Landlording Expenses in Phoenix (rentals, insurance, appliances)

[Potential_Landlord]

I'm weighing whether to keep my current home and rent out vs. selling it. Is it a good idea at all to be an out of state landlord, with property manager and all? Also, what expenses do I have to factor in aside from PITI, pool service, yard service, prop mgr? I'm trying to understand if it would be worth it at all. Thanks!

[Zippyman]

You might want to start by talking to some local property managers - most sfr's that I've seen for rent require the tenant to maintain the lawn & pools seem to be mixed..

I'd also ask for a copy of the PM's contract & read it with a wary "worst case" eye. A PM is authorized by you to bind you contractually to tenants, contractors & darn near anything else they feel like doing. Personally, I wouldn't trust my own family with the kind of power that a PM really *needs* to have to do their job effectively.

If you go the other way & require them to let you hire contractors & screen tenants, you're just paying them to cash your checks & take a cut.. (after holding the funds for most of a month!).. PM's usually keep any late fees collected for themselves.

As for expenses, usually figure most of a month's rent to find a tenant, a few hundred to clean & fluff the house/yard/pool between tenants +1 month's vacancy between tenants. It's most of a grand to hire a good attorney to do an eviction, but those are not that common. Most sfr tenants in the valley stick around for around 4 yrs on average <----- that's an ARMLS statistic.

Maintenance & repairs isn't really too bad if the house is in good shape when you rent it. Things like garage door openers, built-in microwaves, toilets etc tend to die at random intervals & they aren't really that expensive. I personally don't like to include any appliances beyond a stove/microwave/dishwasher - washers/dryers & fridges are expensive & unreliable - better to let the tenant bring their own. If you provide an appliance, you have to fix it if it dies.

Converting a primary residence to a rental involves some accounting gymnastics & I'd highly recommend the services of a CPA for that - whatever you pay the CPA is a business expense & they'll save you big piles of cash at tax time. I keep a separate bank account for our rentals ---> rent goes in, expenses go out of that account only. With a pm, they'll likely just reduce your check for bills that they pay.

If you're looking for "things that could happen to a landlord", you might want to check out the "documents" tab at doctorevictor.com - he's got sample leases, faq's & suggested addenda there that kind of point out pitfalls (and I've seen lot's of PM's leases that didn't address some of those issues!).

To be honest, I dunno if I could hand over my rentals to a PM - I just don't trust anyone who doesn't share DNA with that kind of power.



Good luck!

[wit-nit]

Originally Posted by Potential_Landlord

I'm weighing whether to keep my current home and rent out vs. selling it. Is it a good idea at all to be an out of state landlord, with property manager and all? Also, what expenses do I have to factor in aside from PITI, pool service, yard service, prop mgr? I'm trying to understand if it would be worth it at all. Thanks!

Is this rental in Phoenix.
Taxes, insurance, permits to consider.
https://www.phoenix.gov/financesite/...s/d_037814.pdf

[Potential_Landlord]

Originally Posted by wit-nit

Is this rental in Phoenix.
Taxes, insurance, permits to consider.
https://www.phoenix.gov/financesite/...s/d_037814.pdf

It would bethe only rental, but thanks for the info. I think just as important is to register the rental with the city otherwise there is a steep fine.

[Potential_Landlord]

Originally Posted by Zippyman

You might want to start by talking to some local property managers - most sfr's that I've seen for rent require the tenant to maintain the lawn & pools seem to be mixed..

I'd also ask for a copy of the PM's contract & read it with a wary "worst case" eye. A PM is authorized by you to bind you contractually to tenants, contractors & darn near anything else they feel like doing. Personally, I wouldn't trust my own family with the kind of power that a PM really *needs* to have to do their job effectively.

If you go the other way & require them to let you hire contractors & screen tenants, you're just paying them to cash your checks & take a cut.. (after holding the funds for most of a month!).. PM's usually keep any late fees collected for themselves.

Thanks for all the great info! Unfortunately you do not have much choice as an out of state landlord. At max I could the PM do the tenant screening and deal with the tenant myself once in the property, maybe with an appliance insurance.