Rent it out yourself or use a realtor

25 Replies

Rent it out yourself or use a agent which is better For renting out apartments.

If you have the knowledge , time ,experience and know your market rents then by all means rent it out yourself  If you need the knowledge of a agent then the small rental fee would be an invaluable experience for you. Jersey is a tenant friendly state and you can cost yourself thousands without making the right choice in a tenant 

There are advantages and disadvantages to using an agent. The advantage is the professional touch to acquiring new tenants. Some have a stringent screening system that guarantee a first-class tenant. However, if the location of your apartment is not in a top-class neighborhood where your first-class tenants want to be then I don't think its worth it to get an agent. I say that because most agents require a fee, and often times its equal to the same amount as what you are renting the place for. So that tenant will be paying 3 ways (Security deposit, First Month's rent, and Agent fee). Your first-class tenants can easily afford paying 3 way but your mid to low income families will not. Besides, I find it fun advertising yourself and showing the property yourself. Plus its a tax write off every time you travel from your home office or company office to the apartment and back when doing showings.

I do it myself and have a relationship with a place to complete background checks.  I like some sort of say on who is in the property and feel I would do a better job myself if I can find time.  

To control my time on the process, I usually post it on craigslist and don't meet people individually.  I set up a date to more or less have an open house for interested parties so I can meet the in a set timeframe.  It doesn't bother me if they end up coming at the same time to look at it as it just shows them they aren't the only one interested.  I usually try to find a little project to work on at the same time.

I do what James does, exactly. 

A word of caution though. I spoke to a lawyer about this and my incident cost me $10k!

Although you can try to control who rents your place, you need to be very careful. Ask NO questions. Just open the door and show them the apartment. . If the interested party (doesn’t matter if they fill out an application) feels as though their answer to one of your questions may have been discriminatory (income, familial status, whatever), they can and will sue you. A question as conversation and benign as “how many kids do you have” counts!  Beyond that, send EVERY visitor an application via email after their visit just to CYA. 

Having asked the question indicates you do not have any experience or skills in regards to screening tenants.

Asking indicates you have not researched how to screen and therefor  you should be using a realtor.

If you have to ask..............

Unfortunately Thomas, some of us have to learn the hard way. Cathie, I dont know how long you have been on BP, but being as diplomatic and beauracratic as possible when it comes to discrimination in real estate is one of the first things they reach you here on BP.

Thank you everyone for the information.

@Keith Torres - Generally a real estate agent will charge 1 months rent to list your property on mls. 1/2 months rent (of the 1 mo) goes to the agent representing the tenants (if not the same). So if you collect first months and security, you’re essentially giving 1 Free month’s rent to get this tenant. Sometimes you can get more calls just by lowering your price the equivalent 5-8% (depending on expected tenant longevity). An agent will give you interested people and you choose who to sign a lease with.

Do you feel comfortable taking attractive photos of your house, posting everywhere (Zillow, hotpads, craigslist, Facebook, local community websites), fielding calls including scammers and people who will never qualify, and talking up how awesome your house is? If you are showing your property and you don’t get 3+ legitimate calls a week, somethings wrong with the price or your advertising.

Show it yourself. There's no better way to tell who they are than while showing them around, and you'll get a sense of what people actually think of your place. 

@Cathie Kovacs I would have thought it impossible to be sued for asking a question that will be on the application, as long as you don't act discriminatorily on that info. I never refuse to give someone an application, most of the ones I would like to refuse don't return it anyway.

Originally posted by @Johann Jells :

Show it yourself. There's no better way to tell who they are than while showing them around, and you'll get a sense of what people actually think of your place. 

@Cathie Kovacs I would have thought it impossible to be sued for asking a question that will be on the application, as long as you don't act discriminatorily on that info. I never refuse to give someone an application, most of the ones I would like to refuse don't return it anyway.

