A Quick Guide to Single-Family Property Management
Managing a single-family property involves unique challenges and opportunities distinct from other real estate investments. You get to be the captain of your own ship, but the waters are often unpredictable.
If you’re a first-time investor, knowing what to expect in advance will help you to maximize your ROI and will save you a lot of headaches down the road.
And if you choose to take on the management of it by yourself, be prepared to wear many hats – from handyman to negotiator.
Read on to understand the responsibilities of single-family property management, as well as what to consider when deciding whether to do this yourself or outsource to a property management agency.
Key Takeaways
- The single-family investment market is seeing steady growth, driven by demographic changes and a preference for privacy and space.
- Managing single-family properties involves more hands-on tasks compared to multi-family units.
- Single-family property management is centered around maintaining the property, handling tenant relations effectively, and maximizing rental income.
- Self-management allows for full control and direct handling of income and expenses but requires significant time and effort.
- Deciding whether to manage the property yourself or outsource property management for single-family homes depends on factors like proximity, expertise, and the level of involvement desired.
Single Family Investment Market Overview
According to the National Association of Realtors (NAR), sales of single-family homes continue to rise.
Data from the NAR shows that the average single-family home investor gained about $225,000 in home equity over 10 years. Appreciation accounted for 86% of these gains.
Additionally, 82.4% of metro areas in the U.S. saw single-family housing prices rise during the third quarter of 2023.
However, appreciation isn’t the only return on investment to look forward to. Single-family homes typically have higher rental yields compared to multi-family units. This is due to their popularity among families who value privacy and space.
Plus, tenant turnover rates are often lower in single-family homes, as opposed to when managing multi-family units, given tenants are more likely to be families seeking stability.
How Does Single Family Property Management Differ from Other Property Types?
Single-family property management differs from other property types in several key ways.
First, with single-family homes, you’re typically dealing with one tenant or family at a time, as opposed to multiple tenants in a multi-family or condo setting. This can make tenant relations and management somewhat simpler.
Another difference is the scope of responsibilities. In a single-family home, the property manager is often responsible for a wider range of tasks, including landscaping, exterior maintenance, and coordinating repairs and renovations.
In a multi-family or condo setting, some of these responsibilities may be shared or outsourced to a HOA or property management company.
Single-family homes also tend to involve more hands-on management, as tenants may require more personalized attention and support. In contrast, larger multi-family complexes often have standardized policies and procedures that streamline management.
Additionally, the legal and regulatory environment can vary between single-family and multi-family properties. Single-family homes may be subject to different local zoning laws, HOA rules, and landlord-tenant regulations.
Lastly, the marketing and leasing process can differ. For example, single-family homes often require more targeted and localized marketing efforts. Larger complexes, on the other hand, often leverage broader advertising and marketing campaigns.
What Are the Main Responsibilities of Single Family Property Management?
The primary responsibility of managing a rental property is to protect your investment. This involves maintaining the property in excellent condition, handling tenant relations, and maximizing rental income.
Finding and screening tenants is one of the most important property management tasks. To accomplish this, you must market your property, arrange viewings, review applications, run credit and background checks, and select qualified long-term tenants.
Maintaining the property is an ongoing duty. You’ll need to conduct routine inspections, coordinate maintenance and repairs, and manage a team of contractors and vendors. In addition, you’ll also need to keep meticulous records of all work completed.
Additionally, you’ll need to ensure you collect rent on time and pay the mortgage, taxes, and insurance.
Should I Manage Myself or Use a Property Management Firm?
Whether to manage your single-family home yourself or hire a property management firm is an important decision. There is no universally right answer – it depends on your specific situation, investment goals, and willingness to be a hands-on landlord.
Before making a decision, consider the benefits and drawbacks of both handling it yourself or getting property management for a single-family home. Here are the most common pros and cons:
Managing Yourself
Pros:
- You maintain full control over the property.
- You keep all rental income (minus expenses).
- It can be a good option if you live nearby and have some form of management experience.
Cons:
- It’s a significant time commitment (marketing, screening tenants, repairs, etc.).
- You are responsible for keeping up with landlord-tenant laws.
- It can be difficult to handle tenant issues objectively.
- You lack the economies of scale that a management firm has.
Using a Property Manager For a Single-Family Home:
Pros:
- A single-family home property manager will handle almost all day-to-day operations (saving you time/stress).
- They have expertise in marketing, tenant screening, and legal compliance.
- They provide professional third-party landlord-tenant relations.
- They leverage economies of scale for repairs, maintenance, etc.
Cons:
- You pay a percentage of the rental income as a management fee.
- You lose some control over key decisions about your property.
- You need to carefully research reputable local property management firms.
How Much Does Single-Family Property Management Cost?
The cost of property management varies depending on the specific services included and the local market rates. Here’s a breakdown of typical single-family property management costs:
Monthly Fees
Most companies charge a monthly fee equal to 8-12% of the monthly rent collected. For example, if the rent is $2,000 per month, the property management fee would be $160-$240
Tenant Placement Fees
When placing a new tenant, some companies charge an upfront fee equal to one month’s rent. This can be around 50-100% of one month’s rent payment
Maintenance Markup
Single-family rental property management firms often add a markup of 10-20% to contractor invoices for maintenance/repairs. This pays for their time coordinating and overseeing the work.
Leasing Fees
When negotiating a new tenant lease, there may be an upfront leasing fee. Common ranges are $200-$500 or 50-100% of one month’s rent.
For a full breakdown read our article on how much property management companies charge and how fees are calculated.
How to Choose the Best Single-Family Property Management Firm
Choosing the best property manager for single-family property management can be tricky, so stick to these best practices to narrow down on the best provider for your needs:
- Look for firms with extensive experience managing single-family rental homes specifically, not just multifamily properties.
- Ask about their marketing strategies tailored to promoting and filing single-family rentals, such as professional photography, online listings, etc.
- Inquire about their tenant screening criteria and process for properly vetting tenants best suited to a single-family environment.
- Ensure they have a solid network of contractors and/or vendors experienced in maintaining and repairing this type of property.
- Verify they are well-versed in the landlord-tenant laws and legal requirements specific to single-family rental homes in your area.
Wrapping Up
Single-family property management comes with its unique set of challenges not typically seen with multifamily units. Depending on your bandwidth, budget, and goals, you could handle it on your own or hire a professional firm. However, it’s important to do your research in advance to avoid making a decision that could cost you more in the long run.
Also – consider using KeyCrew to find and compare the best single-family property managers near you.
