To Use a Leasing Company or Not?

Question

Hey BP!

First post. My wife and I bought our first home earlier this year in North Richland Hills, TX. It was going to be a 10-year property for us and we were looking to buy a duplex in the area. But, life had different plans.

Just accepted a new position with a company that is based on the east coast mostly and might have an opening in San Antonio. Either way, we will not have roots in the DFW area much longer.

My question is - do you think a leasing company is worth it? My wife is a realtor so we could list it for rent on the MLS ourselves. Wouldn’t be getting a lot of add for them listing it. But, with us being so far away, I’m afraid to not have much structure on the ground to help handle repairs and other tenant issues. The leasing company I’m looking at will take 10% of the rent each month (~$200/month). Factoring that cost and our mortgage, we would still be cashflowing the property by about $200 a month. We are open to leasing company suggestions and any other comments/concerns you might have. Thanks!

Josh Hollin · Answer

@Nicholas Brumgard You make some solid points. There is a decent chance she will keep her license current, at least at first, but my job is pretty demanding and I don’t think I would be able to help out my tenants to the level I would expect as a tenant. Now just have to shop around and ask for referrals from the leasing companies.

Josh Hollin · Answer

@Christine Valdes Thanks for your reply. I’m definitely going to shop around and you’re right - I need to make sure I’m comparing everything each company offers. Everything I read online is the amount of services should matter more than the cost.

Nicholas Brumgard · Answer

@Josh Hollin I think the real question is, what is your time and energy worth? Will you have the energy to focus on an out of state property with a lack of established resources? Keep up with current laws and regulations?

Another question, will your wife keep her license active from out of state to list one rental each year? (if you end up on the east coast)Those license and membership fees will outweigh the $200 saved each month pretty quick.

In the long run you may pay $200 per month from your cashflow, but the headaches of self managing from afar will be gone, also don't forget that someone is still paying your mortgage.

One last comment, what if you struggle to get it rented? A management team can be there working for you full time to make sure that you find a solid resident. If you don't like it, you can try to switch your approach after a year.

How much liability are you willing to take on?

Vanessa Regalado · Answer

@Josh Hollin as a property manager I think is worth for you to let the agency handle everything for you. Search for a company with good reviews, licensed and insured. Ask for referrals and ensure that you get a copy of their certificate of insurance before you hire them. Being an out of State owner is not an easy task and having the peace of mind that someone professional is handling your property it would take away the stress from finding solutions or vendors last minute that will only frustrate you and your tenants. Wishing you good luck!

Corin Prendiville · Answer

I would probably use a property management company if you are living out of state. It sounds like you already plan to have your wife get the place rented then hand it off to the property management firm after, which is definitely worthwhile if its not a huge hassle for you and your wife knows how to select a tenant. Trying to manage out of state will probably just end up being more of a headache than its worth though, just make sure you pick a good firm and expect to have to manage the manager a little bit.

Christine Valdes · Answer

Hi Josh - I am in DFW now and have properties in California.  I use a property management company and it has been completely worth it for me, since my husband and I both work very busy W2 jobs.  We interviewed a few and checked references before we selected.  I would recommend that you do that same and see what each company will offer, etc. I know a company that asked $75 per month in the DFW area, but I am not sure how their services would compare to who you are looking at now.