You just finished buying renovating your new investment property. Maybe you have a whole portfolio of properties ready to be rented out. Will you manage your properties yourself? Or will you hire a separate property management company to take care of things for you? In this installment, we learn about what it takes to manage your properties.
Property Management: What Does It Take?
Property Management is an important aspect of investing in rental properties. Where fix-and-flip investments are handed off to purchasers upon the sale of the property, rental properties require continuing involvement on the part of the investor/owner. However, federal and local rules and regulations hold landlords responsible for maintaining the relationship between owner and tenant.
Because of ever-changing laws regarding landlord-tenant relationships and the amount of time needed to manage properties, some people elect to hire outside property management companies to manage their rental properties. While not necessary, it eases the burden on owners and allows them to focus their energies on other projects. But is it always the best option?
Obligations of landlords can include:
- Working with real estate attorneys to maintain up-to-date rental contracts and for representation in court when necessary;
- Maintaining physical condition of the rental property;
- Keeping record of all correspondence with tenants and communicating important information to them; and
- Managing the finances of rental properties in accordance with contracts in place with tenants.
Legal Documents and Representation
When deciding to become a landlord, you inherently agree to abide by all real estate laws that apply. Because rules on both the local and federal level are frequently changing, it’s hard for an individual who isn’t submersed in the legal world to keep abreast of changes. This is where a real estate attorney steps in. They can help you design your rental agreements and any applicable addenda, represent you in court in cases such as evictions, and advise you on any unique circumstances. Whether you hire an outside property management company or choose to manage your properties yourself, hiring legal help is essential.
Repairs and Preventative Maintenance
Maintaining the physical condition of the rental home is ultimately the responsibility of the landlord—this includes preventative maintenance such as changing air filters, yard maintenance, etc. What some might not know, however, is that it’s typically written into contracts that the tenant is responsible for reporting all issues that arise so the landlord may address them. For example, if a tenant notices a pest issue, it is their responsibility to inform the landlord before the problem becomes costly. The same responsibility applies for issues such as leaks or broken fixtures. Otherwise, the property might eventually fall into a state of disrepair for which the landlord can hold tenants responsible. Management of repairs and preventative maintenance is something that property management companies do on a regular basis. While not necessarily difficult to implement and track, regularly scheduled maintenance and emergency repairs require a significant portion of a landlord’s attention.
Correspondence and Record Keeping
Correspondence with your tenants is important in maintaining the landlord-tenant relationship. The law requires landlords to give proper notice to tenants of things such as rent and monies due, preventative maintenance scheduling, evictions, etc. It’s also imperative for landlords to respond to any inquiries or concerns received from their tenants in a timely manner. Maintaining open communication with current and future tenants will lead to long-term success as a landlord.
All landlords are in the business of making money on their rental properties. Financial responsibilities of landlords include obtaining monthly rent, processing payments, and managing initial deposits and fees for new tenants. At the end of the lease, owners will also have to make sure they return any deposits due and calculate any final amounts for payment. These payment amounts can include the final month’s rent, utilities, damage fees, and more.
Do It Yourself or Hire a Professional?
At the end of the day, hiring a professional property management company is largely personal preference. If the amount of time and energy needed to manage your property doesn’t intimidate you, doing it yourself is definitely possible and may be less expensive. It may be easier for owners to rely on property management companies when it comes to larger portfolios, however. In either case, managing properties takes a large degree of patience and organization.