Renting your property in the hot market of San Diego can be an excellent way to get some extra income. But, maximizing the return on your investment could come with some unforeseen headaches.
To make the most of your investment in the lucrative Southern California rental industry, you’ll need to make sure everything runs smoothly — from advertising and leasing to move out inspections.
A common question property owners have at this point is whether to do these things alone or to hire a property management company. The answer depends on your individual circumstances.
For instance, if you own a single property nearby, it probably makes more sense to take care of it yourself. If you own an apartment community in a different state, hiring a property management company could be a better bet.
When deciding between hiring a property management company or becoming a self-managed landlord, here are some factors to consider:
Finding and Screening Tenants
High rent prices and a low vacancy rate makes San Diego an excellent market for property owners. In fact, four of San Diego’s largest rental providers report 95% occupancy rates. This is an average, however, and units in your neighborhood may not be as easy to fill.
If you’re lucky, a tenant with perfect credit and a long history of reliability will walk in off the street looking for your in-demand property. If you’re not so lucky, you’ll need to make sure you’re advertising in the right places. You’ll also need to understand the variety of Fair Housing and tenant screening laws, to remain in compliance with the law.
A property management company can take care of advertising and attract new tenants to your building. They can also handle the screening process to help you find reliable tenants.
Maintenance and Repairs
San Diego County renters have certain rights when it comes to building maintenance and repair. Landlords must not only conduct this regular repair and maintenance but keep records of this too.
In single units or smaller properties, this may be something easily managed by yourself or your building supervisor. In larger units repairs may be more difficult to conduct without commercial assistance, as well as needing to track and file paperwork associated with the California landlord/tenant laws.
Property management companies often have established relationships with building maintenance crews, streamlining the repair and paperwork process for numerous rentals.
Acting as a Point of Contact for Residents
There is no substitute for a personal relationship with your tenants. Knowing everyone’s name and face can help prevent and solve problems easily, such as allowing you to anticipate repairs or complaints and address them before it becomes a problem.
It is often possible to act as your own single point of contact for smaller apartment buildings or single residential rentals. If you own multiple units, acting as a point of contact becomes a full-time job.
In addition, if you live out of town or travel often, it will be more difficult to establish this contact yourself. San Diego area property managers can become your single point of contact for all your rentals.
Cost of property management vs. landlord managed rentals.
The bottom line for most property owners comes down to cost. Does managing your own property cost more or less than hiring a full-service property management company? The answer isn’t a clear yes or no, but is based on a number of factors.
- How many properties do you own?
- What size are these properties?
- What neighborhoods are your properties located in? Are they all in Mira Mesa, or spread out from El Cajon to Pacific Beach?
- Do you live near your properties?
- Do you have experience managing properties?
- Do you understand the median rents in your area?
You’ll also want to consider factors such as your ability to provide a contact point for renters and how you will manage repairs and paperwork, such as tax and compliance filings.
If you have a smaller property near your home, it may be cheaper for you to take care of all these things yourself. If you have multiple properties scattered throughout San Diego County, it may be less expensive to hire a property management company. Many property management companies charge a fee that equals 8-10% of the total amount you collect in monthly rent.
The choice to handle the management of your property or hire a company is likely one of the biggest decisions you’ll make. Once you know what questions to ask yourself, you can be confident your decision will maximize the return on your investment.