The truth is, the claimant doesn’t actually have to have a case. In CT anyway, all they have to do is claim that you were discriminatory, and it’ll cost you. It’s a scam of sorts. Settle to avoid court costs (which will get you cleared but cost a fortune) or pay up. 

Originally posted by @Brian Adzadi :

There are advantages and disadvantages to using an agent. The advantage is the professional touch to acquiring new tenants. Some have a stringent screening system that guarantee a first-class tenant. However, if the location of your apartment is not in a top-class neighborhood where your first-class tenants want to be then I don't think its worth it to get an agent. I say that because most agents require a fee, and often times its equal to the same amount as what you are renting the place for. So that tenant will be paying 3 ways (Security deposit, First Month's rent, and Agent fee). Your first-class tenants can easily afford paying 3 way but your mid to low income families will not. Besides, I find it fun advertising yourself and showing the property yourself. Plus its a tax write off every time you travel from your home office or company office to the apartment and back when doing showings.

I have never seen a tenant have to pay the commissions for the agent. The owners always (in my experience) pay the agent directly. It's not a matter of what class neighborhood the property is in. 

Felipe,

When I had rented my apartment in Brooklyn, N.Y. I had to pay security, first month and agent fee. Same thing with a few relatives of mine. So it may not be the case with CT but definitely is in NYC. And neighborhood was a major factor. 

There is NO WAY a prospective tenant can sue me for discrimination, which will not happen in my apts as I put in my own tenants.

In my apts Here in Brooklyn, I have the world of all kinds of minorities and status, each of them I know very well and will stand up for my Character in Court.

The diversity in my buildings are incredible and represents just about everyone.

Also, because I provide them with great service and speak with them on occasions, anyone coming to my building who claims discrimination will be proven to be false as I probably already have that protected class in my building.

The only commonality is that all the tenants meet a Qualification criteria of Credit, Income and other non-discriminatory criteria.

BUT, I know that's not LL. There are LL's here that do discriminate and that's just wrong.

Originally posted by @Filipe Pereira :
I have never seen a tenant have to pay the commissions for the agent. The owners always (in my experience) pay the agent directly. It's not a matter of what class neighborhood the property is in. 

 'Tenant pays the agent' is standard in the NY metro area as far as I've ever seen. It would be fascinating to see a map of where it flips.

Originally posted by @Cathie Kovacs:

The truth is, the claimant doesn’t actually have to have a case. In CT anyway, all they have to do is claim that you were discriminatory, and it’ll cost you. It’s a scam of sorts. Settle to avoid court costs (which will get you cleared but cost a fortune) or pay up. 

If that were true, then what you did or didn't say is irrelevant, isn't it? I mean, it's your word against theirs. I find it hard to believe there isn't more to this story, or landlords all over would be subject to this sort of blackmail.

Originally posted by @Brian Adzadi :

Felipe,

When I had rented my apartment in Brooklyn, N.Y. I had to pay security, first month and agent fee. Same thing with a few relatives of mine. So it may not be the case with CT but definitely is in NYC. And neighborhood was a major factor. 

 
That might be because the apartment listed was not listed by an agent, thus your agent had to get a commission from you. If the apartment is listed on the MLS via an agent, the listing agent will typically charge the Landlord one month's rent as a placement fee. Once the apartment is filled, 1/2 month's rent goes to the Listing Agent and 1/2 month's rent goes to the tenant's agent as a "finders fee".

Very similar to off market properties that are sold...buyers typically have to pay their agents, as the sellers don't usually want to pay out a commission. 

We used an agent to find our tenant in our rental property in New Jersey. We then selected the best tenant from the collected applications and background checks. We had selected the tenant and had a signed lease and the rental fee within a few days. We informed our agent about which tenant we wanted and she informed the other applicants that we had selected another tenant. We had to pay a fee of one month’s rent for the service. Half went to our agent and have to the renters agent. After the lease signing we began managing the property ourselves so we do not pay any other management fees. The process was easy and for a new landlord I would recommend it.

