Give It A GO, Or Hire A PRO?
I'm a 1st time owner on an investnment single family home. I close in a month or so.
Should I follow all the advice I've been able to find about leasing a home (refs, credit check, etc, etc) and drop an ad in the paper and a "for lease" sign in the front yard... or
do I hire a Mgmt Co. to do it at 1/2 1st months & 9% monthly??????
Is it really "that hard" for one to do it themselves?
Thanks,
Erik
ps 
I realize everytime I post I am always seeking advice. Hopefully one day I will be able to contribute to this forum and provide advice to those who will someday be in the shoes I am in now.
I would do it myself. however I am fairly handy. I can do simple electrical work, plumbing, drywall, window repair, basically I can (and have) build a house. I also have a job with flexible hours (I teach at a University) so I can take time off to do things. You need to ask yourself is the time saved by hiring a management company worth the money. The management company is still going to bill you for repairs, but they will deal with getting someone to do the work and go through the trouble of leasing (can be a headache, or it could be easy). If you are fairly handy and have some time (many weeks it requires no time, some weeks many hours) I would handle the management.
Honestly, if you have a hard time saying "NO" to people, then you should not be a landlord. Tenants will try to take advantage of you and if you give them a inch, then they'll take a mile!
You have to protect your investment and sometimes it is hard for an individual to deal with a tenant's personal problems that causes the payment to be late or miss a payment. Make sure you read up on the landlording rules in your State, you can pick up a book in your local bookstore or library on Florida's landlord rules. Document everything! Keep meticulous notes on when the tenant paid, if it was late, and the late fee. If they missed a payment and you sent a demand payment letter, then document when you sent it and certify it to keep it for your records.
If you are not good at keeping records or saying "NO", then you should hire a management co. Just my opinion...
Tanya
You have to first determine whether or not you have a property that will carry the added cost of having a PM. I personally always add in the cost of having a PM when I determine whether I should buy a property. In my opinion, there are no costs saved in not having a PM. Of course if you do all the work that a PM does, you will save that money, but you are giving up some of your time. I would rather purchase some more properties,whose profits would pay the costs of using a PM on all of my properties than have to handle the collection of rents, recordkeeping, finding tenants, being available to take calls when tenants have problems, etc. etc. PM's don't make very much money for what they do in my opinion.
I've also heard that if you pay a management fee, the income becomes passive, and you lose your deductions for real estate losses. Might want to check on that with your friendly neighborhood bean counter... AKA, your tax professional.
jam200,
Your friendly tax professional will tell you that rental property operation is a passive activity, by default. It does not make any difference whether you self-manage or outsource the day-to-day management operations.
I think you are really referring to taking advantage of a passive loss allowance againt other income for property you actively manage. The IRS rules allow you to offset up to $25K in net passive losses against other income for rental property operations with active participation. This allowance is available, regardless of your level of active participation.
For example, if you make the decision about which management company to hire, reserve authority to approve certain repairs (perhaps everything over $300), and have final approval on tenant acceptance, then you are actively participating in the rental management even though 99% of the day-to-day management operations are performed by the professional management company. The net passive loss allowance against other income is still available to you.
Only when you have no direct participation and no authority to affect operations are you likely in a passive income activity for which the passive loss allowance would be denied. An example here might be a real estate limited partnership where as a limited partner, you have NO active participation in any management activity. For your real estate limited partnership, passive losses that are not used to offset other passive gains, must be suspended and carried forward to the next tax year. The passive loss allowance against other income is not allowed for this investment.
I'd join your local apartment association, buy the book "landlording" and do it yourself for at least a year.
Right now will you know if your property management company is over charging you? renting below market? charging too much for labor? Not filling vacancies quickly enough.? There are LOTS of bad property management companies. By doing it for a bit you'll learn what it takes yourself, what you want them to do, what you'll do yourself, and be able to more effectivly find and monitor a good company. If you live close to your rental, you may realize that it's very little effort, and you get to keep 9%
Even if you choose to manage the property yourself, I think you would be wise to do as one of my mentors suggested. He calculated in a management fee for his time if he did the work himself. He said he didn't work for free so if he did the management, he expected a cashflow that was high enough to essentially pay him 10% to manage the property above and beyond what he considered a decent cashflow. In reality, there are no free rides in this world for most of us. If you like doing the management yourself it is great to get paid to do something you enjoy. However, you do have to consider that it does require a commitment of time that will limit your freedom.