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Hello all. Thanks in advance to any knowledge anyone's willing to share.
This is a theoretical situation, but something that's likely to happen in the near future.
I own a detached single-family home in a nice suburb (20 minutes by car to downtown) of a major city.
I may need to move across the country soon, and I'd like to rent the property out rather than try to sell. Because I'll be thousands of miles away, I'll need to use a rental agency. All told, my expenses (not including maint. and utils.) for the house are about 1200/mo.
I've seen rentals of the same size in the area advertised from $1500 to more than $2000, and my property would probably come in on the high side of those. $1600 is probably a conservative estimate, or a price that ought to attract renters looking for a bargain.
My question is, how much of a fee/% can I expect a rental agency to take, and can I hope to break even going with a fire-and-forget agency (assuming I/they get decent tenants) that's going to handle most everything about the property for an owner who lives cross country.
Thanks for your responses. I'd really appreciate hearing from anyone who's been a landlord in MA, because that's where this property is, and we've got pretty tenant-favorable laws.
Hello all. Thanks in advance to any knowledge anyone's willing to share.
This is a theoretical situation, but something that's likely to happen in the near future.
I own a detached single-family home in a nice suburb (20 minutes by car to downtown) of a major city.
I may need to move across the country soon, and I'd like to rent the property out rather than try to sell. Because I'll be thousands of miles away, I'll need to use a rental agency. All told, my expenses (not including maint. and utils.) for the house are about 1200/mo.
I've seen rentals of the same size in the area advertised from $1500 to more than $2000, and my property would probably come in on the high side of those. $1600 is probably a conservative estimate, or a price that ought to attract renters looking for a bargain.
My question is, how much of a fee/% can I expect a rental agency to take, and can I hope to break even going with a fire-and-forget agency (assuming I/they get decent tenants) that's going to handle most everything about the property for an owner who lives cross country.
Thanks for your responses. I'd really appreciate hearing from anyone who's been a landlord in MA, because that's where this property is, and we've got pretty tenant-favorable laws.
I think 15-20% is pretty standard, but that could vary depending on region of the country
Seems to me you are very wise to let a good management company handle this since you'll be so far. And it does sound like you will at least break even and get your mortgage paid
Can I Break Even Renting My Property Through an Agency?
If the numbers otherwise would allow you (or imply that they would) to do better than break even then kicking out a bit extra in fees for management shouldn't hurt too much. The real lesson or point is that NOT using a good PM operation is almost guaranteed to cost you more.
On the first point though is to learn all the costs associated before making any estimates.
eg: property insurance and property taxes will go up immediately as will water and sewer rates and consumption
Quote:
Thanks for your responses. I'd really appreciate hearing from anyone who's been a landlord in MA, because that's where this property is, and we've got pretty tenant-favorable laws.
Contact a landlord or property owners group near you and ask around.
Check the courts for frequency of filings and success when they do happen.
The best arrangements are those PMC's who will lease your home and in turn make their own deal with prospective tenants... in essence becoming a partner of sorts with you.
(going to court a lot is NOT the sign of a good PM... but success when it does happen is)
The thing to watch for are deals based on occupancy and trouble free operation and NOT deals which give the PM a right to charge separately for every little thing that happens in the course of securing and keeping good tenants in place. A extra charge to handle an unusual occurrence? Sure. The routine stuff? No.
hth
Last edited by MrRational; 11-16-2011 at 06:52 PM..
Typical fee around here is 10%. You may also have separate costs for listing/advertising the home to acquire tenants. You should call a few companies to get a feel for the prevailing rate in your area.
To determine if you can at least break even or not, you need to consider all your possible ongoing expenses vs your rental income. Consider mortgage payment, insurance, taxes (including any special city rental tax), vacancy and repair reserves, management fees, etc. Utilities such as water, electric, sewer, etc should be paid by the tenant.
Mr Rational - why would property taxes "go up immediately"? Maybe that's a local concern? Would depend on when homes are assessed, and if a rental would have any bearing on the assessment.
Non-owner occupied vs owner occupied.
Taxes and insurance will both cost more.
Again, I think that depends on location. I have rental properties. Owner occupied or not has no impact on our property tax assessment. And if it did, it would likely drive the valuation down, not up. I do have to pay a relatively small city rental sales tax, so including that, combined taxes are higher than non-rental.
Again, I think that depends on location. I have rental properties. Owner occupied or not has no impact on our property tax assessment. And if it did, it would likely drive the valuation down, not up. I do have to pay a relatively small city rental sales tax, so including that, combined taxes are higher than non-rental.
Very true.
OP: You have to find out all the regulations from the city/county and HOA requirements for renting.
I'll give you an example. In Philadelphia city, you whould have to use a property management or similiar in order to rent out your property if you do not reside in the city. With just 1 property and being so far away, you may want to reconsider and possibly sell it instead of having to be concern about it half way across the country.
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