As renting out your home, you’re faced with the decision of doing it yourself or hiring a property manager or a full property management company, and what to expect from each of these paths. Some landlords manage their rental properties on their own, and take charge of tenant screening, rent collection, any necessary repairs and all communication with tenants.
Do you need a property manager to rent out your home?
No, you do not need a property manager, but the tradeoff is handling everything from advertising your rentals and answering inquiries, screening tenants, proper documentation, rent collection, property maintenance, answering to rental emergencies and disputes, and keeping yourself updated with rental laws to avoid legal risks.
This guide will walk you through the trade-offs, step-by-step, and show you how expenses, control, legal risks and your schedule will fit together, giving you the confidence to pick the best path for your life.
Important Points
- You’ll be well aware of the reality, around 5 to 12 percent of your weekly rent goes towards the fees of property management companies
- Property managers lift a massive weight off your shoulders by taking care of tenant screening, legal compliance, repairs and 24 hour phone calls.
- If you opt to manage the property yourself, you can save on these fees but need to educate yourself in landlord laws, respond to urgent problems at any hour, and handle disputes by yourself, which could be stressful.
- Vacation rentals, meanwhile require a significant increase in workload and need special care with regards to turnover, cleaning, pricing, and city regulations. And, help from a professional can keep guest reviews high, and rules are followed.
- When making the decision consider how much time you have free, the distance to your home, your experience in working with tenants and leases, and the number of properties you own, or plan to buy.
What Does Renting Out Your Home Involve?
Renting out your house entails a regular set of duties. Marketing the house, setting the lease, repairing things, and monitoring the money side, and tools such as online listings and property software will smooth out a lot of these tasks.
Advertising and marketing the property
Having a solid marketing strategy can result in less empty days and subsequently, a much-improved cash flow, especially in a highly competitive market like Orlando, when running a rental property.
Tenant screening and background checks
Tenant screening and background checks are also a necessity, as it protects the rental income and the owners’ peace of mind. The Fair Credit Reporting Act and Fair Housing Laws mandate that managers strictly adhere to regulations that monitor discrimination in reports, and, a well-rounded review.
This often encompasses background checks, credit scores, job and income, previous rentals and sometimes a criminal record, is facilitated when clear written criteria define the fair application progress to all those trying for the property. DIY owners have to be meticulous in following each and every one of these rules.
It is possible to do so too, though and many proprietors choose to use software to hasten the background investigation and hold all the records. Coming dashing back to the property when there’s a disagreement is a lot simpler if good records have been kept.
Rent collection and deposit management
Rent collection and deposit management form the next phase, following the tenant signing, and many leases have rent falling due on the 1st with a 2-4 day grace period before late fees kick in.
Property management services normally automate payments to prevent missed or delayed rent. Self-managing landlords can make use of the same tools, but don’t have to pay management fees or a leasing fee, yet must have very clear guidelines for rent payments and deposits.
Eviction procedures are also put into place if the rent isn’t paid, and a lot of areas allow a three-day notice to quit before the final stage is taken, and some states give extra time to tenants to move out. Laws vary, so check local laws, and rules concerning security deposits are also in place.
Handling maintenance and repairs
You’ll need a reliable list of service providers who can work odd hours, and tenants should be able to easily report any problems, when you’re a DIY property owner. Well-known fast fixes can stop small issues from escalating. Some property management firms like GuestManagers offer 24/7 support, which is a huge help if you can’t be on call.
Short-term rentals require more regular cleaning and inspections due to the rapid turnover of guests. A mishap in screening, deposits or evictions can lead to hefty fines and lawsuits, something that owners, and more so DIY ones, can’t afford to brush off. In a number of locations, owners spend around 1 to 2 hours a week for half a year just to learn the fundamentals.
Handling legal compliance and landlord laws
Property management firms monitor updates through groups like rental housing associations, and you, as a DIY owner, will need to brush up on the Fair Credit Reporting Act guidelines for background checks and Fair Housing Laws during tenant screening.
An eviction is a very formal process that requires very precise steps, and quite often involves the court and lawyers. It’s better to be completely on top of all this so as to prevent financial ruin and damage to your property.
Managing evictions when necessary
Handling evictions, although sometimes necessary, is pricey and stressful and, at times, can go on for months.
DIY owners should, nonetheless, use a thorough, state-specific guide, since a few companies even waive the leasing fee if an eviction is required within the first year. Screening, collecting rent, and overseeing the day-to-day management of your property, when being a landlord you’re responsible for listing.
Coming racing in on the work that a property management company would normally do, this path gives you control over your property and allows you to cut down on costs.
