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By: Rob Massey, Jr., CPM
published in the NARPM’s Residential Resource
Since most of the country has been experiencing a significant real estate sales slow-down over the last year or so, many of us are now being called upon to rent and manage houses for owners who really would rather sell their properties. If we are accustomed to working with investor-clients, then we need to be aware of the new challenges facing us should we choose to represent these reluctant landlords. As property managers we should also be prepared to inform these unseasoned soon-to-be landlords about the realities of renting out their personal homes.
For me, the first topic of discussion for these potential new clients is whether or not they have exhausted all avenues for getting the house sold. I take this stance for two reasons. First, it is simply good advice to make sure its failure to sell is only due to market conditions and not house conditions. Secondly, half of the time I’m not that interested in handling their property anyway because I know of the obstacles that I will be facing should I decide to lease and manage it for them. Of course my own hesitation begs the question of whether I even want to manage under these circumstances in the first place, which is a whole other point of discussion for another day.
The second topic to cover is determining the financial feasibility of renting out for these particular prospects. Most people in this situation have no idea about how much money they will likely net each month from renting. Once you do the math for them, they may well decide on their own that renting is not a viable option.
Typically, their Realtor has already given them a monthly rent figure that often is too optimistic. To make matters worse, the owners likely haven’t even considered any maintenance costs, vacancy time, make-ready expenses or the emotional stress of renting out their personal home to strangers.
Another consideration in determining the feasibility of renting out a house is the ability of the owner to survive (financially and emotionally) the worst-case scenario – an eviction. A property owner has no business renting out their house if they cannot weather the storm of an eviction. Granted, one of the more significant reasons that they hire a professional property manager is so that they don’t have the misfortune of an eviction, but we all know that the risk exists irrespective of how thorough we are as property managers.
I once had a reluctant landlord who had what turned out to be a bad resident placed in her home by my company. We had done a thorough job screening but the residents went through a divorce while in they were in occupancy of the property. The husband, who happened to be an attorney, remained in the house with his three children for a period prior to defaulting on the rent. The end result was not good. The wife of the couple who owned the home happened to be in town when I got possession. Her reaction to seeing her previous personal home after the residents moved out was one that I will remember for a long time.
Another area of misunderstanding with reluctant landlords is the needed work for placing the house on the market for rent. Typically, these owners are surprised by and resist granting permission for the amount of preparation that we know is vital for attracting the best residents. Stand firm on this requirement because it may well be the key to having a successful experience for both them and your company in the management of their property.
Homeowners seeking an alternative solution to selling their homes in a weak sale market need to consider renting their home out. Contacting a professional property manager is their best bet for determining the pros and cons of that option and for understanding what they might expect should it be a logical choice for their specific situation.
About the Author
Robert Massey Jr., is the president and owner of Robert Massey Company, a rental property management and residential property sales company based in Louisville, KY. Robert, Jr. also founded RentalHouses.com, a leading national internet listing service for advertising rental houses. He is an industry leader and authority in property management and online-based services in the industry, writes articles and speaks regularly to property managers and agents across the country about beneficial services and upcoming trends in property management. See more articles from Rob Massey, Jr., website: www.RobertMasseyCo.com