I’m often asked this by potential clients and I’m sure as Realtors, you get this question too. On the surface, it seems like a great idea, yes? But if you dig a bit deeper, you’ll see why hiring a professional property manager for Home Watch is the smarter way to go.
Your relative/friend is close by and can take care of emergencies at any time you want, right? Well, probably not. They likely have a full time job or obligations. So just like your tenant, they’ll need to take time off from work and they can’t really handle this.
They are trustworthy and will check on things periodically. I’m sure they are trustworthy. But just like any other transaction with a family member or friend (such as a loan), it is a good idea to have a contract. With a professional property manager, you’ll have a legal document on which to rely and you won’t take the risk of damaging an important relationship.
My homeowners insurance will cover anything that happens to them. Probably not! When you hire a property manager, they carry insurance for professional and general liability.
I’ll save money. Will you? Fees that you pay a professional may be a deduction on your rental which is a depreciating asset. Check with your accountant to be sure, but in the long run, hiring a property manager may save you more money, both in actual dollars and peace of mind!
Remember that a professional property manager sets up a schedule, tracks visits on a calendar, makes sure that regular preventative maintenance is performed and has a contractual obligation to perform those services.
Do consider hiring a property manager who will make sure that the right service people come in on a regular schedule and keep your rental running smoothly!
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This is a great article, Somerset. We could not agree more on your posts and want clients to work with professional managers in some capacity. Here is a post we wrote on the liability as well:
http://resources.hemlane.com/family-and-friends-managing-rental/
You make a good point that a family friend will have likely have a full time job or other obligations. My sister has been thinking about getting into real estate investing. I will be sure to send this to her so she can know that she should probably hire a property management service to help her with that.
Why couldn’t I contract with a relative to manage the property and then deduct the cost of that expense from my taxes? I have plenty of relatives who could use the money.
Having a contract with them is a good step. But unless they are insured for property management, there is still a risk, especially if something goes wrong.