3 Risks of Owning Rental Properties Even With a Comprehensive Property Management Service
Using a property management service is a great way to relieve the day-to-day stress of owning a rental property. This is especially true for owners who live outside the area in which they own property. Property management services can also help with everything from finding tenants to getting them moved in and everything in between. However, owning a rental property, even with a property management service, does not come without risks. Here is a list of things that owners should take into consideration.
Stay On Top of Regular Upkeep and Maintenance
Depending on where your rental property is located, it is a good idea to have contracts with local maintenance and repair companies. For example, if you need the lawn cut or the snow plowed, have someone on hand who is there on a regular basis. Other contracts might include pest control, air conditioning and heating.
Communicate Regularly with Property Management Service
It is inevitable that things will break in the unit, like the washer or dryer, the air conditioner or the refrigerator. Many property management services will have someone on call to help with immediate needs, but if there is a problem that requires a bigger fix, for example, a new appliance, staying in touch with the service will help prepare for unexpected costs and expenses. Many contracts have clauses that say, “if a repair is more than XXX, the service must call.” This helps ensure you understand what the problem is, the best way to fix it and whether you need to get more involved.
Decide How to Handle Big Problems
If there is a problem with a property while there are renters in place, decide how you and the property management service will manage it. For example, if a window breaks, will you call the local window repair company or is that the responsibility of the service? Keep in mind that convenience comes with a price. The more they do to make your life easier, the more they charge. Most companies charge a percentage of the total cost of the repair or service for their time on top of their regular fees.
Keep in mind that on top of the mortgage and property taxes, there are going to be either HOA, Condo or other upkeep and maintenance fees, repair fees to budget in, monthly heating and electricity if it isn’t built into your monthly rent, etc. Before you purchase, create a spreadsheet with all the monthly finances and this will help you assess the risks associated with buying that particular unit.