Do I need Property Management? / If Yes, How Do I Choose One?

As the real estate market declines more and more people are confronted with the choice of selling or renting their homes. Both investors who came in droves to buy cheap new construction in the years of 2001-2005 and homeowners who have lived here for years are choosing to rent their homes.  In the cities of Temecula, Murrieta, Wildomar, Menifee, Winchester, French Valley, Lake Elsinore, Hemet, Sun City, San jacinto, Romoland, Canyon Lake, and Perris we have seen the rental markets explode with inventory.

After deciding to rent the next question for homeowners is do you do it on your own or do you seek out professional property management. If you are currently confronted by this question here are some helpful questions to ask yourself:

1. Do I have the time and energy to deal with managing the property? Unfortunately, having a rental property is not as easy as looking for the check in the mail each month. There very often are issues with scheduling repairs, dealing with late payments, and regular inspections. It is very important to have the time to keep good tenants happy and bad tenants miserable.

2. Do I have the marketing ability to get the home rented quickly? As a landlord you need to consider what marketing outlets are available to you. Unfortunately, print media is no longer effective. Most tenants are online looking for homes so that they can see pictures. If you don't get adequate exposure it will prolong the process. Each day that goes by vacant is costing you money. If your home rents for $1800 a month and you spend an extra month on the market due to lack of exposure you have saved yourself nothing. $1800 will more than cover a years worth of property management. I have seen so many cases where people place an add in a local newspaper and no one calls and they gets discouraged and stops advertising. They then decide to rely  on a yard sign. They sit for months waiting to rent and then decide to use a property manager.

3. Have I done my homework and researched the market to find out what would be a competitive rent for my home? If you are not competitive in this market you will sit forever. With internet access most tenants no what they can get for their money. As discussed earlier, the Riverside County rental market is glutted. There are property management companies asking very low prices for rent and on top of that offering a free months rent. I personally think that is very bad business in that it further depresses our market and also tends to attract the worst quality tenants.

4. Do I know how to screen tenants so that I don't get stuck with a bad tenant or worse yet a scam artist. The individuals who rent on their own attract the worse quality tenants. Most tenants who have a history of not paying rent, or running scams, shy away from property management companies and look solely for people trying to rent on their own. They drive neighborhoods looking for signs placed by an individual or look in newspapers for private parties. They know all the tricks. They know that most property managers know what to look for and would never rent to them. Once they are in your property they become your worst nightmare. They immediately stop paying and very often ruin the house. If you call the police they will tell you it is a civil matter and there is nothing they can do. The laws that we have to deal with these people are not strong enough and chances are they will get away with no consequences. The eviction process is costly and time consuming. The damage left behind can run into the thousands of dollars.

5. Do I know how to draw a lease that will enable me to successfully pursue a tenant in court. If a tenant goes bad on you very often  the only recourse you will have are the courts. What is in the lease will determine whether you or the tenant prevails. Drawing a thorough and precise lease is very necessary. Unfortunately, the boilerplate leases available in stationary stores and online do
not do the job.


How To Choose A Property Management Company

If you decide you are not able to handle the rental of your property and have decided to use a property manager there are many things you should look for in a property management company:

1. The company should have a large internet presence. If it does not come up very high in the search engines for terms such as "Temecula rentals" or "Murrieta rentals" then no one will see your property and it will take you a great deal longer to rent your home. As discussed earlier, print advertising and yard signs are not very effective. If the management company lacks marketing power it can take you months longer to rent your home and cost you thousands of dollars.

2. Check prices. Most of the property management companies servicing Temecula, Murrieta, Wildomar, Menifee, Winchester, French Valley, Sun City, Hemet, San Jacinto, Romoland, Lake Elsinore, Perris, Canyon Lake,  either charge a flat rate or a percentage of the monthly rent. Flat rate charges vary from $98 a month to $140 a month. Percentages usually are 7% or 8% of the monthly rent. If you find prices below these ranges you should question the quality of the service.
Almost all companies get what is called a procuring fee and that usually is 50% of the 1st months rent. This charge covers the finding of a suitable tenant. It is a one time payment for that particular tenant. When the property is vacated there will be another procuring fee. If a company charges more than 50% find another company. Many companies in this area also charge an upfront fee for setup and advertising . Some get $200 for 3 weeks of advertising. At the end of 3 weeks they will charge more. That seems excessive to me. Others get $100 that covers all marketing. Others do not charge a fee. If there is no fee there probably is very little marketing.

3. Find out how many homes the company manages. Be most concerned with companies that have too few houses. The reason that I say that is too few houses means lack of  market knowledge. A property manager has to be very active in the market in order to know how to price a home properly. The manager needs to know what renters are seeing out there and how much they are paying.

4. Find out what the property management company actually will do for the fee. Find out if they do inspections. Find out how actively they manage the property. Find out how experienced they are. I heard of one company who did inspections every two months on the ten properties they managed. While it sounds good it is bad business. Their policy shows a lack of experience. You do not want to make the tenant feel uncomfortable in the home. The reason i know about this policy is that 2 of the tenants who lived in their homes switched to mine and the first thing they asked was how often do we inspect the property.

There are many more things you should know about the company you choose but these questions will get you started when you begin talking with the various property management companies in our area.