, in addition to letting fees for finding tenants. While this cost might seem like a lot, the importance of having a good property manager is indisputable. It has been proven that landlords that have property managers managing tenant/managing staff relations have fewer problems such as tenants defaulting on rent.
In addition to the tasks described above, it is a good idea to have your property manager work with you on deciding what tenants will be charged for rent. There are a few reasons for this, one of them being that while obviously rent has to cover the ownership, and additional overhead costs, the rent really has to be based off of the current local market, which is something that your property manager should know about. A great way to see if you and a perspective property manager are on the same page, is to address the rent issue during the interview process. Find out what their take is on the local market, and what their thoughts are on different rent styles, (utilities included vs not for example).
Making sure that you and your property manager are able to work well together is an important factor when renting out your property because not only should they be helping you with the aforementioned tasks, but they should also have some input into the marketing plan. Many people rent out property, so making your property stand out is necessary.
If you were able to hire a qualified and experienced property manager odds are they will have a fair bit of experience in drawing attention to your property, and drumming up interest. Having them being an active part of this process is important because they are the ones responsible for finding, and approving tenants.
When looking to rent out your property is it also important to make sure that you have good landlord insurance. Land lord insurance, will cover you, and bring you peace of mind. Renting out your property is a huge risk – even with the most qualified property manager.
Some of the things that good landlord insurance will cover you on include:
-Loss of rent payment if a tenant defaults
-Any legal expenses necessary when dealing with a former tenant
-Intentional damage to the property done by either a tenant or someone they are hosting
Without property landlord insurance you have no way of really protecting yourself financially. As with all insurance policies, it is important that you do your research, and look around to find the best one for you, and your situation. Renting out your property can be a great way to pay down your mortgage, and build equity, however, it is a big risk, and should be treated as such. By making sure that you have done your research, and have hired the best property manager possible, you will be reducing the risk of hurting your investment, and will be taking a great step forward towards a better financial future.