How difficult is it to manage a rental property?

As a property owner, knowing the costs of managing a property is essential before you take the leap to landlord. Expenses such as utilities, repairs, insurance, and property taxes can become significant. They can seriously reduce your rental income if you are unprepared. Working with a property manager can help avoid potential financial pitfalls.

Property managers are well-versed in rental law, tenant screening, and the proper collection of rental payments.

Utilities

According to their lease, tenants are usually responsible for utilities like electricity, heat, AC, water, and gas. However, as the owner, managing utilities is your responsibility. Repairs, maintenance, and updates to meet changing property codes all fall under the supervision of the landlord or property manager.

The landlord is responsible for ensuring the utilities are in the correct tenant's name and are paid on time each month. This includes monitoring account changes when a tenant moves in or out. An experienced property manager can help you avoid unexpected charges for utility deposits, connection fees, transfer fees, or late payment penalties. 

Maintenance

Basic maintenance like lawn mowing, pest control, minor repairs, and regular property reviews are your responsibility as the owner. A responsible landlord will complete an annual walk-through, and stay on top of repairs. Regularly maintaining the property allows you to plan and prepare for necessary repairs instead of facing unexpected emergencies. Just ask any landlord who has had to spring for a new roof or HVAC without notice.

Insurance and Taxes

Property owners must have comprehensive insurance on their rental properties that cover risks such as liability, hazard, flood, and earthquake. The insurance cost will depend on the property's value, construction type, and location. Property taxes are due annually and must be paid on time to avoid penalties, liens, and loss of property.

Management Fees

Reputable management companies charge 8-12% of the monthly rent for management fees. These fees usually cover things like tenant screening, lease management, and collecting rent and security deposits. It also covers the experienced advice of the property manager, including recommendations about rates, potential tenants, property care, and marketing.

It is critical to keep the property occupied. From application to move-in and the many steps along the way, timeliness is key. A five-point screening should include a credit and criminal background check and verify employment, income, and rental history. A property manager handles this and provides you with everything you need to make the best possible choice for your investment.

The time spent handling unexpected tenant issues like eviction is also handled by a property manager.

You can expect a property manager to prioritize your financial investment by providing regular communication. This may include monthly statements, an annual report about property conditions, including pictures, and an annual 1099.

Conclusion

Owning and leasing a residential property can be a large part of your personal goals. Give careful consideration to upfront expenses, realistic budgets, and necessary reserves.  The obligations associated with owning and leasing a property can be substantial. A professional property manager can help maximize the return on your investment property while saving you time, money, and stress.