by Gilson Penny

Created on: October 29, 2007

Whether you purchased your second home hoping rentals would cover expenses, or are considering renting your vacation home to pay those property taxes, approach your decision with a realistic analysis. The first question that usually pops up is "Should I use a property manager?" This should be the second question. Thoroughly examining "What does renting property entail?" will usually lead you to your ultimate property management solution.

Many people who decide to rent their property recognize the potential asset value, but there is some angst about finding quality tenants and protecting personal property. Owners must recognize that this personal protection comes at additional expense, both in money and time.

Ask yourself:

-How do I determine what income to expect?
-Will I have to increase my insurance?
-Will I have to upgrade fixtures (appliances, HVAC, fire alarms/escapes) to meet local market standards and/or building codes?
-How will I manage taxes for income, depreciation, and deductions?
-What are the extra expenses for personal storage, housekeeping, rubbish removal, etc.?
-How will I manage the money? Personal checks? Credit cards?
-When do I want to use the property (peak vs. non-peak)?
-How far away is it, and how will I handle inspections?
-Who are good local contractors?
-How do I advertise? Where will I find my tenants?

If these considerations seem overwhelming, it's time to get some expert advice. Start by obtaining a copy of IRS Publication 527, Residential Rental Property. Then interview property managers to determine if their success rates and recommendations for you demonstrate a more profitable long-term plan than your own.

A Property Manager costs money, but saves time and maximizes your occupancy rate, thus income. They handle advertising, scheduling, cash flow, tenant screening, maintenance, and often bill payments and tax reports, in exchange for a monthly fee and/or a percentage. Unlike rentals with long-term leases, vacation rentals are a revolving door of marketing and maintenance.

To weigh the pros and cons of hiring a manager, examine who has the necessary expertise to generate the most income, offer the best customer service to the tenant (you want them to return, and recommend your property to their friends), and minimize expenses.

Market Knowledge: Do you know the timing of your window of rental opportunity? Or the market rate of rentals? Classic mistakes can affect your income potential. Using a ski condo for Christmas week, Presidents' week,

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