Anyone who has owned rental properties has probably asked themselves "Should I Hire A Park City Property Management Company?" at some point. Whether they were struggling to find a new tenant, taking a phone call about leaking pipes in the middle of the night, or having to deal with the unfortunate process of eviction, having a rental property can take up both your time and patience. I have put together a few key points to analyze when asking this question.
1. Do You Live Near The Property?
The Princeton economist Alan Blinder put it best when he said "You can't hammer a nail over the Internet." This simple phrase succinctly explains the problems that can arise from managing a property from a distance. At some point, something will happen that requires direct action to solve. Touring a potential tenant through a property, posting a notice of late rent, and of course maintenance requests are just a few examples of the different tasks carried out in the usual course of managing a property. If you don't live close enough to respond to these and other types of issues in a timely manner then a property management company may be right for you. Along with being able to respond quickly to the needs of your property a quality property manager brings with them comprehensive knowledge of the rental market and housing industry. They will also have important connections within the industry to assure that your property is cared for in the best way possible. Park City property management companies can be a trusted and valued asset in managing your property.
2. Do You Have The Time And How Do You Value It?
Do you have the time to properly manage your rental property? We have established that Park City property management is a hands on enterprise so if you feel that you don't have enough time to devote to the demands of a rental property then consider your alternatives. Murphy's Law definitely applies to property management so if your life is already full with work, family commitments, taking care of your own home, and trying to find a little R&R in between the last thing you need is to fix a leaking sink or chase down some late rent payments. Everyone values their time but I most people don't try to put a dollar amount on that value.
Let me give you an example. Let's assume, on average, managing your property requires 5 hours every month. Those 5 hours can be anything from talking to your tenant about a maintenance call to depositing the rent check into your bank. Let's also assume that you can hire a property manager to do all the things you do, plus some things you either can't or won't, for $100 a month. Now you have a decision to make. You can either hire a property manager at $20/hour to take care of your property, or you can hire yourself to work as a property manager for $20/hour. If you feel that $20/hour is the going rate for your time then a property manager might not be the answer. If not then you have some things to consider.
3. Do You Have Multiple Properties?
If you have purchased more than one investment property you should definitely consider a property manager. Obviously time is a factor in this but the other point to consider is the hiring of an employee. If your investment properties keep you busy to the point that you are thinking about hiring an employee then an easier solution is to hire a Park City property management company. This saves you the necessity of establishing yourself as an employer, hiring and managing employees, and all the legal requirements that go along with this. In several ways outsourcing the management of your investment property to a professional can save you time, provide you with peace of mind, and allow you to pursue the more important aspects of your life.
If you would like to learn more about property management Park City Utah, download our free white page "5 Questions Every Landlord Should Ask Themselves".
Park City property management can become very confusing when examining the legal aspects so I have created these 3 legal tips for landlords that cover issues I commonly see people get wrong. This is not meant to be a long or exhaustive description of the laws surrounding property but rather the basics that a landlord is likely to encounter during the usual management of a rental property. Should you need further information or more specific legal advice you can consult the sources I list at the end of this blog or contact an attorney specializing in property management.
1. Entering A Property
I have seen both extremes when it comes to entering a rental property. From a property owner who manages their own property and will go in whenever they want because "It's my property!", to owners who buy investment property, hire a Park City property management company, and never set foot in their property. Whether entering a property to perform maintenance work, touring a prospective tenant while the property is still occupied, or a general property check there are basic legal guidelines in place. In most instances a landlord is legally obligated to provide a tenant with 24 hour notice before entering a property. A best practice would be contacting a tenant directly and scheduling a time however a notice left on the door will also fulfill this requirement. The only time it is appropriate for a landlord to enter a property without notice is in the event of an emergency. As a landlord you should realize that once a lease is executed you give up the right to enter your property whenever you would like. Respect your tenants and they will respect you and your property.
2. Changing The Locks
How many times have you heard the threat "I'm going to change the locks!" made when
talking about Park City property management? Perhaps you may have even said the same, or at least
thought about it when a tenant is being problematic. If a tenant is not paying rent, is creating a nuisance in the community or engaging in illegal activity on the premises, or if the tenant is damaging the property you may feel it is your right, as a property owner, to change the locks. The truth is locks can only be changed by the landlord in very limited and specific circumstances and a court order must be obtained first. In fact, should you change the locks without a court order a tenant can contact the police and you could end up in a lot of trouble. Most landlords will not contemplate changing the locks without some cause for doing so. In this case the first step a landlord must take is a 3 day notice. This notice can take the form of a 3 day to pay or vacate in the case of unpaid rents or a 3 day to comply or vacate in the instance of behavior that violates the lease agreement. The key for a landlord is quickly posting a notice if your tenant has violated the terms of the lease agreement. At this point a tenant will either realize you are serious and get with the program or if they do not you have begun to take the proper legal steps to get them removed from the property.
3. Handling A Deposit
How quickly do you have to return a tenant's deposit? Is it upon move out? A week after move out? Never? What can and can't you charge a tenant for? These are all good questions to ask yourself when it comes time for a tenant to move out. And if you don't know the answers you should start doing some research. Utah property management law provides for a 30 day window after tenancy ends or within 15 days of receipt of the tenants new address, whichever is later. A tenant can be charged for any damages beyond reasonable wear and tear, cleaning, and other items provided for in the lease. In the event that there is damage above reasonable wear and tear then receipts for all work must be provided to the tenant explaining why this amount was deducted from their deposit.
If you would like more information about property management Park City Utah, download our free white page "5 Questions Every Landlord Should Ask Themselves".
