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Rental property management: Yes or no?
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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:

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  • advertising vacancies
  • screening and placing tenants
  • collecting security deposits, rents and late fees
  • facilitating standard upkeep, such as trash collection and lawn maintenance
  • facilitating repairs, such as backed-up toilets
  • preparing units for rental after a tenant moves out
  • renewing 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.

     
     
    Next: "hiring a property manager shouldn't be taken lighty ..."
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