If you’ve ever considered investing in a few rental
properties, now might be a good time. Prices are still low, but have been
on the upswing. According to the National Association of
Realtors,
the median price of an existing home in a US metropolitan area grew 13.7%
between July 2012 and July 2013, the latest in a 17-month streak of
year-over-year price increases. New landlords can
choose from properties that are likely to appreciate and a large pool of
potential renters.
Licensed realtor Pat Mueller cites a few reasons for this trend:
“Many families have lost their homes to foreclosure and are entering the
rental market for the first time in years. Mortgages are also harder to get
now, so fewer people are qualifying for a new one.”
The more skills you bring to the table and the more time you
have to devote to your properties, the faster you can make a return on your
investment. But investing in rentals can also be disastrous (or too stressful
to be worthwhile) without expertise. Here are three professionals you may
consult about your new property, and what you can do to mitigate how much they
cost you:
Handyman
You may need to hire a specialist for some work on your rental.
If you need new outlets or new pipes, for example, hire an electrician, plumber
or licensed contractor. Handymen usually tackle smaller, more manageable tasks,
like:
- Painting
and paint removal
- Drywall
repair
- Minor
appliance repairs (fixing a leaky toilet or faucet, among others)
- Installing
tiling or flooring, moldings, windows, doors
- Refinishing
decks, cabinets and other wood items
When You Could Skip It: You could do any (or all) of these projects yourself if you have
the time and interest in learning. Of course, this only works if you live
relatively close to your rentals and are flexible enough to service them on
short notice. And if you’re willing to respond to the occasional 5 AM basement
flooding.
Average Savings: Any base rates or costs-per-hour vary from location to location,
but nationally, you can expect to spend an average of $60 to $85 per hour for repair costs. It general costs less to hire an individual handyman than a
handyman employed by a company. Expect an additional charge if your job
requires a trip to the store for materials.
Resident
Property Manager
As the owner of a handful of properties, you may be able to
manage them yourself, but if you want help, a single resident manager would
probably be more cost efficient than a property management company. Resident
managers may:
- Serve
as a handyman
- Advertise
vacancies in your units
- Show
apartments to prospective tenants
- Review
rental applications
- Collect
rents
When You Could Skip It: Again, the closer you live to your properties and the more spare
time you have, the less likely you are to need a manager. The obligations of
being a boss will also cut into the time you save on maintenance.
Average Savings: The national median wage for residential managers is just over $25 per hour. Research the wages in your community
and adjust according to how much responsibility your manager will take on.
Real
Estate Agent
Once you’ve gotten your financials in order and done your own
research on the neighborhood(s) you’re considering, you might contact a realtor
to show you potential properties. You can also arrange for a realtor to show
units once they’re ready to rent.
When You Could Skip It: It depends. Even if you’re a local, or have thoroughly
researched the neighborhood(s) you’re considering, a realtor is a great
resource for a first-time rental buyer. Realtors have access to data and
statistics not necessarily available to the general public and first-time
buyers may not know all the right questions to ask. Using a realtor to fill
your vacancies is less of a no-brainer, depending on your other time
commitments or whether you plan to hire a resident manager who could do the
same thing.
Average Savings: As a buyer of rental properties, as when buying your own home,
sellers typically pay most, if not all, of the buyer’s realtor fees. In this
case, Mueller points out there’s little reason not to work with a realtor. For
help in filling your units, the services of a realtor would set you back
between 10-20% of the unit’s rent per month. Mueller recommends
interviewing with several brokers before making your final decision.
The
Bottom Line
As a new landlord, you can’t necessarily control the flexibility
of your schedule or the amount (and cost) of unexpected repairs to your
properties. Rentals are a long-term investment. However, to maximize profits
from your new rentals, you can buy close to home and start small. Mueller
recommends beginning with just one or two properties. This will allow you to
maximize the time you spend on your properties’ needs, and minimize the amount
you’ll have to pay anyone else. So if you are looking to buy or rent properties
visit Allindiayellowpage.com to get details about property dealers and
agents in your city.