So, you are considering renting your property? Congratulations, you are on the first step toward a new journey of building durable wealth through rental income for your family and future generations. Now comes the age-old question, should you manage it on your own or hire a San Diego property management company? There are pros and cons to both options.
The Basics of Property Management
As a property manager, you have five basic duties:
- Advertising the property and securing new residents
- Conducting background checks and drafting the lease terms
- Renovating and maintaining the property
- Responding to emergencies
- Finally, collecting rent payments and, if necessary, evicting troublesome residents
As a landlord, you need to execute all five of these property management duties to ensure that your property remains profitable.
Advertising and Finding Residents
The first step for leasing your property is to find a tenant. A San Diego property management company will have the experience to know when to put up a listing, how to word it to attract certain residents, and on which forums to place the listings. If you are DIY, you must learn how to do all of that on your own, which is time-consuming and could lead to you receiving lower quality residents.
You also need to interview the prospective residents and show them the property. For a DIY property manager, this is time-consuming and can conflict with your current schedule. A San Diego property management company can do all of this for you with a team of experienced managers and interviewers. Additionally, a company knows how to comply with Fair Housing Act guidelines, so that you avoid any accidental violations that could subject you to a lawsuit.
Background Checks and Leases
The background check is the most critical part of the review process. A DIY landlord must find a third party to do it for them (which costs a lot of money) while many San Diego property management companies can do this in-house or have standing accounts with a vendor. Additionally, you need to remain compliant with the Federal Credit Reporting Act, if you don’t secure the information that you learn, you could be subject to an investigation or lawsuit.
Finally, the lease is the most important document in this relationship. It defines your respective rights and obligations, and contains all the terms that control how and when you can seek compensation, evict, and other responsibilities. Property management companies have the experience to draft and organize these documents, if this is your first time, you risk omitting critical clauses or risk drafting language that is ambiguous.
Renovations and Maintenance
Your property only retains its value up to the point that you renovate and maintain it. A full-service property management company with a hands-on approach will have a team of experienced licensed inspectors and contractors who can keep your property running smoothly. When you are DIY, all of that responsibility is on you and will likely cost you more than it would for a professional property manager.
Additionally, professional companies can keep costs down because they have a proven method and process for dealing with them. If you try to do it on your own, you are forced to reinvent the wheel, which drives up costs and takes up time.
Responding to Emergencies
You need to be available 24/7 to respond to emergencies. For DIY-ers, that means you are cutting into your personal schedule and life. For San Diego property management companies, they maintain their own teams that can respond quickly.
If the situation is critical, you need to resolve it quickly and effect repairs as fast as possible. A professional management company will have protocols for dealing with these emergencies, it is likely that you won’t as a first-time property owner.
Collecting Lease Payments and Evicting Residents
You need to keep an account of all of the repairs and maintenance done on the property. You need to track when you do it and when the resident’s do it. The cost of these repairs may influence the lease payments and could also impact the security deposit. You need accounting books to ensure that you handle everything properly.
Furthermore, if you have a troublesome resident, you need to document everything they do wrong. There are also strict eviction procedures in California. A San Diego property management company will know how to comply with those procedures to ensure the resident is evicted in a timely manner. As a DIY, you are forced to learn on your own.
It may be confusing to decide between DIY and hiring a property management company. In the end, it comes down to what your time is worth and how committed you can be to looking after your property.
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