| Rental property management: Yes
or no? |
| |
| Hiring it
out
If you do opt to hire a property manager, you need to understand
what they will and won't do for you. Typically, a rental property
manager performs such tasks as:
advertising vacancies screening
and placing tenantscollecting security deposits, rents and
late feesfacilitating standard upkeep, such as trash collection
and lawn maintenancefacilitating repairs, such as backed-up
toilets preparing units for rental after a tenant moves
outrenewing leases handling complaints
about tenants (noise, unsupervised children, etc.)filing
appropriate paperwork for evictions
preparing reports on income and expenses for the
owner.
Some property managers will make the mortgage payment
as well, says Marc Banner, 2005 president of the National Association
of Residential Property Managers.
If you know a good
plumber or electrician, you can ask the property manager to call your person first
when work needs to be done, Banner says. You can also ask the manager to use your
screening process and lease if you have one. They might decline because it's easier
to manage standardized processes, but it's worth asking.
One thing a management company
won't do is take over your liability. You're ultimately responsible
for whatever happens on the property. Banner won't manage a unit
that's not properly insured and unless his contract releases him
from responsibility for pretty much anything except willful misconduct.
He also asks his owners to add his company on their liability coverage.
Taylor
recommends that owners carry at least $300,000 in umbrella liability insurance.
Talk to your homeowner's insurance agent about it. "You
never want to use the management company as an excuse," Taylor says. Selective
service
You want to pay special attention to the tenant screening process,
because it's the most critical activity a landlord performs. Not
only do you have to be a bit of a detective to verify the information
on the application, but you also need to make sure your process
doesn't run afoul of the Fair Housing Act. You may think it's shameful
for an unmarried couple to be living together, but their familial
status can't factor into a decision to decline their rental application.
Neither can a person's religion, race, color, nationality, gender
or disability.
You'll pay a hefty fee for a property
manager to screen and place tenants; a charge of a month's rent
is common and many property managers will put in the contract that
they will be paid again if the tenant renews the lease. (All contracts
are negotiable, of course, and veterans recommend crossing out that
part.)
Review their tenant application
and their screening process. Make sure they're verifying the information
the tenant provides and that they're doing credit checks. Taylor
recommends retaining approval of all tenants.
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