My next step in converting our primary residential property to a rental property is to hire a property manager. The management agent that I expect to use is with Long & Foster and came highly recommended by a friend.
Although Long & Foster’s management division is on the higher end of management fees, they offer a comprehensive service. Since my husband and I will not be in the same state as our rental property when all is said and done, I may be willing to pay a little more for the peace of mind in knowing that proper care will be given my property and my tenants.
With Long & Foster, I would pay the first month’s rent as commission, with a monthly management fee of 10% of the monthly rent. The management fee is in addition to other fees for actual services or repairs procured by Long & Foster for the benefit of my property.
On Friday, the L&F management agent came by and provided a walk-thru of my property wherein she noted things that I am required to do by law in DC in order to rent my property.
I have three doors on the house, which provide access to the outside. All three doors have security gates that require a key to lock and unlock the gate. Pursuant to DC law, this is a fire hazard. Therefore, I am required to replace the locks on these doors with single cylinder locks – locks which can be locked and unlocked by hand, without a key. Since it may defeat the security function of the gate if someone can just reach around and unlock the gate with their hands, I could also add a welding component to the lock to hinder access from outside. I am also permitted to just remove the security doors as I do not have an obligation provide the security doors as long as all main doors are steel doors.
I will explore which is the least costly option. I will probably remove the security doors and will need to install one steel door, as the other two are already steel.
In DC, I am required to have a fire extinguisher mounted on the wall in the kitchen and in the hallway on the upper level. This will be a simple installation that I will most likely do myself.
Ground Fault Interrupters (GFIs)
The agent informed me that, in DC, you are required to have GFIs at all faucets, which would be in the bathrooms and the kitchen. The GFI is pretty recognizable as the outlet with the colored reset buttons. What isn’t clear to me is whether you must have a GFI outlet at each faucet or whether, if there is an outlet near the faucet, then it must be a GFI.
Really, it doesn’t matter for me because my house already has GFI outlets at each faucet.
In addition to these things that I am required to do, she also made suggestions in a few other areas.
Make the Dehumidifier Disappear
She took note of a dehumidifier that I kept stored in a room at the back of my house. She suggested that I keep it out of site when I am showing the property. Apparently, a dehumidifier may give the impression that there are moisture problems in the home.
I had already planned to get rid of it. I’d used it a couple of years ago when I had a leaky roof that caused some moisture problems in one of my rooms. I have since replaced the roof and rectified this problem. So, I no longer need it.
But, apparently a lot of other people in this city do because I listed it on craigslist this afternoon around noon and by 1p I’d already had 4 inquiries about it.
Hire an Accountant
She suggested that I hire an accountant to help me sort out the differences in personal taxation when including a rental property business. As a general overview, she added that I should expect to report rental income as passive income and depreciate certain renovations and capital improvements to the property.
This suggestion is timely, since I’d already been thinking about hiring an accountant on some other tax issues. Now I can kill two birds with one stone.
In anticipation of converting my primary residence to a rental property, I am already preparing to convert my homeowners insurance to landlord insurance, which will include coverage for the property building and landlord liability.
She also suggested that, in the event that the property is initially vacant when I move to MS, that I wait to convert my insurance to ensure the property is covered during the vacancy. I haven’t researched this yet, but it seems that under a landlord policy, the building may not be covered unless and until there is a tenant in the property. Thus, if the building is vandalized or burglarized while vacant, the homeowner is not covered under a landlord insurance policy.
If you are taking on a rental property, whether or not you will hire a property manager, you should research your state’s property requirements for rental properties. I’ve only had an initial interview with my prospective property manager. She gave me some very good information and suggestions. But, before I sign my management contract, I intend to do a bit of my own research on these and other issues that will be important as I get down to crunch time.
Have you ever dealt with property management for a rental property? I’d love to hear your stories. Please share in the comment section, or, you may email me at firstname.lastname@example.org.
MAKE MONEY MONDAYS is a forum to discuss ways in which you can create additional sources of income. I try to focus on particular ideas and steps you can take to create alternative income and passive income sources. I have also begun a series of posts called “Rental Property Conversion.” This series follows my husband and I as we turn our property into a rental property. I will also research and post other useful information in this category. If you like what you see here, please use the orange icon at the top right to receive my content updates by email or RSS reader.