The world is full of do-it-yourselfers (DIY’s). Home Depot rode the backs of your nine-to-fiver’s who decided to break out the tool belt and buy a miter saw instead of the latest titanium driver. HGTV is building a content empire with home-fix-it up shows to inspire the DIY’s. The beauty of these projects are that we can do them on our schedule, at our pace, and at a quality level acceptable to us. Renting a property though involves more than just yourself. So the question is do you want to do-it-yourself or do you need a property management company?
To decide there are a limitless number of questions you need to answer depending upon your specific situation. Today we’re going to look at five of the top questions to answer to help decide if your need a property management company.
If you live in Norcross and have a rental property in John’s Creek or even Marietta that’s not a big deal. On weekends you can get from your home to your property in under 30 minutes, give or take an orange cone or two on 285. But what if your rental property is in Birmingham, AL? Now you’re looking at a 2-3 hour drive. Suddenly simply checking up on your property is going to be a 6 hour plus commitment.
Distance is a huge factor to determine if you should do it on your own or get help from a property management company. You have to look at your family, social and business life to see if you have the time to commit to actively managing your property. When you do it alone passivity is not an option.
If you own a single property and its in close proximity to where you live that’s not a huge issue. What if you have five properties, ten or even more. Now you’re looking at having to commit more of your time to inspecting, managing, maintaining etc. Even if the units are within a short distance of each other, the time commitment can be overwhelming. Add distance into the equation and you’re approaching the impossible, unless managing your properties is your only job.
An empty property represents dollars flowing out of your pockets. Sure the property may be appreciating but that’s long-term. In the short-term your paying a mortgage and maintenance costs which can be a significant out-flow of cash. Knowing how to market your property is critical to maximizing occupancy. Should you place an ad in an online or offline source, network with real estate professionals, tap into your social network… You have to be constantly working on how you are going to find the next tenant. And you must have a process in place to pre-screen tenants.
What happens if a tenant suddenly disappears, do you have a quick solution to fill your property. You have to be ready at a moments notice so once again the choice of whether or not to do it yourself revolves around having the knowledge, experience, time and dollars to market your property. If you have 5, 10 or even more than the time and costs are multiplied.
Managing and maintaining rental properties is different from doing the same with your own property. You have a responsibility to the tenants to ensure that you are providing a livable space. Projects that you put off in your own home have to be addressed immediately in a rental property. If the phone rings in the middle of the night you have to be prepared to handle the issue yourself or at least have a plan in place to delegate resolving the issues to a third-party.
Are you good at organizing? You’ll need to schedule maintenance appointments, coordinate needed repairs and put time aside to at least periodically inspect the property. Plus, what happens if the tenant fails to pay the rent? Now you need to possibly get into the collections or eviction process.
All of these things take time that you have to be able to have available if doing it by yourself.
With a rental property you have rights and responsibilities under the law. These laws are primarily governed by your state and vary from state to state. If you have properties in multiple states then you need to have a clear understanding of rules and regulations in each. If you are in Georgia we recently posted a blog that touches on the legal aspects titled Georgia Lease and Rental Agreements Law.
Like most choices in life, whether or not you need a property management company comes down to time and money. If you do it yourself it will cost you more time, and maybe more money if you make some mistakes. If you choose to hire a property manager, there is a cost to that. As far as time it depends upon if you make a good selection as making the wrong choice could cost you time as well.
GSPM assists property owners and investors in maximizing revenue potential while minimizing the hassles in marketing and managing their properties. We recognize that there are a lot of factors that go into making a property a successful investment and put our experience and knowledge to work for you. Call us at 404-254-4502 or complete our Fast Form to learn more about our services.
If you’re looking to add residual income with an investment property, then you will need to understand the specific Atlanta rental property costs. Some costs will vary depending upon city, state and region you are in. Be sure that you research rental property costs as close as possible to the actual location. Once you’ve purchased and set a rental price is not the time to discover new or actual costs.
