You have worked hard, persevered and made it happen. You have finally bought that Charleston, SC rental property you have always wanted.
Well done!
The journey might have been full of unexpected turns, but thankfully the time has finally come to enjoy the fruits of your labor.
In fact, real estate has produced more millionaires than any other business.
But, being successful in the rental business isn’t easy for everyone. Among other things, you need to have the right skills for the job.
For example, you need to be a good communicator. You also need to be knowledgeable when it comes to federal, state, and local laws on landlord-tenant agreements.
And more importantly, you need to figure out how your property is going to be managed, by whom, what kind of costs you can expect etc.
The management of your property can make all the difference to the return you get on your investment.
Should you hire a property manager, or should you manage the property yourself?
In this article, we’ll look at some of the pros and cons of managing your rental property yourself.
Pros of Self-Managing Your Charleston, SC Rental Property
1. Saving Money
This is probably the most popular reasons why many people choose to manage their rental properties themselves.
After all, who doesn’t want to save on their expenses?
Broadly speaking, property management companies usually charge anywhere between 5 and 10% of the monthly income.
Suppose, for example, you charge your tenants $1,200 a month. This will mean that the property management fee will be between $60 and $120 per month.
If you own several properties or have a high maintenance tenant, this fee would seem like a bargain.
However, if you just have one tenant, this would seem like a ton of money to give someone else to simply deposit a rent check.
2. Increased Control
When managing your own rental property, you’ll be able to make decisions and implement them yourself.
You’ll have control over things like, who rents your property, and which contractor you want to deal with.
3. Avoiding Fraud
Property managers aren’t one and the same. Some may have unethical characters.
They may participate in unprofessional activity, like getting kickbacks from contractors, or rent from “unoccupied units”.
4. Extra Care
Not many property managers will care for your property as much as you would.
Caring usually translates to effort. The extra effort can potentially mean the difference between a successful rental business and one that is struggling.
Cons of Self-Managing your Charleston, SC Rental Property
Self-managing your rental property comes with some risks.
This is especially true if you lack the experience. Below are some drawbacks of self-managing your rental property:
1. Insufficient Documentation
Without industry experience, you may end up putting yourself in a risky situation by not having a legally enforceable contract.
Some go even as far as simply relying on a handshake as a confirmation of the arrangement.
That’s why hiring a property manager can become necessary.
A qualified property manager will be able to draft all the necessary documentation you may need. Important documents like a lease or rental agreement.
2. Inadequate Tenant Screening
As you probably know, choosing the right tenant is key to a successful rental business.
What you may not know is the process you may need to go through to get one.
When starting out in the business, it’s unlikely that you’ll have the expertise, experience or the tools to screen tenants thoroughly.
You may only be able to rely on limited information (such as CVs and pay slips) and your intuition.
Hiring an experienced manager can prove handy in this regard, too.
Property managers are privy to crucial selection criteria such as rental history, which they can access via industry databases.
3. Poor Understanding of the Landlord-Tenant Law
The landlord-tenant relationship is one that is governed by many rules.
Good examples include:
To evict a tenant, you must follow the due legal process. You cannot evict a tenant using “self-help” methods. Self-help eviction methods include turning off the heat or electricity, removing the front door, taking the tenant’s belongings, or changing the locks.
- South Carolina landlord-tenant act.
The act defines, among other things, the rights and responsibilities of each party to the lease.
South Carolina, just like other states, has rules when it comes to security deposits. The rules guide the use and return of the deposit.
- Mutual covenant of quiet enjoyment.
Did you know that you cannot barge in on your tenants as you please? Your tenant has a right to the quiet enjoyment of their rental. You will need to inform them in advance when you will be entering the property.
The Fair Housing Act prohibits you from discriminating against applicants or residents based on certain characteristics. Such characteristics include family status, handicap, religion, national origin, sex, color, and race.
Self-Management vs. Property Management: Which one is right for you?
Yes, self-managing your rental property can save you money while still being a very fulfilling experience.
However, it’s one that can be time-consuming and fraught with issues and uncertainty.
You need to know the law, negotiate diverse personalities, and adapt to various issues that can pop up any time.
If you lack the time, knowledge and experience, leaving your property’s management to a professional may be a wise move.
A qualified property manager can make your life so much easier. They can help advertise your property.
They can screen potential tenants. Help you set the right rent. And, help evict a tenant should it become necessary.
As mentioned, not all property management companies are created equal.
You’ll need to do your research before choosing one if you decide to do so.
Here are some few questions you can ask before hiring one:
- How much do you charge for your services?
- How often do you evict tenants from your client’s rental properties?
- How much time do you need to fill a vacancy?
- What’s your tenant screening process?
- How do you handle maintenance requests?
- What do you do when a tenant doesn’t pay rent?
While not exhaustive, these questions can help you get an idea of the value you could expect to get.
Clearly, there are a lot of pros and cons of self-managing your Charleston, SC rental property.
At the end of the day, you’ll have to weigh these out for yourself and see what makes the most sense to you.