You’ve decided to rent out your house. Maybe you weren’t able to sell it or maybe you realized the investment opportunity of property rentals. Whatever the reason, the fact is you want to do it right.
It may seem like a better financial decision to manage your own property… until you look at the hourly rate. When you add up the time you spend working with your rental property (especially getting it started), you may be surprised at just how little you’re saving by doing the work yourself. Let’s look at the time investment.
Utilities – 1 Hour
To get your house on the grid, you have to get the utilities rolling. Gas, water, and electric come from different companies, meaning you need to call each one to set up the services in your name. Then, once the property is leased, you’ll need to change it over to the renter.
Placing a Tenant – 8+ Hours
Finding and qualifying a tenant is one of the more time-consuming portions of the process. First, you market to get leads. Then you qualify the leads that come in. After those check out, you call the lead to schedule a time to meet. You drive to the property, show it to the lead, and then work with them through the application process. That includes filing background checks, and getting in touch with the employer and current landlord (who won’t consider your call a priority).
And you don’t just do that once – you follow that process as many times as necessary, until you find the right tenant.
Related: 5 Mistakes to Avoid When Screening Tenants
Ongoing Repairs – 1-4+ Hours
Rental property repairs don’t follow standard work hours. If a pipe breaks in the middle of the night, it can’t wait until morning. Someone has to deal with it immediately. If you’re managing your own property, you’re the one they call. Then it’s time to coordinate the repair with a contractor or make the time to fix the issue yourself.
Finding and Coordinating Contractors – 1/2 Hour–1 Hour
Finding a contractor to deal with repairs and coordinating with the tenant’s schedule can be tricky. Sure, you may be able to do some jobs yourself, but that won’t always be the case. When these repairs come up, you need the right person. Then you have to meet them at the house, explain the repair, and select repair options (like which A/C unit to pick).
Related: How to Get Started Investing in Out-of-State Rental Property
That’s all in addition to working with the tenant. Usually, there are a couple of obstacles like, “You can’t come at this time because my dog’s out.” After the repair is complete, you’ll need to check on it to make sure it was done correctly.
We take care of repairs for our landlords. Yes, we get approval on every repair, so we don’t spend without your consent. Every time something needs to be fixed, we work with the three people involved (the owner, the tenant, and the vendor) to resolve the issue as quickly and affordably as possible.
Collecting Rent and Enforcing Past-Due Rent – 1/2 Hour–1 Hour
Collecting monthly rent doesn’t have to be time-consuming if you’re set up to receive it electronically. However, late rent opens up a world of time-consuming problems. First, you have to go to the post office to send a certified letter. Then you go to the courthouse to file eviction paperwork. Finally, you attend the eviction hearing at the courthouse. In total, you’ll spend hours dealing with the issues that come when a tenant doesn’t pay.
City Compliance – 4-8 Hours
Along with property rentals comes a world of red tape. The city has to approve of your house as a rental property before you can legally list it. First, they’ll inspect the house and give you a to-do list to complete before they’ll approve it. When you make all the necessary changes, you schedule another appointment, etc. Then you have to make sure you stay within local and state laws, and follow federal regulations like fair housing. All in all, there’s a lot of scheduling, phone calls, and paperwork involved when you deal with compliance issues.
Time Value
Let’s add it up. By the time you get a tenant in the property and have one repair, you’ve invested about 20-25 hours. How much is your time worth?
If you make 250K a year, you average about $120/hour. With 25 hours in the rental, you’ve invested another $3K in time on top of what you’ve paid out in expenses.
Leap Property Management starts at $85 in management fees. And we only get paid if we produce. That means, if the house isn’t collecting rent, you’re not paying.
So is that a good deal? If you save around $3,000 and get more than a day of your life back, it’s a deal you can’t afford to pass up.
Have a few more questions about hiring a property management company? Give us a call!