Purchase costs: These are your upfront purchase costs including loan fees, closing fees, interest payments, your downpayment. All of the costs associated with purchasing your investment property are included here. After these costs you will have a mortgage payment that details how much prinicipal, and interest you pay with each payment.
Property taxes: Property taxes are included in your mortgage payment, so during your first year of your investment property purchase, they are accounted for. In subsequent years the property tax effect can drive the monthly mortgage payment higher. This tax amount will be dependent upon whether your estimated home value increases or decreases and whether or not your county millage rate increases or decreases.
Maintenance costs: Costs for maintaining a rental property are part of the cost of being a homeowner or a landlord. Appliances breakdown, systems fail, roofs or basements leak …stuff happens. You’ll need to estimate an amount to set aside for routine maintenance. If you’ve been a landlord for a while you likely have a good understanding of what’s required. If this is your first investment property, you have to use some formula to estimate an amount. Fannie Mae recommends that you set aside 2% of the property value for annual maintenance costs. On average 1-3% of the property value seems to be the average amount set aside.
Insurance: Much like your primary residence you will need insurance coverage for your investment property. Instead of a homeowners policy, though, you need a landlord policy, also known as a dwelling policy. There are three dwelling options:
While the above takes care of the indemnity side of insurance, you also need to ensure that the liability side is protected. The difference in cost between $500,000 coverage and $1,000,000 of coverage is only a couple of hundred dollars annually, so we recommend going with the higher amount.
Utilities: Depending upon how you structure the contract you may or may not be responsible for some or all of the utilities. It really depends upon the market, as covering some utilities can be a good marketing offer. Even if the renter covers all of the utilities you will need to be prepared in case the property becomes vacant. If so, you will then need to handle the utilities until the unit is rented once again.
Vacancy: If you unit is not rented you have to cover the costs and expenses during the vacated period. If you’re lucky enough an your property remains rented its not an issue. For planning purposes you should budget and set aside about 10% of rents to cover future vacancy time periods.
These are only a few of the Atlanta rental property costs you might encounter as a Landlord. Additional costs might include advertising your property when its vacant, hiring a property management company to manage your unit (s), and other unexpected costs. You can’t plan for everything so its wise to build up a emergency fund for each property.
If this all seems confusing or time consuming, maybe you should consider hiring a property manager. GSPM assists property owners and investors in maximizing revenue potential while minimizing the hassles in marketing and managing their properties. We recognize that there are a lot of factors that go into making a property a successful investment and put our experience and knowledge to work for you. Call us at 404-254-4502 or complete our Fast Form to learn more about our services.
If you are a landlord or plan on becoming one, why use a property manager? Why not save the money and do it yourself?
Most people that rent out properties do so as a way of making additional income in addition to their “real jobs”. The additional income can make a significant difference in your personal finances but it doesn’t come without costs. These costs include:
The list above and individual items are only some of what you will deal with. So the question you have to answer is why use a property manager? Or why not?
If you’re looking for a hands of experience a property manager can make your life as a landlord as easy as it can be. Here are some specific items a property manager can help you with:
Getting Ready to List
Signing a Tenant
The above reasons paint a compelling portrait and answer to the question of why use a property manager? So on the opposite side why would you choose to not use one? Primarily the choice revolves around money. There is a cost to use a property manager, so if you want to retain 100% of the rental revenue then you have to do it by yourself. There is a time/money trade-off.
So why use a property manager? The final decision often comes down to peace-of-mind. It’s simply easier to be a landlord when someone else is managing the day-to-day, week-to-week and month-to-month details. And it becomes more important to rely on help as you move from a single unit to multiple units.
Interested in hiring an Atlanta Property Manager? GSPM assists property owners and investors in maximizing revenue potential while minimizing the hassles in marketing and managing their properties. We recognize that there are a lot of factors that go into making a property a successful investment and put our experience and knowledge to work for you. Call us at 404-254-4502 or complete our Fast Form to learn more about our services.