Should I Hire A Property Manager or Self Manage My Vacation Rental Property?

If you would like to begin renting your vacation rental property there are plenty of things you need to choose. One of the primary items to consider is if you wish to rent and promote your property alone or hire a property manager instead. When I first began renting my property I decided to rent and promote it myself. I have now been managing the rental area of my property for pretty much 6 years. I have marketed my property on vacation rental websites, collected my money through Paypal, created my rental documents and managed all renter contact via email and phone. For quite possibly the most part it hasn’t been too difficult. However, you can find an amount of stress I’d personally prefer to not deal with and sometimes I’m wondering if I market my property sufficiently. Either method offers you results however you may like one more in comparison to the other. Here is some information about managing the property all by yourself or working with a property manager.

Self Managed

I have been a realtor for years and have worked with numerous property owners. I’ve also used services to rent vacation rental properties for family trips. There is actually a large number of property owners who manage their own property. I’m sure there are a variety of explanations why one may choose this method. Having said that I want to list my three reasons I decided to personally manage my property.

Profit – If you manage your own property there’ll not be a monthly fee to a property manager for marketing and renting your place. Usually there is a set bill every month and when anything abnormally occurs with the property there’d be an extra fee.

Control – Think about it, who doesn’t want complete control! The main purpose of my vacation property is to spend each available moment making memories with my family there. We merely rent the property to be able to pay for the yearly bills. It can be nice to choose who might rent your property to assure it will be taken care of while you are away. I haven’t always allowed the very best of renters stay at our property but for the most part we certainly have had great individuals that treat our property like it is their own.

Marketing – I’ve been a salesman for as long as I can remember. Of course I believe there isn’t anyone who can market my vacation property to potential renters a lot better than I am able to. I am currently using an online vacation rental website but there are many other methods as well. You can make your very own website of the property blogging about its features. I’ve seen vacation rental properties for rent on Craigslist. Also, as I mentioned you are able to promote your property on any one of the large vacation rental websites located on the Internet today.

Property Manager

If you decide you’d just rather outsource the renting and marketing of your vacation rental property to a property manager make sure you ultimately choose wisely. As a realtor I’ve met various sorts of property managers and this choice can be the difference of renting your property or not. As I’m sure you’re aware, most vacation rental properties tend to be found by renters through use of the Internet. I rarely notice a property being advertised in the newspaper or a magazine unless it’s for a timeshare. It is vital the property manager of your choice is heavily associated with marketing his customer properties on the Internet. A good way to locate a property manager, perhaps even seeing user feedback, can be searching the term property manager after which include the city where your residence can be found as part of the search term. This is a faster way to obtain a quick directory of property management companies local to your vacation rental property city. Do yourself a favor and interview at the very least 3 of them to find out which one will be capable to market your property the very best and who understands your preferences. It is important you feel confident with the property management company you choose to hire. Don’t forget to verify most of the following items below prior to hiring a property management company to rent and promote your vacation rental property.

1. Just how do they advertise heavily on the Internet? What other ways are they going to promote your property?
2. How do they interview potential renters? Do they contact you for final approval?
3. How do they verify the renters left the property as they found it?
4. How do they handle repairs when required for the property? Just what is their extra fee because of this service?
5. How much will they charge to rent your property on a monthly basis?

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Why Owning Rental Property is a Great Experience For Some and a Nightmare For Others

Proper Expectations and having a game plan for managing your rental property, will determine your experience and success.

Let me show you a comparison of two peoples expectations and plans for managing rental property to see how it would impact their success…

Lets look at person As expectation and management plans for owning rental property:

  • Decides to buy a rental property for positive cash flow but doesn’t plan for if it ever has a negative cash flow.
  • Expects to reap the benefits of appreciation but doesn’t have a clue what cycle Real estate in his/her area is in. Flat, appreciating, depreciating. Yep, real estate is cyclical.
  • Expects owning rental  to be completely passive. Expects to put tenants in and get rent checks like clock work. Has no plans for how to manage tenants when they have problems that effect other tenants or their ability to pay rent on time.
  • Expects the tenants to treat his property with respect and care. We live in a society now where respect and care for other people is often ignored, never mind other peoples property. Has no effective plans how to take care of problems occurring from tenant irresponsibility and lack of caring for the rental property.
  • Expects his owning rental property experience to be headache free. Has not created a game plan that will fit his/her lifestyle to take care of phone calls, problems and issues that may occasionally occur from owning rental property.
  • Expects to reap all the benefits that only owning rental property can give with no strings attached.

Lets look at person Bs expectation and plans for owning rental property:

Decides to buy a house for positive cash flow but has plans for when and if it has a negative cash flow.

