If you’ve recently decided to rent out your property, you might be wondering what that entails. It can’t be that hard, right?
Managing your own property often involves a lot more work than people want to believe. It’s a very time consuming job and often takes just as much time as having a part-time job. This can be taxing if you already have another line of work.
If you don’t have any experience managing a property, it can be overwhelming to take on this new task. What information do you need to know? How do you select a tenant? What do you price your home at? These are all questions to ask yourself if you’re considering self management.
At Good Life, we often meet with people that have self managed or are wondering why they should hire a property management company. We believe that property management can relieve a lot of the problems you might have while self managing. We’ve compiled a list of the issues people tend to have.
- On the clock 24/7
- Lack of knowledge on fair housing and local laws
- Tenant selection
- Long Vacancy periods
- Juggling Multiple Properties
On the Clock 24/7
When you manage your own property, tenants can call you whenever there is an issue. This could be something as minor as a torn screen on a window to a pipe that burst. You’ll have to either head to the property yourself or immediately call a vendor.
If you don’t have a portfolio of preferred vendors, these minor emergencies can be a bigger hassle. Each time a new problem arises, you’ll have to research the right company to handle the situation.
Not only is this stressful, but it interrupts your daily life. You could be at your child’s soccer game or in a movie and get an urgent call from a tenant. It can get increasingly frustrating to have these interruptions when you least expect them.
You’ll also be responsible for rent collection. This means that come the first of the month, you’ll need to make sure you receive payment from your tenants. This can get complicated if you are managing more than one property.
If a tenant is late on rent, you’ll have to keep track of that as well. Some tenants might not be as reliable and consistently pay you later than expected. You’ll have to keep track of who has paid and who hasn’t, and how many days late they are so you can charge them an appropriate late fee.
Lack of Knowledge on Fair Housing and Local Laws
Property managers typically have an educational background that allows them to know the laws pertaining to real estate, fair housing laws, and even some local laws that might affect homes. Chances are you don’t have this background.
While it is possible to manage on your own without taking a real estate exam or a property management class, it’s much harder to navigate around the many laws in place to regulate tenant and landlord interaction.
For example, you might decide that you don’t want to rent to college students because you feel that they might damage your home. This is a fair housing violation. Same goes for renting to people with kids.
In California, the laws favor the tenant, so it can be easy to accidentally break one that you didn’t know about. If that happens, you could be looking at a lawsuit, fees, and future issues with tenants.
It would take a large amount of time to research all the ins and outs of these laws and it still might not prepare you enough for every situation that might come up.
Selecting the tenant is an important task that can affect you in the short term and long term. You might think it’s a fine idea to rent to a friend or relative, but that can create problems down the line.
When a property management company selects a tenant, they do it for you and keep you out of the process entirely. This is to avoid those preferences and biases we mentioned in the Fair Housing section of this article.
When you select a tenant, it tends to become more of a personal decision than a business transaction. As nice as it might be to be friendly with your tenants, it’s better and easier in the long run to keep the relationship professional.
If you get too close with your tenants, they may ask for leniency on late rent payments, pet rules or deposits, and guests in the home. This can lead to them taking advantage of you and you losing out on profit.
If your tenant is already a friend or family member, this task is even more difficult. It’s hard to be a fair, unbiased landlord when the tenant is your cousin, sister, etc.
Long Vacancy Periods
Another downside of managing your own rentals is handling all the marketing yourself. You’ll need decent photos of the interior and exterior of the home and good descriptions for the websites you’ll list on.
Homes that have subpar photos on Zillow, Craigslist, etc. struggle to get as many showings and as much interest as well-photographed homes. These days, people have shorter attentions spans and want to be immediately pulled in by your advertisements.
The less effective your marketing skills are, the more likely it will be that your home sits vacant on the market for longer. Longer vacancy periods can affect the overall interest in your home as well as the asking price.
If a home sits vacant for 2-4 weeks with little to no interest, you’ll need to lower the asking price. These long vacancy periods matter because during this time, you won’t have any money coming in. It’s better to market the property effectively from the start in order to get a good tenant moved in quickly.
Juggling Multiple Properties
If you own more than one rental property or will in the future, these problems only get more complicated. Being on call around the clock for one property is one thing, but multiply that by two, three, etc. and you could be in over your head.
Some people get into the rental business in the hopes of having a “side hustle,” i.e. another way to make money outside of their current job. If this is the case for you, managing these properties on your own will likely take too much time away from that job.
Things also get complicated when you are managing money from multiple tenants. You don’t want to start losing track of who has paid, who hasn’t, who is late, etc. Unless you are highly organized, property accounting can be a major headache.
These are some concerns to consider when deciding if self-management is right for you. Many people think they can handle it and like having the extra bit of control, but oftentimes it can be more time-consuming than they realize.
If this article has you considering what your other property management options are, check out our blog, Property Management vs. Self Management vs. Leasing Only: 5 Tips for Choosing.
Are you wondering how much property management costs? We can help you with that too! We detail what contributes to the cost of property management in our blog titled How Much Does Property Management Cost?
Call Good Life today for more information on what we can do for your property management needs! (858) 207-4595