When to Start Planning

The planning timeline for turning your home into a rental depends on your personality and your home’s condition.

Some people want to plan ahead. They begin reaching out to property managers months in advance and either choose a manager then or develop a short-list to revisit once they’re closer to moving out of the home. In this case, you can likely sign the management agreement ahead of time with an effective date that reflects when the home will be vacant. That way you’ll ‘save your spot’ on the manager’s calendar and they can be sure they have the resources lined up to bring your home to the rental market.

But life happens, too.

Maybe the last few months flew by, and you need to get everything lined up asap.  In this circumstance, you’ll be trying to balance two important tasks. On one hand you’ll want to do your due diligence and interview managers and on the other you’ll want to move quickly to get your home listed for rent.

Hiring someone to manage your rental is a huge choice and picking the wrong one can be detrimental to your experience in rental ownership. Conversely, once your home is empty, each day you delay signing a management agreement tacks another day on to the timeline to get it listed for rent. If your home will rent for $3,000/month, it’s costing you $750 a week in lost rent to hold on the vacant property.

If you wait until the last minute to hire a manager, you may find yourself in this kind of balancing act. Either way, getting a management agreement in place and getting it listed efficiently is critical.

Finding the Right Manager

The first thing you’ll want to do is to reach out to a few property managers. We recommend you do this before you begin spending money making updates to the property.

One of the most expensive mistakes you can make is a cheap property manager. – Grace Property Management, Colorado

Property Management is not a transactional relationship, this person will be fully responsible for finding a qualified tenant, coordinating maintenance, and managing your money. A lot of your money, which can easily exceed thousands a month in rent. Moreover, Idaho has very few requirements when it comes to property management. You’ll want to be sure you find a manager that’s professional, invests in continuing education and best practices, is up to date on rules and regulations, and that you can trust.

It’s important to ask about the management fees, ancillary fees, and markups (it’s common for companies to add markups to various invoices). However, making a choice based only on cost can be short-sited, especially if you’re just dipping your toe into rental ownership.

Here’s why.

For the most part, you get what you pay for. And, if one company has much lower management costs it’s likely they’re making it up with add-on fees or minimizing their costs through automation (that means less hands-on time for you, which can be hard as you embark on your journey to rental ownership). Saving $20 a month can cost you thousands in the long run.

So how do you do your due diligence?

Google “Questions to ask a property manager” an you’ll see plenty of lists. Instead of copying one of those, we’ve put together a list of questions we think will help you better understand the experience the company will provide.

• Can you send me links to your listings?
  Instead of hearing how they’ll market your property, take a look with your own eyes. How are the photos? What is the listing description like? Do they require renters to enroll in ad-on costs or programs?
• On average, how much do you spend marketing a property like mine?
  We’ve already established each day a home’s on the market it’s costing you money in lost rent. Understanding what they spend on marketing, and how they will set your home apart from others, is key.

• Who responds to interested renters to schedule showings? Who shows the property?
  These are both critical questions which will help you understand how their business works and the experience you or your prospective renters may have. Is AI, or a remote person responding to inquiries or is it a local representative? Can interested renters enter the property by themselves for a ‘self-showings’ or is a representative of the company present for all showings? It’s two different business models, and as an owner it’s important to understand which you’re signing up for.

• Who will be my point of contact?
  People can often experience a feeling of being ‘passed off’, after initially thinking the owner or person they interviewed with would be their point of contact. Gaining clarity on who you’ll be working with might help you make a decision on what manager is the best fit for you.

• What else will I be charged for? Do you markup maintenance?
  Again, this will help you avoid unexpected bills and mark-ups once you’ve signed on with the company.

• How do you stay up to date on changes in rules and regulations? Can you tell me more about the new Boise ordinances?
  Because Idaho property managers aren’t required to take continuing education, it’s up to the company owner to make this a priority by joining NARPM or another management association. For example, the City of Boise enacted new ordinances Jan 1, 2024. See if the manager is aware of these and how it may impact your property.

• How many properties do you typically bring on each month?
  This is a great follow up question to the ‘how many do you manage?’ inquiry. Are they bringing on 30 properties a month? If so, it may be a larger, process-focused company with a less hands-on feeling. If the company doesn’t bring on any most months it may indicate a stagnation, or that they’re not focused on growing and developing their business.

• Have you done this before?
  Gain an understanding of whether the company has helped other home owners transition to rental ownership. What are some of the pitfalls to avoid? What are tricks for success? Moreover, do they own their own rental properties and have they gone through the process first-hand?

Get Your Home in Rentable Condition

The property manager will want to walk through your house, even before you sign a contract with them. Ask them what they think needs to be done in order to get it ready to rent (and also realize that this quick walkthrough won’t catch everything).

Here’s why this is so important.

A property manager should know the market and be able to make recommendations on what updates are needed to get the home rented, and what updates may not result in a better return.

For example, maybe your kid’s rooms are neon green and purple. Your manager may recommend painting them a neutral color before listing it for rent. To save money, this may be something you choose to do while you’re there rather than hiring it out.

Conversely, say you’ve noticed your hardwood floors have some scratches and you aren’t sure if they need to be refinished. If you do refinish them, you definitely do not want to allow pets because you don’t want them scratched again. If you live in Idaho it’s important to know that about 70% of households in the state have pets. So instead of making your home more desirable, this update may cause your home to sit on the market longer or require a lower price to compensate for the smaller, no-pet, renter pool. Ask your property manager about what you perceive is needed before making a decision.

One thing to remember is there’s a lot the manager won’t see if you’re still living in it. For example, it will be difficult for the manager to determine how much if any touch-up painting will be needed or the cost of carpet cleaning as furniture and personal items can easily mask holes or stains that will need to be addressed.

When transitioning a home to a rental, it’s typical for there to be some costs for things like handyman, cleaning, and carpet cleaning. The more you can do yourself, the more you’ll save, and it’s important to set some money aside for any needed items to get your home ready for its first renter.

Understand the Finances

There’s a reason you’re choosing to rent out your home instead of selling it. Maybe you bought it years ago and you have a low mortgage. After talking with a property manager, you realize you could make a good amount of passive income from the higher rent it will garner today.  Maybe you look as the investment as a way for someone else to pay down your mortgage and build equity. Maybe you’re moving away and may want to move back in at some point.

Whatever the reason, most people want to either make money from their rental or have rent cover their expenses in order to gain equity in the property.

The first month you rent your home, you may not get as much rent income as you would in later months. Consider that there may be maintenance items deducted from rent or leasing fees. If the renter moves in mid-month, then rent will be prorated for the days that they live there.

Going forward, your income from the property will likely become more consistent. Many months, the only expense you’ll likely see deducted is the management fee. There may be an occasional maintenance issue or preventative maintenance service cost, but expenses often become more consistent once a renter is in the property.

Industry standard recommends keeping the equivalent to one month’s rent on-hand for maintenance needs. If you’re home is older with original appliances, you may want to increase that amount.

You property manager should be sending you an owner statement each month which will show what income (rent) was generated from the property as well as any expenses incurred. They may also share invoices with you. Keep an eye on this and don’t hesitate to ask questions if something doesn’t make sense. This is your money, and you need to understand where it’s going.

Build Trust & Start Letting Go

Building trust with your property manager is critical in developing a positive long-term relationship and enjoyable rental ownership experience.

It’s also important to remember why you hired a manager in the first place. You don’t want the burden of micromanaging and stressing about your property. Your home will transition into someone else’s home. You get to enjoy the passive income your property generates. You don’t have to worry about every little thing, that’s our job.

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