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Pros and Cons of Hiring a Management Company
Dear Phyllis,
We will be converting our primary residence into a rental and moving to Santa Barbara. We have no experience being landlords, and I am looking for some guidance. If the tenant stops paying rent, I will need help with getting him out. I am hoping you can provide me with the pros and cons of hiring a management company and a recommendation for one. I want to explore all of our options.
Future Landlord
Dear Future Landlord,
In the event the tenant stops paying rent, you will need a good eviction attorney. A management company or a local Realtor can recommend one. A management company will collect a monthly fee but will buffer you from tenant requests and complaints. As you won’t be local, it may be worth the added expense and convenience of a management company. Contact me directly, and I will provide you with a referral.
If you decide to hire a management company, find out if they will be listing your rental in the MLS (multiple listing service). The MLS auto-populates to numerous websites. I find that your home will command a much higher rental price when exposed through the MLS. If the management company does not utilize the MLS, you can list your home with a local real estate agent. If desired, once your home is leased, the property management company can take over the day to day managing of repairs, collecting rent, etc.
In the event you decide against hiring a management company, it is advantageous to note in the lease that the tenant is responsible for the first $150.00 (or an appropriate amount based on your rental) of each repair. As a result, many nuisance repairs become the tenant’s responsibility.
In addition, since you are not local, it is important to keep your trusted gardener to ensure the yard is properly maintained. Likewise, ask a neighbor to keep an eye on the property and report any issues.
Finally, ideally, you should maintain a list of trusted vendors, such as plumbers and electricians. Consequently, you will be prepared when repairs arise and need to be handled quickly while managing your rental.
Real estate values have skyrocketed. Before making any decision, discuss with your accountant the pros and cons of selling versus renting. Best of luck on your move.
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