For most rental owners who aren’t making careers out of being full-time landlords, the decision to use a rental agent is an easy choice—most people simply don’t have time or expertise to deal with all the aspects of renting out their vacant home or apartment.
From finding and screening tenants, collecting rent, and keeping up with maintenance, to dealing with emergencies, doing the necessary accounting, and handling legal issues, the workload associated with operating a rental property can be inconvenient—even overwhelming—for an inexperienced rental property owner
With that said, there are a few situations where the DIY approach might make more sense, such as:
- You have friends or family who want to rent your unit. If someone you know and trust wants to rent your property, you obviously don’t need a rental agent to fill your vacancy, and assuming your potential tenant is responsible and reasonably self-sufficient, you probably won’t have many unexpected difficulties to deal with. As long as you’re careful to make sure your mutual expectations are in alignment, renting to someone you know can be ideal for everyone.
- Experienced rental managers are part of your inner circle. You may not know anyone who wants to lease your rental unit, but if you count property management experts among your nearest and dearest, you probably have enough access to advice and help without hiring a professional. Assuming you have the time to take care of the necessary management tasks, you likely won’t find yourself out of your league when it comes to taking care of your property without the help of a rental agent.
- You live in the same neighborhood as your rental/work only part-time/are handy. If you live close to your rental property, have a fair amount of time to devote to managing it, and/or are fairly expert at home maintenance, you’re at a distinct advantage when it comes to managing your own rental property. While you’ll likely choose to hire a rental agent to handle some or all aspects of your business if and when you expand your rental property portfolio, you may be able to manage a single property, or even a couple of properties, on your own.
This is a great question. Before I began managing properties for clients my wife and I managed our own rental properties in town. We viewed hiring a property manager as an un-necessary expense and we considered ourselves capable enough to deal with any problems that would arise.
Looking back on some of the early costly mistakes we made I truly believe we could have saved thousands of dollars had we carefully selected the right property manager in the beginning. There are two reasons for this:
1. The reality of paying a mortgage on a vacant property was so real that we were overly anxious to rent out our vacant properties. This, combined with the fact my wife and I considered ourselves as good judges of character caused us to quickly approve some applicants without carefully screening them. Also, we simply didn’t have convenient access to credit, criminal and eviction reports and we were not skilled in knowing what ‘red flags’ to look for and avoid when screening tenants. This resulted in us having to evict a few marginal tenants. This was costly. It was also costly to spend hours of our time talking with, negotiating with and sometimes arguing with them before the eviction.
2. It is often more difficult for an owner/manager to maintain the right relationship of accountability with a tenant. Last year a property owner hired us to manage a home he had leased out to an acquaintance from his church. The owner is a capable and compassionate person and when the tenant fell on hard times the owner agreed to some rent concessions and agreed to trade the tenant’s labor for part of the rent payment as well. Eventually, several misunderstandings between the two parties left the owner feeling he had given several months in ‘free’ rent to the tenant and the tenant felt he had put in enough work to the house to justify the concessions. After we were hired, a full rent payment became due on the 1st of the month with no concessions and improvements to the house were made by outside vendors and only when necessary. The first couple months were rocky but after the tenants learned we were going to service the lease exactly as written they began paying the full rent on time every month.
There are many stories of owner/managers losing money due to their generosity, their haste to rent the property quickly, or their lack of knowledge and tools to enforce the lease terms when the situation calls for it.