You have a property for rent, now what?
Do you manage the property yourself or hire a property management company? I mean, really, how hard can it be?
You place an ad online, put a “For Rent” sign in the yard, take a few calls from potential tenants, and ask a couple of questions. You select the one your “gut” tells you is ‘the one’, right? Simple, right? The short answer is WRONG!
The long answer is WRONG as well, but let me share with you why.
Problems with Self-Managing Rental Property
In the “good ole days” a man or woman’s handshake was their bond; you didn’t need a lengthy lease explaining all the do’s and don’ts of the agreement. The rent is $3000, due on the first of each month– period-end of the story.
Not so now.
Now, you need to screen tenants thoroughly. You must ensure they are gainfully employed, check with their current landlord as well as with their previous one.
You must run a credit check. Yes! A credit check.
Now you’re thinking, well how do I do that? Guess I will “Google it.”
Yes, you will find the answer on Google, but what do you do with that information? How do you make heads or tails out of the report you just ran? What does the credit rate mean? Does it matter what the credit rate is, or do you look at positive and negative accounts?
So many questions, and now your head is spinning….
There is good news. The process does not have to be this complicated. Professional management companies will do all the legwork for you so you can focus on the things in life that matter – family, friends, and yourself!
Now, fast forward to arranging repairs and general maintenance for the rental property. Where do you start? How do you find a contractor who will give the best pricing? How long will the repairs take? A few weeks, a few months? There is so much to consider.
The bottom line is, time is money. While your rental property sits vacant you will lose about $150 a day. Do the math; if you wait two weeks to get a quote, meet the contractor at the property, and then wait another two weeks to a month for the repairs to be completed, you could have lost between $4500 to $5500 in revenue. Not to mention the cost of the repairs and the cost of your time meeting with contractors, etc.
Property Management Companies are Familiar with the Process
Most professional management companies have contractors that work with them, know the routine, and can get the repairs done in about a week.
Think about that for a minute: no waiting at the rental property for a contractor for two hours only to find out they are running late, or they don’t show up at all. You don’t have to worry about scheduling the carpet company, the painting company, or the electrician, you can just send in the check, and the property management company handles the rest.
Now, you are thinking, well I am handy and retired, I will just do the repairs myself. Did you know that hiring contractors to do the work on a rental property is a tax benefit to you? Yes, that is true and good news. When doing the work yourself, you can only write off the materials, but when you have a contractor do the work, you can write off the materials and labor. So, let the professionals handle it and enjoy retirement.
The rental property is ready for a tenant, now what? You found a tenant that looks good on paper and your “gut” thinks is a good fit for your property. You meet the happy couple and their kids, and you hit it off so well. You pick them, and they move-in. Things are moving along swimmingly until they call you at 5 pm on a Friday: there is water pooling under the fridge …
The fridge is packed full, and they want it fixed right away. Well, there goes your Friday night plans. You are now stuck trying to find a technician that is willing to come out in 24 hrs. and not charge you double or triple the normal service rate, because after all, they like their weekends as well.
Professional Property Management Companies Handle Tenants for You
Professional management companies have contractors to take those frustrating repair calls. They work with contractors who are willing to go out after hours, and not charge double and triple the rates, thus allowing you to enjoy your Friday night. Professional management companies make sure that tenants have renter’s insurance, so if their belongings are damaged, the burden is not on you the homeowner.
The first of the month rolls around and you get that dreaded text from your tenant (they don’t call anymore, that’s too old fashion) “Hi! It’s me, your tenant at 1515 Johnson Street. I know the rent is due today, but I don’t have the money. I can pay you on the 10th when my next check comes in. Is that ok?”
A little panic and anxiety creeps in as you have already sent in the mortgage payment for this month because your gut told you they were good tenants and would pay on time. Now, the check you sent is going to bounce as you were not prepared for the tenant not to pay.
Ok, don’t panic. You’ll just transfer money from your savings to your checking account and that should be ok, right. They will pay on the 10th, right? That is what they said, and they are good people (per your gut check).
So, you respond, “Yes, the 10th will be fine, but no later. I have a mortgage to pay, and I don’t want any late fees from the mortgage company.”
The 10th rolls around and you are checking your bank account. Did the tenant pay you today as they promised?
Then you receive another text message, “Hi, it’s me again. The money I thought was coming did not show up today. I am sorry about all of this. I know we can have the money together by the 25thof the month, is that ok?”
Your internal response is now more panic, “The 25th? No, that is not ok. I have another mortgage payment due on the 1st and I already borrowed from my savings account to cover this month, I don’t have the funds for next month, thanks to you.”
But that’s not what you say. Instead, you text back, “Okay that is fine, but please no later, and this is putting me in a bind.”
The 25th rolls around, then the 26th, now the 30th, and guess what no money….. now what?
Well now, you must call an eviction attorney.
Property Management Companies Can Deal with Uncomfortable Evictions
Time to use our trusting friend “Google”- he knows where to find everything we need, right?
Google says 20 eviction attorneys service your city. But which is the best one, how much do they charge? You’ll probably have to spend your lunch break calling and interviewing attorneys.
The first questions they will ask you are: did you post a 3-day notice? Did you mail a 3-day notice? What does your lease agreement say about late payments?
Your answers will most likely be, no, no, and my lease agreement does not say anything about late payments. With professional management companies, we take all the stress away from dealing with a tenant that does not pay rent. Most property management companies make rent due on the 1st of the month, give a small grace period of 2-4 days, and then start charging late fees, posting 3-day notices, and will file the eviction for you, if needed. Let the professionals be the bad guys, and you get to enjoy life.
Now your property is empty, and you have to start all over again. Ask yourself this question, “Do I self-manage again or hire a professional property management company to take on all the headache of managing a property myself?”
Let the professionals handle it, and you reap the benefits of owning a rental property.
Contact us today for a free consultation at 441-247-1830 or email email@example.com