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Tuesday, December 29, 2009


Assuming you are going to rent out the property, there are really two choices: Do it all yourself; or align with a Property Management Company. For us, the Property Management Company is a far better way to go. The rest of the discussion assumes that.

A fundamental decision needs to be made: are you renting an unfurnished property, or are you furnishing it and renting it as a “vacation rental”?

Typically for an unfurnished property: income is lower; management costs are lower (10% is typical); and most of the utilities are set up and paid for by the renters. You probably still need to pay taxes, Home Owner Association (HOA) fee, and potentially a pool service. For our property those are about $250/month total ($150, $35, and $65 respectively), but a condo would have higher HOA fees. However, there is less frequent turnover of renters; you have no ability to use the property yourself.

Conversely for “vacation rentals” you pay for furnishing and outfitting the property to make the property useful for a vacation. That means furniture; kitchen appliances, dishes, utensils; linens, etc. Therefore you need to add capital to your acquisition cost. Depending on the property that could be $5K or $20K. And time to manage the build out. Wear and tear on furnishings is your responsibility, and thinking about wear and tear may cause you to make furnishing decisions that are different than you would make for your own long term use in the future.
You pay all utilities. Heat, electricity, cable, internet, phone in addition to those mentioned above for an unfurnished property. Income will be much higher when occupied, but there will be more unoccupied time.
You can book the property for your personal use if not already rented
A typical management fee is 30% of income.

A good choice of Management Companies is very important to (a) the amount of hassle you experience; and (b) the ongoing maintenance costs. We aligned with Jeff Dicks of National Rental Pros, and that has been a very good experience. He was also our Real Estate Pro, so the property seamlessly transferred from acquisition into managed mode, and he directed all the initial repairs and set up activities with very little intervention on our part. He even arranged for acquiring and installing an almost new washer and dryer.

1 comment:

  1. i too think that Property Management Company option is better as you don't need to take tension about arranging all things and these companies are always cooperative and handle the things appropriately