  • Knows if Real Estate is trending up,down or is flat – uses that info to estimate when the rental property will appreciate and plans an exit strategy.
  • Doesn’t expect owning rental property experience to be completely passive. Has plans for how to manage tenants when they have problems that effect other tenants or their ability to pay rent on time.
  • Doesn’t expect the tenants to really care much at all for the care and maintenance of the rental property and understands that many tenants think every tiny thing is property owners responsibility.. In fact, expects the bare minimum from any tenant, and totally respectful, caring tenants are few and far between. Has effective plans how to take care of problems occurring from tenant irresponsibility and lack of caring for the property.
  • Understands that the property is a structure in which things wear out, have life expectancies and will break. Understands that a tenants problems, especially financial problems, may cause you a headache. Has created a game plan that will fit his/her lifestyle to take care of phone calls, problems and issues that may occasionally occur from owning rental property.
  • Expects to reap all the benefits that only owning real estate can give, but understands that there is no free lunches in life and is prepared to take on the challenge to reap the benefits.

Obviously the two people are going to have different experiences from investing in real estate.

Three years down the road, person A will be telling people what a nightmare owning rental property is and it’s a bad investment.

Person B may well be on their way to achieving financial freedom, bought more rental property and would tell anyone that owning rental property is a tremendous investment.

I’ve owned rental property for almost twenty years. I was totally clueless when I started. What saved me was that, I had nothing else going on. I had it in my mind that this was going to a full-time venture with one hell of a learning curve. I had the right expectations and although I had no specific plans for how to manage my property, I expected to learn and I did.

I had the expectation and the plans of “do whatever it takes to be successful at owning real estate”.

But, I realize this is far from the norm of people who decide to buy rental property. Most people decide to invest in rental property as a supplemental vehicle to help them financially.

That’s completely fine. Trust me, people don’t buy rental property for fun and ha-has. But a perspective  property owner had better learn what to expect and make plans for managing the rental property if he wants to be successful at it.

Mark

Investing In Rental Property – Key Facts To Consider – Part 2 Of 2

This second part of “Investing in Rental Property” is a continuation that highlights the remaining key elements that you should carefully consider before investing in rental property. Whether you’re a new or experienced investor, considering these aspects about rental property can improve the odds that your future investments will ultimately turn out to be successful ones.

6.) Operating and Utility Costs – The operating, or carrying costs of a rental property directly affect its cash flow on a “dollar-for-dollar” basis. Simply stated, a cost reduction of one-dollar for an investment property results in an increased cash flow of that same dollar for the property. Since operating costs have a direct influence on a property’s cash flow, it is critical for an investor to verify all such information supplied by a seller before purchasing his or her property. Unethical sellers may understate their property’s actual operating costs in an attempt to inflate its sales price.

If the tenants occupying the property pay their own utility costs, it is wise to get an idea of what those costs are. When these bills are combined with the tenants rent, the result can determine the overall “affordability” of the property that is based on the average incomes of renters in the area. Utility costs that are too high can result in high tenant turnover. This may justify lower rent levels for the property.

7.) Handling Vacancies – A proper plan (or protocol) for filling vacant apartments can really lower vacancy rates for the rental property and improve its cash flow. If the rental property is located on a highly traveled road and gets lots of exposure, then a simple “for rent” sign may be all that’s needed to attract plenty of potential renters. On the other hand, if the property is somewhat secluded, then a plan for media advertising will be needed to announce the vacancy and attract qualified renters.

8.) Distance Factor of the Property – If you’re an “absentee landlord”, the distance of the rental property from your home can become an important factor if you plan on managing the property yourself. If the property is located quite a distance away, it may become a chore in itself just to get to the property to address tenant issues, perform maintenance, etc.

On the other hand, a rental property that is located within a convenient distance from your residence will make it easier and less time consuming for you to get to the property and carry out your on-site tasks. Over time, this can result in better (and more reliable) management and upkeep of the rental property.

9.) Parking / Laundry facilities – Adequate on-site parking facilities can be a significant benefit for tenants occupying the property. The property should have a sufficient number of parking spaces for the tenants in order to provide convenience and safety of their vehicles. If parking is not sufficient, then it’s a sure bet that problems will develop with the tenants over the situation, leading to turnover and lost income.

Another significant benefit for tenants is a rental property that has adequate on-site laundry facilities. Tenants will certainly appreciate the convenience of it versus having to lug their laundry to a laundromat each week. Also, a coin-operated laundry facility can provide an additional source of income for the property owner.

10.) Investment Goals and Planning – The importance of this aspect of rental property investing could rank it at the top of the list. Simply investing in rental property alone is not enough to achieve your full potential as an investor – it only forms part of the process. To realize your full potential as an investor, you must first establish a set of goals you’d like to achieve. Then a realistic investment plan will have to be developed that will allow you to reach those goals. Such a plan can act as your “blueprint” to investment success.

In conclusion, those are the core issues that should be contemplated before investing your hard-earned money in rental property. Taking the time to do so and adopting this “look before you leap” mentality can certainly increase your level of investment success.