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Options for Managing Your Rental Property

There’s never been a better time to invest in rental property. Record numbers of foreclosures have created a new class of renters – people forced to “sit out” homeownership until they can resolve credit issues and regain stability. For these reasons, first-time investors can acquire properties of all kinds at unprecedented low rates – the strategy recommended by Jason Hartman’s investment systems. But purchasing real estate brings a number of decisions, including ways to manage the property.

Although rental property can create a steady income in retirement, it does involve an ongoing commitment to maintenance and administration. Municipal building and housing codes hold owners responsible for the property’s safety and appearance, and well-maintained properties attract quality, long-term renters for a regular income stream that covers mortgage payments.

New owners of rental properties must either manage their properties themselves, or enlist a third-party manager.

In a number of situations, personal management of your rental property offers distinct benefits. In this situation, the owner is directly responsible for handling all the upkeep, maintenance and repairs. No fees need to be paid to a third-party property manager. And, if the property is a duplex or multiplex, the owner may also be able to live on the property and oversee it on a daily basis.

However, personal management of the property entails establishing business practices that may include a home office or other kinds of structures for management and tax purposes. It also involves dealing with problem tenants, recovering rents and resolving any issues related to the property. An owner’s time may be too heavily invested in management, especially if more than one property is involved.

Third-party property management offers a solution. If you’ve purchased a property out of town or in another part of the country, it may be the only option. But even closer to home, enlisting another individual or company to oversee the property may be a way to free yourself from administrative tasks.

Third-party management can take many forms. You might hire an individual directly – someone who can represent your interests, resolve on-site issues such as repairs, and be a liaison between you and your tenants. In a duplex or multiplex, this person might be a tenant who receives a small salary or another benefit in return for acting as a property manager.

Another option might be a property management company, which handles numerous properties in the community. For a fee, the company collects rents, handles property issues and represents the owner’s interests, offering freedom from the ongoing, hands-on tasks of managing the property. However, property management reduces the owner’s return on the investment and creates added expense.

Investing in rental real estate has never been easier. Planning ahead for managing your investment can eliminate headaches and smooth the process. (Top image: Flickr | aflcio)

The Heroic Investing Team

 

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