In a previous blog, 3 Tips For Successful Residential Property Management, I briefly touched on the Fair Housing Act and some possible consequences to getting sideways with Uncle Sam. In this blog I would like to go over the act in a little better detail as I feel this is something that many people have heard of but know little about. In particular how this act relates to rental property management is something every landlord should be aware of.
The Fair Housing Act
Passed in 1968 the act prohibits discrimination in the sale, rental, and financing of property to any individual based on race, religion and national origin. An update to the law in 1974 included gender to this list. Most people would view the discrimination against these four classes as an obvious no-no but an update to the law in 1988 created two new classes you might not know about.
Handicap
We are all familiar with the ubiquitous handicap parking signs but handicap or disability is also a protected class when it comes to rental properties. For example if you set a no pets policy at your rental property, or if your property is part of a condominium association that does not allow pets, you cannot refuse to rent to a blind person who uses a Seeing Eye dog. Also a landlord cannot prohibit a disabled tenant from making, at their own expense, reasonable modifications to the property that will allow them to use it. However if a modification is made the disabled tenant is obligated to restore the property to original condition upon their moving. And finally if there are any rules or policies that inhibit a disabled person from using the housing then reasonable accommodations must be made for the tenant.
Familial Status
Familial status, a somewhat confusing term, can easily be understood as having kids. Discrimination against this type of protected class can be somewhat difficult to understand but I have found a simple way to determine if a rule or policy is discriminatory. A posted rule stating "No kids in the pool from 10-2" may see innocuous enough but if "kids" were to be replaced with "Asians" or "Catholics" then it becomes clear that the rule is discriminatory. I recently had a resident stop by my office concerned about the prospect of having a new neighbor move in above them. They were concerned about the noise and asked that I would only rent to a single person, preferably a woman with no kids who worked as a flight attendant! Not only was the request a little extreme but it would also be a discriminatory practice. As a professional property manager I cannot even engage in what is called "steering", the act of suggesting only certain properties to a family or other protected class.
What Does This Mean For Me?
Great question, glad you asked! There are rules regarding what housing is covered by the Act and what is not. Generally most housing is covered but under certain circumstances a single-family home rented without the use of a broker is not covered, as long as the owner of the property does not also own more than four rental properties at a time. For reference you can take a look at an overview of the Fair Housing Act or, if you are really suffering from insomnia, you can take a look at the entire text of the Act here. Now if I could make a recommendation to anyone it would be to follow the requirements of the Act whether you think you should or not. While it is always best to error on the side of caution you can be certain that your actions in managing a rental property are ethical and honest.
Having an investment property can be both a challenging and rewarding experience. Property owners are faced with two basic choices when thinking about Park City property management: do I manage the property by myself or hire a Park City property management company? Each property owner arrives at an answer by assessing the property and their personal situation. However there are a few common pitfalls that I have seen self-managing property owners stumble into in my time as a professional property manager.
1. Knowledgeable Tenants
All too often I have had a resident, who rents directly from an owner, stop by my office with a
problem. And that problem is usually related to a lack of knowledge. From "Where is the laundry?" to "Can I have a satellite dish?" many problems that arise for a tenant can be proactively dealt with through informing the tenant about basic information related to the property. If your investment property is part of an association this could include parking rules, pet policies, or access to gym and pool facilities. In the case of renting a private home clearly spelling out any maintenance responsibilities that belong to the tenant are also very important. Setting expectations early can help a property owner avoid frustrations and make renting a positive experience for a tenant. The last thing anyone wants is a car to be towed because a tenant didn't know where they could park.
2. Background Checks
A while ago I had a conversation with a property owner who does their own Park City property management. At the time we both had a similar property we were trying to rent and they wanted to know if I had any good prospects. I said that I had a few showings but only one party had submitted an application and had been turned down. When they asked why I had turned the prospects down I indicated that a member of the party had a Social Security number that showed up as belonging to a deceased person. The property owner then asked if I would refer the prospects to them because "I don't really worry about that, I never run a background check"! Now I would hope that this is an uncommon response but when looking for prospective tenants you must take the time necessary to protect your investment. Some recommended steps are:
- Verifying employment
- Check rental history
- Run a credit and criminal background check
I have seen too many examples of poorly checked tenants that have resulted in damaged property, lost rents and even involvement from law enforcement. This can not only negatively affect the property owner but also the community. Don't just take the first person who has cash in hand, do your research and you will be glad you did.
3. Be Involved In The Community
As a property owner it is all too easy to simply let the rents come in and not think about the big picture. Do you know what is going on in the community where your investment property is located? Are there things happening that could impact your ability to rent your property, either negatively or positively? Let me give you an example. Not too long ago I was consulting with an attorney who specializes in Utah property management. We were discussing pool rules when he told me about a community he was aware of that got into a lot of trouble over their pool rules and the Fair Housing Act. The Fair Housing Act, passed in 1968, creates certain protected classes that it is then illegal to discriminate against. One of those protected classes is "familial status", which was added in an amendment to the act in 1988. Familial status can be easily understood as having children. The community that the attorney was telling me about was formed prior to 1988 and had an little known and never enforced rule that barred children from using the pool during certain hours. A family renting a property in the community, upset with something completely unrelated, found this rule and reported the community to the U.S. Department of Housing and Urban Development, the agency responsible for enforcing the Fair Housing Act. Unfortunately for this community the government levied a heavy fine which then was passed on to individual property owners for payment. In this case an involved homeowner could have easily saved the community a serious fine by knowing the rules present in their community.
Park City property management can be a positive way for owners to generate funds on their property but without some basic knowledge it can be a difficult process. Take time to further educate yourself with some of these resources: Fair Housing Act, Background Check.
If you are interested in learning more about property management Park City Utah, download our free white page "5 Questions Landlords Should Ask Themselves".