@Amy Beth which part of New Jersey do you own? How is market there? I check union city but become very expensive this year.

My rental is in Metuchen. It was our former residence and the market had gone down at the time we were moving so we decided to rent it. Now he market has gone up but we have held onto it because we are able to rent it for $2400 per month and make a nice profit.

I have been researching with the idea of buying a second SFR rental. The problem with New Jersey rentals is the high taxes. When my husband and I are ready to do this again I think the best option would be to buy a foreclosure and then fix it up and rent it to make the numbers work. I dread another remodel though so I have stalled on it. I think it also depends on the township if you are able to do the work yourself on a rental or if you have to hire a general contractor. At our current rental we obtained the permits ourselves as the homeowner without any problem and did the work ourselves which saved us a lot of money. I have read that not all townships allow that if it is not your primary residence though.

I have a friend whom recently purchased a two bedroom apartment in Union as her primary residence. I am not familiar with the market there though.

@Amy Beth

I hate do a shameless plug for my hometown but I can't help it. You can make a sizeable profit in the Allentown-Bethlehem area of Pennsylvania. Housing is cheaper and property taxes are much lower than NJ. SFH property taxes in the Allentown area normally range in the 1-2K. You see it start to hit the 3-4K range when you are in the more expensive school districts. PA is less tenant friendly than NJ. The only utility the landlord must cover is water and sewer. Since Allentown has a mixture of oil, gas and baseboards, the onus of heating is on the tenant. If interested or have questions, you can talk to my colleague @Justin Brown  to learn more.

You've gotten some great replies on both sides of the choice. I would tend to not use a real estate agent (unless they are also property managers) if the rent is under 1000-1200 per month. (Before the backlash, I have been a licensed realtor in PA for over 20 years). And they won't screen for you. You will have to do your own. We use a firm that gives us all the information we need with an overall tenant rating for about $25 per person (charged to the applicants as an application fee but a full or partial credit back off first month's rent if they are approved). Well worth it. Might want to look at property mgt. firms. Some will do a rental only agreement and possibly include the screening information gathered but you will have to make the final decision. If you have a full mgt. contract, they most likely will make the decision in placing. Steering clear of a discrimination lawsuit is easy if you follow a few simple rules. 1. Use the same application and screening process for anyone that applies. 2. You can deny if: They cannot afford the rental, evictions for non-payment, recent bankruptcy, financially reckless behavior, etc. You can also deny on habitability limitations (# of people vs # of bedrooms), a consistent no pet policy if they have a pet,  Megan's Law registrants, ex convicts on parole or Sec 8 applications if you do not want to do the work they request after their inspection. If you are new to this, find a mgt. company and let them manage the property(s) for a year while you learn the business. Even then, if you buy more properties, you may find that having a firm manage your properties leaves you more time to grow your portfolio. 

I have never had problem finding highly qualified tenants without an agent. 

I just advertise on Craigslist. I specify in my ad that an excellent credit score and income is required as well as documentation (paystubs, bank statements, references, etc) and background check (costs about $25-30)

I rent in a B neightborhood, I charge above market rent for the area but keep the place in top-notch shape. But keep in mind, we are 15 mins from Midtown Manhattan so there is a lot of demand here. 

Filipe Pereira Here in Bergen County, NJ, the Residential Tenant (not the Landlord)  pays the Realtor fee to lease an apartment ir house.

Try it yourself first and see how it goes. Craigslist and Zillow are both pretty easy. If your apartment is in a very rentable area, you should be able to rent it out easily. Just make sure you do all the due diligence, income, eviction history, criminal history, etc.

I do combination of both, use realtor to show, but I take care of phone screening and tenant screening part.

I don’t mind pay them to show for me as my schedule is not very flexible . But I screening them like crazy myself . And I don’t mind keep the place empty for a while until I find a good one.

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