As record-breaking real estate values price more and more people out of the dream of home ownership, the rental market is experiencing a boom. Premium rents stimulated by the housing shortage are causing property owners to consider whether to capitalize on a hot rental market by leasing out their homes. Managing your own rental property comes with responsibilities — and sometimes extra headaches that cost you time and money. There's also a simple fact that not everyone has the personality or patience to manage a rental property. Do you?
Here are a five questions to consider before becoming your own property manager.
- Can you run your rental property like a business? Some property owners do a poor job at running their property rental business because they see property management as a side-gig rather than a business for themselves. As a result, they don't consider or even want to put in the time and effort to market the property, screen tenants, respond to emails and phone calls, and coordinate with maintenance and service professionals.
If you've lived in the home and are renting it for the first time, you might also tend to want things taken care of the way you would for your primary residence, while some decisions should be more business-minded. For example, perhaps you should choose to patch something a tenant damages rather than replacing it with that high-end finish you want for yourself. When it comes to making choices for a rental property, you want to go with the practical and durable rather than high-end options you may prefer.
When property owners have the proper mindset – shifting from viewing themselves as a "landlord" to a "business owner" — and treat the property as such, they will find far greater success.
- Do you have what it takes to screen tenants? Perhaps the most significant error a property owner can make is renting to the wrong person, leading to never-ending headaches such as late rent, trashed homes, and evictions. Do you have the wherewithal, time, and resources to screen tenants to ensure they have a stable income, no recent evictions, no recent felonies, and good references from past property owners? You also need to understand the law and make sure you don’t screen out tenants based on any protected classifications, or you could find yourself in a lawsuit.
- Can you maintain a professional relationship with someone you don't like personally? A signed rental agreement establishes a legally binding contract between you and your tenant. While you don't have to like your tenants, you can never allow personal feelings to get in the way of a business relationship or your contractual obligations. Successful landlords put their feelings aside, strive to give every tenant the same level of service, and treat everyone with dignity and respect.
- Can you maintain a business relationship but not be too nice? Just as you need to maintain a professional relationship with someone you don't like personally, the opposite can also be true. Be careful not to overstep the business relationship. Being "too nice" might give some tenants an invitation to take advantage of you.
On the other hand, it can also become awkward when you rent to family and friends with whom you already have a personal relationship. Will you be able to charge fair value for the rental property or hold them accountable for things that go wrong?
If the lease says rent is due on the first, expect the tenants to oblige. By allowing renters to break the rules, you open yourself up to years of struggle and compromise that will ultimately lead to substantial financial losses.
- Are you afraid to ask for help? We've been in the property management business for over 20 years, and we still learn something new every day. Ask questions and get opinions. Whether it's a phone number for a service provider, help with an eviction, or just advice, reach out to other property managers for help.
If you’re finding that managing your own rental is too much of a hassle, consider engaging a property management company to help. The time and headaches saved are often worth much more than the fee for an experienced property manager.