So you’ve just bought your first investment property. You’re excited to get your rental out on the market, acquire a tenant, and start making money on your investment. But you’re a little nervous about all the ins and outs of property management. That’s when your realtor offers to manage your property for free in exchange for buying the property through them. This is great, property management for free! Right?
In reality, having someone manage your property for free on the side can be a massive mistake in your investment. We recently had a client in a similar situation looking for property management in Tracy, CA. Their realtor offered them to manage the property free of charge in exchange for the owner buying the house through them. Fast forward a few months and the tenant has completely stopped paying rent with no action taken by the realtor. The home owner has not been able to visit the property for the entire time the tenant has been there due to a lack of communication from the realtor.
The eviction process was finally started by the time we took over as the owner’s property manager, and that’s when the extensive damage to the home was discovered. The owner lost money on missed rent payments and repairs to the property because their free property manager showed no care or attention to their property over the course of the lease.
That’s why hiring a reputable and experienced property management company is worth the cost. Let’s discuss all the reasons to avoid free property management in Tracy, CA.
Time Investment of Property Management
The biggest reason why you just won’t get the property management you need for free is the time needed to properly care for and run a property. Many think because rental income is considered passive that it won’t take much to keep the place running once a tenant is secured. This couldn’t be further from the truth. Managing a property can be stressful! Dealing with tenant complaints, emergency maintenance issues, collecting rent, and inspections are just some of the common tasks that make property management a full time job.
For obvious reasons, a realtor cannot handle all of the aspects of being a property manager for free while also doing full time real estate work. But even if it's a family member, friend, or other party offering their services, property management just is not something that can be done on the side feasibly. One problem being allowed to fester can quickly cause a domino effect that will cut into your income.
Maintenance Around the Clock
Property management is a full time commitment that needs someone willing to be available around the clock, which is why hiring a property management company is the best solution for this. The number one part of the job that showcases this is the maintenance of a property. Maintenance issues and emergencies are something that can crop up at any time of the day or night. Somebody managing your property for free is not going to have a dedicated maintenance line set up for around the clock calls or a network of maintenance professionals. If they’re busy with their full time work or just not available, a maintenance issue can quickly turn into a crisis.
This can quickly snowball into a massive cost to you as a landlord. One unsolved maintenance issue can lead to more in a property. It can also agitate your tenant and cause them to stop making rent payments. If maintenance problems get too out of hand, your property might not meet California’s minimum habitability standards and would provide legal defense to the tenant against eviction due to failure to pay rent.
The Business of Property Management
On top of the full time commitment needed to keep up the health of the property and keep the tenants happy, the accounting and bookkeeping necessary when owning a rental property in Tracy, CA is very similar to running a business. Making sure the financials involved with the revenue, profits, and expenses of a home are being kept track of accurately is vital. It keeps your income in line and prevents any financial trouble that could occur with shoddy accounting. If someone managing your property for free doesn’t have the time for everything your property needs, you certainly can’t expect them to have the focus to keep track of your finances. This either means that they’ll be performing the accounting on a subpar level or it will be left up to you. That’s why a full service property management company with a team to handle each aspect of your property is the better choice.
Legal Issues
Legal trouble is every landlord’s nightmare. No property owner wants to see their property managed in a way that brings it to their door. If you let someone manage the rental for free, you cannot expect them to have the investment in your property or the know-how to follow all the laws of renting. The city of Tracy and the state of California follow rent control legislation that can affect the cost of rent for you and dictate how much you can increase rent. There are also laws on minimum habitability standards as mentioned that have health, safety, and building codes. There are even laws affecting security deposits. These affect the amount, deductions, documentation, and time frames of disputes.
While a real estate license is needed to operate as a property manager in the state of California, that doesn’t mean a realtor is going to have the necessary knowledge to follow all of these laws. Missing one rule in these legal issues when managing a rental property can quickly start cutting off a home owner's income and costing them money.
Free Isn’t Always Free
While someone offering their services to manage your property for free is tempting, there are always hidden costs that come attached. Is it really worth saving a few dollars up front to eventually cost yourself thousands of dollars?
If you’re looking for property management in Tracy, CA and want a team with experience to handle all of the road bumps that come along, we’re here to help. We have a full service team ready to make your rental income a breeze.
Get in touch with our team today and start stressing less about managing your property.