Understanding DIY Property Management
Responsibilities of self-managing landlords
As a self-managing landlord, you’re also on the hook for screening potential tenants, drafting lease agreements, and keeping up with the laws, like Fair Housing and the Fair Credit Reporting Act.
Challenges of being on-call for tenant issues
Every single repair request and complaint goes straight to you, and new landlords often burn out after a year of 1 to 2 hours a week of learning the ropes. Well-known systems are your best friends, so create a straightforward flow for maintenance, payments and documentation, because speedy responses to emergencies can prevent the rental from being trashed and send your tenants home happy.
Well-known emergencies don’t follow a routine, though, burst pipes, heating failures, and lockouts can happen on weekends and in the dead of night. If you’re self-managing, you’re basically the go-to person for any tenant disputes and after-hours requests, which means less sleep and less quality time with the family.
Balancing emotional involvement with professional decisions
It’s difficult to make professional decisions, especially on issues such as raising the rent or enforcing rules, when you’re emotionally involved with your tenants. Emotions and personal relationships also make settling roommate disputes very challenging. Coming from a neutral position, you can prevent escalating the situation, maintain a polite and firm tone in communication, and do not mediate the conflict.
Dissatisfaction with a constant stream of problems, is signifying that hiring a property manager might be a good way to move forward.
Benefits of Hiring a Property Manager
The main benefits of hiring a property manager, is they’re able to turn your rental property into basically a passive income source, freeing up your time to do other things.
They take on all the day-to-day work of running the property, including tenant screening, rent collection, phone calls and after-hours repair jobs.
Local property managers act as a go-between for you and your tenants, and also vendors. They’re in charge of listing the property, showing it to potential renters, handling paperwork and dealing with any late night emergencies. Which can be a huge help if you live far away or already have a hectic schedule.
Expertise in legal compliance and tenant issues
Property management companies also possess expertise in the legal side of things, including state and local regulations, the Fair Housing Act and the Fair Credit Reporting Act, which drastically reduces the chance of a lawsuit and a financially crippling mistake. They’re also the ones who know the correct steps to take when it comes to evictions.
Access to a network of trusted tradespeople
Having a large pool of trusted tradespeople to draw from is crucial in getting repairs done quickly. Most property managers have this setup, so you don’t need to waste any time searching for plumbers, electricians, HVAC technicians and cleaners that are on the ball.
These vendors also provide substantial savings, and reduce downtime, this means that you and your tenants are happy, and there’s less strain on both of you. Short-term rentals are also benefiting from this, as cleaning teams can rapidly turn the units between guests.
Shorter vacancy periods through effective marketing
Something many property managers use to stay competitive with rental prices, when working with GuestManagers you’ll be getting high-quality property photos and marketing. They throw open houses and get tenants moving in quickly, and with those empty days being reduced and a stable income stream, it’s a win-win for the owner.
Improved tenant retention and satisfaction
Coming from a different angle, tenant retention and satisfaction are boosted when property managers respond promptly, fairly and with clear systems in place for repairs, and payments. If they’re doing their job well, they’ll even weed out tenants who don’t pay on time or treat the property with care.
Managers who communicate well, essentially knock out any disputes over deposits, or monthly rent percentage changes, and by nipping problems in the bud, they’re able to secure the renewal of your tenancies and stabilise your revenue.
Drawbacks of Hiring a Property Manager
Costs and management fees
Well-known downsides to hiring a property manager are that you pay them a fee,, and you hand over control. In Australia, the fee is usually around 5 to 12% of the weekly rent, in places like California it’s around 7 to 10% of the monthly rent. Add on a leasing fee, tenant screening, maintenance calls, or online listings, and your expenses pile up.
You may choose to self-manage to avoid these kinds of charges, which according to Bessie Hassan of finder.com.au, can save you thousands of dollars a year, but the fee structures vary, some managers charge a flat rate, others a percentage of the rental income, so be sure to ask what you’ll be paying before signing anything.
Reduced control over decision-making
One of the main tradeoffs of hiring a property manager is reduced control, they are making lots of day-to-day decisions, from tenant screening to repairs and lease terms, and some owners can get uneasy about not being able to control every step. You’ll also have less say on price changes, or how strict the rules should be.
Risk of selecting the wrong management company
Coming fast into the wrong property management company can severely hurt your returns. Firms that take on too many properties can be slow, bad screening can bring in problem tenants and longer vacancies and a lack of communication will break the trust between you and the tenants.
