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Tracy, Both Buyer and Seller in Oakland, CA

Property management for renting out my current home?

Asked by Tracy, Oakland, CA Sat Aug 6, 2011

I need to leave this neighborhood because my son got into some trouble with the locals. I am upside down in my loan. I could either short sale the house (I don't want to) or rent it out. I'm thinking of hiring a property management company to handle this for me. Is this a good idea? I'm not to keen on screening renters and all of that. What does a property management company do for you? I'm also thinking that I could get a section 8 tenant. Is that an advantage? What sort of hoops would I need to jump through?

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Tracy:

I personally own properties with Section 8 renters. We like it because a significant portion of the income is guaranteed and, in many cases, the rents are higher. To qualify for Section 8 renters, your home has to pass specific an inspection – here is an example of the inspection check list:

http://www.tulsahousing.org/Portals/0/General%20Documents/HQ…

A good property manage can:

(1) Oversee the entire Section 8 certification process
(2) Provide a screening for applicants
(3) Collect rents
(4) Handle maintenance issues as they arise
(5) Handle evictions, if necessary.

We use a property management company for all our rentals – I wouldn’t do it any other way.
.
0 votes Thank Flag Link Sat Aug 6, 2011
Hey Tracy, there are pros and cons to using a property manager. Pretty much the only con is that it costs money! Typical property managers charge ~ 50% of the first months rent for tenant placement. If you are going to have them manage the property which includes collecting rent, taking the phone calls when something breaks, deal with any issues that come up etc, they usually charge ~ 7% of the rent every month.

Personally, I would use a property manager because I don't want to spend my time dealing with all of that stuff. In fact, I refer out property managers all the time. The other positive thing about hiring a property manager is you limit your liability. There is a lot of liability that comes with renting out property and if you're hiring a professional to do it (and paying them for that service), they take on much of the liability.

Section 8 also has its pros and cons. I have a number of clients who own multiple investment properties and in general, they like section 8. The majority of their rent comes straight from the government. The down side is they often have to go to the house to follow up on/collect the rent and many times the tenants are late with payment or don't have it. Just like anything, there are ups and downs.

Shoot me an email if you want the names of a few good property managers.

Aaron Brown - The Grubb Company.
1 vote Thank Flag Link Sat Aug 6, 2011
Tracy, I am a Do-It-Yourself landlord with an investment property in Vallejo. If you are going to stay in the bay area I would recommend you joining a landlord or property management meet-up group / organization and do the property management yourself. There are a lot of tools out there to help with the tenant screening, verification and selection. http://www.tenantopia.com/landlord is one that allows you to place an application into your craigslist ad and start collecting interest. Then, you simply select the person you feel like is a good candidate, you call them, show them the place, and then request that you have their application verified. Then, within 24 hours you receive a verified application including credit report, FICO score, rental history verification, employment verification, and income verification all for just $30. Take the time to get a good tenant and you can save yourself 8-10% / month of the rent plus half the first month's rent as a placement fee on property management fees. That being said, if you are not comfortable showing your place to interested, pre-qualified tenants then by all means you should hire a property manager as this is what they specialize in. One more thing to keep in mind, if you are using a property manager, make sure to tell them you minimum income to rent ratio. A lot of companies require unrealistically high income/rent ratios compared to the area making it close to impossible to find a qualified tenant. Best of luck, Thomas
0 votes Thank Flag Link Tue Jan 27, 2015
Hi Tracy,

You don't have to sell, especially when the market is in the up and up. Not all prooperty manager;s charge 50% of your rental income. At Wells and Bennett we offer reliablilty and quality for each of the properties we manage---we are hand pick the properties we want to represent. But we offer great service. We have experience with section 8 as well. And the only hoops to jump is actaully picking up the phone and giving us a call. That's it. We can take care of the rest and let you know what we offer for no hassle and easy management or leasing or both. Feel free to give me a direct call and I will assist you with any and all questions.

(510) 485-7252
0 votes Thank Flag Link Sun Jan 25, 2015
Renting your house out can be a great option, especially with rents spiking in many areas. Try using All Property Management to find a property manager in your area. You can also read about what property management companies do (and charge) in their "Resources" section.
0 votes Thank Flag Link Mon Aug 8, 2011
Make sure you work with a certified property manager. At least you know that had the necessary training to know what to do. Tenant screen ing is only one part of property management, and although important ( a good tenant keeps up the property). I do property management, and would be able to give you advice on what to watch out for. Too much to write down in an email. I can also do the comparsion investment calculations to compare alternatives you already mentioned, like short sale, rent, etc.
Kind regards
Antoine
0 votes Thank Flag Link Sun Aug 7, 2011
Truly sorry you are having a difficult time. Last thing you need is to worry about screening potential tenants, managing a property, etc.

On craigslist, many property managers advertise their vacancies. The way by which they promote their listings may give you some idea of how they market. Or at least it gives you an idea of whom to call to interview for the job of managing your property. You can also ask them for ideas on how much rent you can get.

if you won't get enough rent to pay your mortgage.....and if you are upside down on your loan...what other option do you have? Have you tried loan modification?

As for Section 8 tenants, as Carl said, rent payment is guaranteed. That's one less headache for you.
0 votes Thank Flag Link Sat Aug 6, 2011
Tracy,
I'm sorry to hear about your troubles. There are a number of good property management companies around. If it makes sense financially I agree with Aaron that this is a good way to go. Put the onus of selecting tenants on them, whether its section 8 or not. If you decide to rent it out yourself plese spend a lot of time and energy screening for good tenants, you'll be happy you did. Best of luck to you.
Bill Fletcher
Red Oak Realty
0 votes Thank Flag Link Sat Aug 6, 2011
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