Should I use a Property Management Company?

Question

Hi,

I live in Austin, TX and I have a 4 bedroom home in a very good neighborhood. Both Elementary and middle  schools are exemplary and very close by. House was bought new in 2010. Around 3400 sft. I am planning to rent it out. My job might require some traveling occasionally. So, my question is is it worth hiring a property management company or should I try managing it on my own. I am a newbie and it may take a lot of time/effort to learn the  details about managing the property.

Appreciate your honest inputs/advice? Thanks,

VS

Phil Earley · Answer

Hi Satish, asking for advice on Bigger Pockets is a great place to get started.

I came across this guide published by Fannie Mae a couple of years ago.  It is not one sided either way and will help you determine what is best for you.    I think you can google it also if the link doesn't work.

Fannie Mae Guide To Becoming A Landlord

If you do decide to hire a property manager, you can go to our website to find a list of questions to narrow them down under "owner resources."   Finding a company that meets your needs and not theirs is the next hurdle.

Good luck and I hope this helps!

Fred Dray · Answer

I work for a property management company and agree with those who say that is your bet way to go.  However, I understand wanting to save those monthly fees, so I will offer this.  You mostly need a mgmt co to rent the property, handle maintenance issues and deal with problem tenants.  If you were fortunate enough to find a long-term tenant who will take care of the property...then you may not need a mgmt co.

If you go this route, you should accumulate a list of vendors (plumber, pest control, appliance repair, maintenance man) that you trust and can call out for repairs.  You would also want to learn landlord/tenant law for your area as you will need to prepare a lease, give proper notice for any entry into the unit for repairs or inspections and many other things with which you don't want to make mistakes that could lead to legal issues.

Bottom line, if you can afford it...use a property mgmt co.  However, make sure to research them as some are more diligent in performing their dutires than others.

Best of luck and let us know what you decided.

Melissa Gittens · Answer

@Satish Vittalam i would suggest getting a property Management company to manage it for you , since you will be traveling for work it may become an issue especially when issues arise from your tenants.

Christine Kankowski · Answer

A few things you said push me to recommend a property Management company:  You are a newbie and you may need to travel for work.

Property mgmt companies are set up to deal with vacancies, they know the laws of your state regarding fair housings, lock changes, smoke detectors, etc

Let them handle it and focus on your job.  Let this be an investment for you and the cost of the is just part of the cash flow.   Best of luck to you!

Donny Widjaja · Answer

Hi @Satish Vittalam ,

I currently have 2 rental properties, and I managed them myself.   I would like to share my challenges, and hopefully, can help you to make your decision.

1. Finding tenants:  Posting a "house for rent" ad on Craigslist is the easy part.  Scheduling a meeting for showing and screening tenants can be challenging but it is doable.  One tip a person suggested is to schedule a showing for all interested parties on the same time frame, just like an "Open House".

2. Preparing a contract.  I got my contract from LawDepot, and I can fill in the template  online.  I compared it with some contracts from other sources, and it seems to be reasonable.  It covers anything many issues such as rent, landscape maintenance, who pays what (for utilities), pet clause, sublease clause if necessary, etc.

3. Rent.  I think a good property manager should be able to suggest the optimal rate for rent on that area.  "Optimal" means the most money that you can make with the minimum vacancy time.  In my case, I might have charged too low.

4.  Emergency call.  In the last 2 years, I've received only 1 real emergency call that came at 9 PM from a tenant regarding drainage issue.  I asked my handyman to fix the problem in the morning.  There were a few other calls on minor fixes.  Luckily, I know a good A/C guy that I can rely on, and a handyman that can be available quickly when I need him to fix a few items around the house.

5. Being too nice.  One of the biggest issue for a new landlord is being too nice.  I was too nice because I want to be successful, but in the end, I am actually hurting myself.  I'm slowly becoming a tougher landlord now. :)  For example, I waived late fees a few times.

Yes, there are many other issues, as Aaron mentioned in his post, that could happen to any landlords but luckily it has not happened to me yet.

Elizabeth Colegrove · Answer

Everyone has their own opinion. My husband is active duty navy and we own 7 house. Our locations are all local to the current set of orders. When we arrived in California in 2013 we had 3 houses back east that we manage. It has had its moments, but a great lease, holding tenants feet the fire and treating it like a business has allowed me to manage my houses. Saving me tens of thousands of dollars a years in management fees.

Good luck!

Larry Russiya · Answer

I recommended to use a property company management to manage it for you.But you must find that company those fulfil all of  your needs and make you satisfy.

Aaron Gordy · Answer

Satish

Hi. Good question. One can manage a property on their own if they understand the laws and the economics of real estate. Do you understand how many folks can legally live in the property? What do you do if the tenants choose to lease the place out airbnb? What happens if the tenants don't pay? Do you understand the process of eviction? Do you know about contractual liens? Do you know how to properly do a background check? There are people that try to get over sometimes and will fudge on the application some things such as income. Credit and criminal is cut and dried. Do you know how to check rental history and ask the right questions? Do you have relationships built with handymen and/or can achieve economies of scale with regards to getting a handyman. Do you have an hoa that can make life tough in the event that the yard isn't maintained properly and was supposedly going to be maintained by the tenant?

I know quite a few folks that manage their own properties but they always know that they can call me if they are in a bind. Things happen. What do you do with a hoarder? Worse still, what do you do with a death or similar such things. Things happen. There are so many elements involved with property management. Some folks have the time and some folks don't. My advice would be to hire a company (like mine : )) and if you don't like them then fire them. In my contracts with owners I give them an option out so if they aren't happy then they can leave. And vice versa, if I don't like the way a particular person does business such as wanting to be a slumlord then I will choose to fire them.

Hiring a property manager can save you headaches, provide expert advice and a ton of time. My two cents. A good property manager is a tough love type of person. The tenants pay the bills but I am most certainly not going to let them go nuts and ruin a property with keg parties or whatever.

Aaron

Should I use a Property Management Company?

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