Choosing a property management company to oversee your rental can seem like a daunting task. How do you effectively vet a property management company?
For one thing, you know that the relationship will most likely be a long-term, ongoing one, so finding a solid property manager is important. Additionally, when entrusting one of your largest assets to someone, you’ll want to make sure they’ll manage it properly, and will be able to help you get the best returns possible. It’s a tall order!
But while there’s no shortage of property management companies; it’s important to remember that not all companies are the same. While a great manager will make life easier, and will be able to help you get the most out of your investment, the worst of the bunch will allow unscrupulous tenants in, charge exorbitant fees, and cause havoc with your rental.
But don’t let this scare you off! Fortunately, finding a solid property manager isn’t as difficult as it may seem. As when sourcing tenants, your search for a qualified property manager starts by knowing what to look for. To help you in your quest, here are a few things that you should ask in order to find a property manager that’s not only qualified –but excellent.
Check Out Their Credentials
A reputable property management company should have a number of credentials and accolades to their name. Once you have a prospective property management company lined up, head over to their website and see what you can find. You shouldn’t have to search too hard; if they’ve received recognition in a specific area, they should have that prominently displayed on their website.
See What Their Fees Are Like…Read more
According to Robert Berger of U.S. News and World Report, rental properties can provide a meaningful source of consistent income as part of your retirement planning and portfolio. He claims, “Buying a property or two could provide enough income to allow you to retire sooner.” However, you’ll need to ensure your investment properties will provide steady, positive cash flow throughout your retired life. You don’t want a rental property to become a drain on your retirement resources! Here are some things to consider before diversifying your retirement portfolio with investment properties:
Explore your Financing Options. In a post-financial crisis world, those with good credit and a steady work history can purchase rental properties through a variety of finance vehicles. One should consider the use of a portfolio lender (like Colony American Finance). These lenders have greater flexibility and can act outside the terms imposed by Fannie Mae or Freddie Mac. That being said, lending requirements are understandably stricter than they have been in the past. Lenders are now requiring increased down payments (25% or more) and more stringent credit and liquidity profiles.
Get Familiar with the Tax Implications. Rental properties offer some valuable tax benefits. To name a few, you can claim depreciation on rental properties (but not the land), reducing your tax burden year by year. Depreciation, along with the interest expense on a mortgage, may enable you to minimize taxes for some time. Keep in mind, however, that you’ll have to deal with depreciation recapture down the road If and when you sell the rental. In many cases, rental properties operate at a tax loss. One of the hidden benefits of being a landlord is that these “losses” can be deducted on your tax returns (up to $25,000 a year). There are some requirements that must be met, so be sure you understand the rules. The tax implications of owning rental properties can be beneficial, but are also complex. Seek out the help and advice of a tax professional before you delve into the world of residential rental investments…read more