Taking Care of Your Investment Property. DIY or Property Management Firm?
Congratulations on your new vacation property! If you bought it as an investment, and are planning to use rental income to pay your mortgage, you probably want to be sure the house stays rented, and your tenants stay happy.
We bet you can’t wait to use those owner weeks and relax in your own place. But to really relax, you need to know that the house is cared for when you aren’t around. Also? If you’ve been getting weekly (or daily!) phone calls from your tenants about everything from a loose floorboard to a broken coffee pot, you may be wondering how people do it. It’s also tough to relax if you aren’t sure when your next rent check is coming, and marketing your place can be tough.
We hope you’re reading this advice before you invest, but if you’ve already gone for it, these questions may help you decide if a property management company is right for you, or if you prefer to go it alone.
How close do you live to your investment property?
If your home is nearby, you probably already know repair people in the area, and you have a relationship with some good ones. That burst pipe won’t be such a big deal if you know who to call. (Yeah, the burst pipe is still going to be a hassle, but you won’t waste an hour or two scouring review sites trying to find just the right company for the job!) If you live two hours away, doing it all yourself may not be practical. If you are nearby, you can also avoid repair charges entirely if you get a call about a stuck window, a broken coffee pot, or anything else you could fix yourself. As long as you have the time, which leads us to the next question.
How much time do you have
Is your work schedule flexible? If you work at home, you may be able to get out for an hour to unstick the window or nail down the loose floorboard on the dock (you know, the one that could have caused grave injury to your renters and ruined their vacation). Renters don’t like to wait too long. After all, they may only be staying for a few days. Taking too long to fix things leaves you open to complaints and bad online reviews, which may make it harder to rent your place. Do you have time to go to your place after each renter leaves and make sure they left it clean, doing the big stuff yourself? Marketing your place will also take time, whether you advertise it online, locally, or anywhere else. An empty place doesn’t bring in any cash.
How much if a DIYer are you
Really. Be honest. Are you good at this kind of thing or are your DIY skills pretty limited? This is an investment property, and the last thing you want to do is take chances with your investment. Make sure you have room in your budget, or a source of funds you can tap, like a HELOC, when the repair or improvement is beyond your ability.
How nice are you
Seriously. Do you like people? Can you keep a cool head, and maintain a pleasant tone, when someone’s not being as polite as they should be? Many investment property owners find that a third party, like a property management firm, can be a good buffer between homeowners and renters. If you have your own receptionist at your day job, and wouldn’t mind them taking the time to answer calls about your rental property, that’s also an option. How does it make you feel when someone asks you for a discount? Because it's going to happen, and you can't take it personally.
What’s in your budget?
A property management firm doesn’t work for free. They generally take a percentage of your rental income, and charge you for most repairs. They can also have yearly maintenance fees. You definitely need to look at the opportunity cost of having a third party manage your place. It may seem expensive, but if you can’t do the work yourself or don’t have the time or ability to reach enough potential renters, you may end up losing money on an empty place. Depending on your day job, being responsible for your investment property may take time (and income) away from you there, too.
Your vacation home should be something for you to enjoy for years to come, a place for you to relax and make memories with your family. The best way to do that is to make sure it stays rented when you aren’t there, and that the renters stay happy. Hiring a property management firm, doing it yourself, or a combination of both are all good options, and only you can decide which one’s the best for you!