How to Decide Between DIY and Hiring a Property Manager
Use a mental checklist, look at how much time you have, how far away the property is from you, and your level of experience with property management, when deciding between doing it yourself and hiring a property manager.
Coming home to a 3 am phone call and weekend emergencies aren’t exactly what you signed up for. Nor are lease questions and issues that take up your time and mental space.
Assessing your time availability and location
If you live far from the property, a small problem can quickly escalate, and owners of properties close by tend to be able to react faster. Owners who have more than one home find it difficult to visit them often, but a property manager can be a good option in this case.
Evaluating your experience with property management tasks
Well-known in the real estate world, but new to property management, it’s recommended that you budget 1 to 2 hours a week for the next six months to get to know the ropes, covering the essential tasks of tenant screening, rent collection, and the legalities of evictions and fair housing. If you are still finding it difficult, it would be wise to consider hiring a property manager.
Legal and tenant disputes are tricky and can be a significant financial burden and managers know well the risks.
Considering the size and complexity of your rental portfolio
The property rental portfolio handling multi units makes juggling checks, contracts and leases a nightmare. Owners of multiple units get to know when they need to turn to professional help, companies provide the neccesary structure and can knock out empty apartments by posting well-written listings and competitive pricing. Investing in properties across states borders demands expert help to avoid costly legal bungles.
Special Considerations for Vacation Rentals by Owner
When dealing with short-term rentals for vacationers, hospitality level service is what’s expected with slick check-in, lightning-fast help, and sparkling clean rooms, and all of that demands ultra-regular routines and clear communication, and a property manager can really be a lifesaver.
Vacation rentals rely heavily on being seen online and sending out rapid-fire responses. Owners list their properties on Airbnb, Zillow and social media platforms to keep the bookings rolling in, and top-notch photos and clear descriptions get the message across to the potential renters. As the rental owner, one must be always ready to answer inquiries from listing sites.
Frequent maintenance and cleaning requirements
With respect to short-term rentals, regular cleaning and checks are almost a necessity given the high turnover. The cleaning standards are even higher than those for long-term rentals, and they involve fresh linens, spotless bathrooms, and working appliances every time.
Managers typically schedule cleaners and handymen between bookings and also keep vendors on call for any sudden issues, such as a broken air conditioning unit in the middle of a heat wave, so that they can be fixed swiftly, and regular inspections prevent your rating from dropping and your occupancy from being affected.
Compliance with local short-term rental regulations
Compliance with local regulations is a huge concern for short-term rentals and many cities now require permits or licenses, limit the number of days a home can be rented in a year and hand out heavy fines to offenders, plus you may need to collect local hotel taxes and are subject to zoning regulations.
Companies offering property management services can take care of paperwork, keep a close eye on your property to stay compliant with the regulations.
You see the legal aspects can feel quite heavy, as well as the rent collection, and lease renewal work which can be disheartening for property owners.
Conclusion
Deciding whether to go DIY or hiring a property manager will be determined by your time, tolerance of rules and degree of experience and is ultimately a balancing act between the savings on property management fees and a leasing fee and the regular stress and pressure of dealing with tenants, rent collection, and upkeep.
DIY property management may save you between 5% and 12% of property managers’ fees, but if professional managers will improve your occupancy, lower vacancy periods, free up your time to do other things, and give you peace of mind adhering to rental laws, then hiring property managers is the best decision for a truly passive rental income.
In terms of rental properties, legal advice should be sought from a licensed attorney, or a local housing group, as laws vary by state.
If you want a truly trouble-free property rental management and passive income, hiring a property management company is the wiser move. Yes there are management fees, but if property managers can increase occupancy and lower vacancy, plus allowing you to free up your time to do other things, then this will make your rental investment will be more profitable. In Orlando, you can count on Guest Managers to have a worry-free, stress-free rental property management. Contact us today for a free assessment.
FAQs
1. What does a property manager do for my rental property?
Property managers manage tasks for your rental property such as, tenant screening, rent collection, lease agreements and taking care of the property, plus they oversee the rental listing process and settling any arguments between tenants.
2. How much do property management services cost?
Property management companies often charge a percentage of the monthly rent as their fee, and sometimes add a lease fee and/or other charges for additional services.
3. Can I screen tenants myself instead of using a property management company?
Yes, you can run background checks and handle tenant screening on your own, but it will take up a lot of time.
4. Are there benefits to hiring someone else to manage my investment property?
Well-known benefits of hiring a property management company is that they save you the hassle of collecting rent, fixing problems and dealing with difficult tenants, which is a blessing if you have lots of properties or work at another job.
