What is a Property Manager and Do I Need One For My Rental Property?
Managing the day-to-day operations of a rental property or condominium complex is overwhelming for landlords. Especially ones new to the task. That's why many owners hire licensed property managers to take on the bulk of the work. This can save you time, money and potential headaches. Particularly if you don't live in the same city as your investment property. Here's what you need to know about what property managers do, how they can help run your business and whether you should hire one.
What is a property manager?
Hired by a property owner, a property manager is an individual or a company. Property managers oversee and manage the daily tasks for one or more pieces of real estate. They act on behalf of the landlord. They're responsible for supervising everything related to the property. They also make sure to take care of any tenant issues quickly and professionally. Because property managers stay current on federal, state and city regulations, including local landlord-tenant laws, they can help protect your investment.
What does a property manager do?
Hiring a property manager means someone will always be on call to handle issues with a rental property. Depending on the contract, a property manager's duties usually include:
- Supervising and coordinating building maintenance, inspections, cleaning and repairs
- Collecting and depositing security deposits and rent
- Managing and resolving tenant complaints or concerns
- Responding to tenants' maintenance requests, including emergencies
- Making sure tenants are complying with their lease agreement
- Finding and screening new tenants
- Marketing and showing vacant apartments
- Preparing a unit before a new tenant moves in
- Managing evictions
There are other responsibilities that may come up, as well. And, each property may have its own unique things to take care of, too.
How much does a property manager cost?
The cost of hiring and retaining a property manager varies depending on which services a landlord requires. Often, property managers charge regular monthly fees and specific fees when required. Typically, property managers charge:
- A one-time account setup fee, which can cost up to $500 per property
- Monthly management fees based on the size of the property, the number of tenants or a percentage of the gross monthly rent collected — usually around 10 percent per property
- Building maintenance fees if they're not included in the overall management fee
- A leasing fee that includes the marketing, screening and paperwork for new tenants — often equal to one month's rent or a percentage of it
- A fee for renewing a lease or for signing new tenants — this is a set amount or a percentage of the rent
- An eviction fee if the landlord asks the property manager to handle the eviction
Some property management companies will provide an all-inclusive contract. While others allow landlords to pay for additional tasks only when required.
What are the pros of working with a property manager?
Because property managers help preserve the value of your property on your behalf, having one act on your behalf can save you a lot of time and potential headaches. Especially if you don't live near your rental unit. Hiring a property manager is a qualified business expense, so it's tax-deductible.
Most property managers can quickly find tenants to fill vacancies thanks to their extensive networks. And, they're used to screening tenants, doing background checks and running credit reports. This means you may have access to qualified tenants and therefore, a lower turnover rate.
Landlords or investors who live near their rental properties but don't have the time or want to deal hands-on with tenants, repairs or emergencies will find that having a property manager can solve lots of potential problems.
Professional property managers can also help save you money by proactively solving issues that could have ended up in damage to your unit or unexpected vacancies. And, because they have the expertise to handle evictions, you may not need to pay legal fees when faced with this situation.
Larger property management companies may have their own maintenance teams in-house, which means you can benefit from the volume discounts they receive from suppliers for everything from lawn care to appliance repair.
Having a property manager on-call 24 hours a day, seven days a week for scheduled or emergency repairs means your tenants will receive quality care when it's needed.
Are there any cons when working with a property manager?
One possible downside that comes with hiring a large property management company is the loss of personal attention for tenants. Landlords who take care of their own real estate properties may offer a more personalized approach.
However, for investors that live out of town or who want to increase their holdings, it's important to delegate this task to a professional property manager.
What should you look for when hiring a property manager?
Before hiring a property manager or company, check that any state licenses or certifications are current. Ask for and verify their references: Make sure that the other buildings they manage have low vacancy rates and high ratings for good customer service.
Double-check that the property manager or management company you want to hire has experience with your specific condominium or rental property type. You may also want to ask a potential property manager the following questions:
- Is your staff licensed in this state?
- What is your tenant screening process?
- How do you collect rent from tenants?
- Can I contact you directly if required?
- How are emergencies handled?
- Will there be any extra fees?
- Do you check with me before doing repairs?
Read the property management contract carefully, and make sure all the tasks you require are in the fees. A reputable property manager is transparent about how much it costs to service your tenants and take care of your investment.
Hiring a property manager takes the weight off your shoulders
If you're a new landlord with little property management experience or you have a busy schedule or you live in a different city away from your real estate investment, hiring a reputable property manager can make things easier for you. Your property represents a large asset, and a property manager can both protect it and increase its value by taking good care of it on your behalf. From responding promptly to your tenants' needs and keeping an eye on maintenance, having a property manager can help you feel more confident and in control.