Should you self-manage your property or hire a property manager? This is often asked among first-time landlords. How you decide to go about it can either make or break your investment.
For most novice investors, the calculation is usually simple. You just need to subtract the expenses from the rental income to get the profit.
As most experienced landlords would agree, landlording goes beyond this simple equation. To be successful, you’ll also need to factor in other things as well, including rental maintenance, tenant acquisition and screening, and lease drafting and enforcement.
That’s why when starting out, it’s important to know what landlording entails. This way, you’ll know whether or not you can manage it yourself or hire an experienced property manager.
1. Rental Maintenance
As a landlord, you’ll need to ensure that the property is always in tiptop shape when it comes to repairs and maintenance. In fact, the state’s landlord-tenant laws require that a rental property be habitable before it’s rented out.
For example, it’d be illegal to lease out a property that has mold issues, structural issues, or doesn’t have running water. Additionally, you’ll also need to keep up with tenants’ maintenance requests.
The following are some of the questions you may want to ask yourself:
- Will you be able to respond to maintenance emergencies whenever required?
- Do you have a contact list of reputable contractors and vendors?
- Are you familiar with the state’s warranty of habitability?
2. Rental Vacancies
These are inevitable in the life of any landlord. But the goal is to ensure vacancies are kept as minimal as possible for an optimal ROI.
That said, finding a tenant can be anything but easy. It goes just beyond the basics of putting up a yard sign or listing an ad on Craigslist. The following are some of the things you’ll need to do to attract a quality tenant:
- Draft a proper rental ad that contains all relevant details and is in line with the relevant fair housing laws.
- Syndicate the ad on both online and offline platforms for maximum reach. These can include social media, rental listing sites, yard signs, word-of-mouth, community bulletin boards, and local dailies.
- Screen prospective tenants. The process should prioritize verifying the tenant’s employment status, creditworthiness, and rental background.
- Show the vacant unit to prospective tenants.
You’ll also need to ensure the entire process lines up with the state’s fair housing laws. That is, ensure that you treat prospective tenants fairly based on certain protected classes, such as race, color, nationality, and religion.
3. Tenant Relations
Landlording doesn't stop once you land a tenant. You’ll also need to keep checking in with the tenant every so often. This could be regarding renovations or maintenance, inspection, or simply asking if everything at the property is okay.
The tenant may also call you to lodge a complaint against a neighbor. Regardless, you’ll be your tenant’s point of contact regarding anything happening at the property, whether good or bad.
4. Lease Drafting and Enforcement
As a landlord, it’ll be your responsibility to draft and enforce the rental agreement. When drafting the lease agreement, you’ll need to make sure that it is as detailed, yet concise, as possible to minimize ambiguity.
When it comes to enforcing it, you’ll need to abide by the terms of the agreement. Furthermore, you’ll also need to ensure the enforcement is fair and consistent across all tenants.
5. Legal Compliance
There is a smorgasbord of federal, state, and local laws that landlords must abide by when renting out a property. They include the following:
- Landlord Entry Rules: Just because you have a right to enter the unit doesn’t mean you can do it any time. You must have a legitimate reason, enter during normal business hours, and give some advance notice.
- Tenant Eviction Laws: Evictions must follow the state’s judicial process. You must not resort to illegal removal methods, such as throwing out the tenant’s belongings or locking them out.
- Security Deposit Rules: Landlords can ask for a security deposit from tenants, however, how they handle it must be grounded on certain statutory laws. For example, in California, the maximum deposit you could ask must not exceed one month’s rent.
- Fair Housing Laws: As a landlord, you must treat tenants equally and fairly regardless of certain protected classes. In California, the classes include sex, color, race, religion, nationality, disability, and familial status. Others are citizenship status, ancestry, marital status, mental disability, and primary language.
Hiring a Property Management Company
This is the ideal option for an investment property owner who is either starting out, is out of state, or has a sizable investment portfolio. A good property manager will be in a good position to sort out all your responsibilities.
They will fill vacancies with quality tenants, maintain the property, abide by all relevant laws, and everything in between. You won’t have to worry about anything other than how you’re going to spend your recurring passive income.
Conclusion
Which option should you go for? To hire a property manager or self-manage the property yourself? Just like most things in life, it depends!
To self-manage the property, make sure that you’re familiar with your responsibilities. Including, maintaining the property, collecting rent, tenant screening, and all legal duties.
Otherwise, if you have even the slightest doubts about your abilities, hiring a property manager would be ideal. Why? Mistakes, especially those involving violation of a tenant’s right, could seriously hurt both your reputation and bottom line.
Ratner Property Management would be more than happy to walk this journey with you. We can help rent out your Los Angeles rental property reliably and professionally. Call us now to know more!
