Property managers handle the daily aspects of running a rental property, including communicating with tenants, ensuring rent gets paid and tackling maintenance problems.
Owning rental properties comes with lots of responsibilities. To relieve yourself of some of these duties, consider hiring a property manager or property management firm.
Property managers handle the day-to-day operations of your rental property. From having a firm understanding of landlord-tenant laws to rent collection to handling maintenance requests, a property manager eliminates many headaches for landlords, so property owners can just focus on earning a return on their investment.
Here’s an overview of what a property manager does every day, how much they charge and how property management can benefit you.
What is a property manager?
Property managers are individuals or companies that handle the daily aspects of your real estate investment. They perform a range of tasks: set rent prices, collect rent, screen tenants and handle maintenance issues. Some states require property managers have a license.
Usually, property managers pass along the monthly rent to the property owner minus their management fee. Most property managers contact the owner of the rental real estate when major maintenance issues come up or other problems arise.
Property managers are great for property owners who live in a different city or state from their real estate or who own multiple rental properties.
What does a property manager do?
There are several reasons to hire property managers. Maybe you want to take a hands-off approach or are too busy to handle the daily operations of the property. Hiring a property manager or property management company can help relieve some of the stress of being a property owner. Here’s an overview of some property manager’s responsibilities:
1. Stay updated on landlord-tenant laws
Local laws for landlords and tenants get complicated, and they vary from place to place. It’s tough to navigate all these rules and regulations, especially if you’re a new rental property owner.
That’s where property managers are a huge help. They’re knowledgeable of landlord-tenant laws and can help you avoid any legal trouble. Property managers are also experienced in working with tenants and handling the day-to-day operations of rental property.
2. Set rental rates
Since property managers are knowledgeable about the local real estate market, they’ll help you set rental rates that are competitive for the area. This ensures that you’ll always be able to find tenants.
A property management company also knows how to price rental properties so owners can maximize their rental income.
3. Find and screen tenants
Finding prospective tenants is one of the most challenging aspects of owning rental real estate. Property managers will advertise the home, accept inquiries from potential tenants and show the property to interested renters.
Screening tenants is a complex process that involves reviewing applications, conducting background checks, verifying income and other tasks. The process ensures you’ll have quality tenants living in the property and reduces tenant turnover.
4. Collect rent
Rent collection is a key task for property managers. They create a standard process for collecting rent each month to ensure it gets paid on time. This might include accepting checks or helping renters set up online payments.
Property managers also deal with late payments and unpaid rent to ensure rental property owners are earning the maximum rental income. If a tenant has regular late payments or misses payments, a property manager will work with the renter or proceed with an eviction.
5. Enforce signed leases
A property manager explains the lease agreement to the tenant. Each lease should include a section outlining what will happen if a renter violates the agreement, such as by not paying rent or adhering to property upkeep requirements.
The property manager is responsible for making sure the tenant follows the lease and takes action if there are violations. That may include communicating with the tenant to fix the problem or proceeding with an eviction.
Property managers also collect a leasing fee, security deposits and pet fees when a tenant signs the lease. They also handle lease renewals and collect a lease renewal fee.
6. Handle maintenance requests
Property managers handle all tenant complaints, tenant concerns and maintenance requests. This is one of the biggest headaches for owners.
When a tenant needs repairs or problems arise, property managers take care of things quickly. They also ensure that regular upkeep, such as pest control and HVAC servicing, is performed.
The property manager might have an in-house maintenance team or know of the best local contractors who can perform these tasks quickly, efficiently and cost-effectively. This will help keep your maintenance costs down.
7. Keep an eye on the property
When you live in a different city or state as the property, having a property manager to keep a watchful eye over the home is crucial. They can make sure the home is being kept up and take immediate action in case of an emergency.
Property managers are also familiar with the area, which is helpful in navigating local ordinances or regulations.
8. Proceed with evictions
Being well-versed in landlord-tenant laws, a property manager also is the one to enforce evictions if a tenant stops paying rent or violates the lease agreement.
Evictions are a time-consuming process, so having a property manager take care of them is one of the biggest benefits for landlords. The property manager will know what steps to take to evict a tenant according to local law. Not following the law properly could lead to legal trouble for the rental’s owner.
9. Deposit the rent and communicate with owners
A property manager stays in regular communication with the owner of the rental real estate. They’ll keep you informed about vacancies, rental income and expenses, along with any maintenance problems, issues collecting rent or legal issues that come up.
The property manager will usually provide the owners with a monthly statement, outlining the income, expenses and net profit for the month. Many property management companies use online portals where owners can log in and access this information for themselves.
On top of managing rent payments, the property manager will disperse monthly rent payments to the owner. This ensures you have a steady income stream from the property.
The pros and cons of hiring a property manager
Hiring a property manager offers many benefits for the property owner. But, there are some downsides that you should consider, too. Here are some pros and cons of hiring a property manager.
The pros
Some of the advantages of investing in property management include:
- It removes the headaches. The day-to-day operations of property management is overwhelming. Property managers handle it all, including finding and screening tenants, dealing with problems and complaints, refunding security deposits and handling maintenance and repairs.
- It saves you time. Learning the ins and outs of rental property laws and regulations are time-consuming. So is figuring out how to screen tenants. A property manager handles all of that for you.
- It makes collecting rent easy. Having someone set rent prices and accept rent each month ensures you’ll see a return on your investment.
- It saves you money. Property management comes with a fee, but it’s a worthwhile investment. It’ll keep vacancies to a minimum and ensure that repairs happen efficiently, which can keep expenses down.
- It protects your investment. If you own one home or have multiple properties, property managers ensure that everything goes smoothly. The property manager will keep an eye on the rentals and ensure tenants are following the lease.
- It helps out-of-town owners. If you don’t live in the same city where your rentals are, having a property manager can give you some peace of mind. A property management company is there all the time and can respond quickly to problems.
The cons
While hiring a property manager offers many advantages, there are a few downsides to consider, including:
- It removes some of your control. Using a property manager relieves many of the responsibilities, but you will give up some control. For example, you may not select the contractor handling repairs, and many smaller repairs may happen without you knowing about it.
- It’s an extra expense. Professional property managers are costly, so you’ll need to factor that into your monthly expenses and decide how it affects your bottom line.
- It’s an extra step. Finding a professional property manager can take time. You’ll want to interview a couple of individuals or companies before settling on someone to manage your rentals.
- It’s something for you to manage. Property owners hire property managers to manage your rentals but you’ll have to manage them, to some extent. Owners will need to make sure they’re following through with the property management agreement and that they’re receiving their rent payments each month.
How much does it cost to hire a property management company?
Property managers take on so many of the responsibilities that would traditionally fall on the owner’s shoulders. And, there’s a price for that.
Property management firms typically charge between 8 percent and 12 percent of the monthly rent for their services, according to All Property Management. Some may charge a flat fee, like $100 a month, but it varies by company and location.
Along with the management fee, many property managers charge:
- Maintenance fees. Some property management companies will charge landlords a monthly maintenance fee to cover things that come up. Others may charge you for any repairs, maintenance or upkeep costs that come up during the month. These costs are usually withheld from your rent deposit.
- Leasing fees. Property managers may charge a fee each time a new tenant signs or renews their lease. These fees may cover the cost to market the rental, review applications or other tasks.
- Eviction fees. Some property managers may charge an extra fee if they have to deal with an eviction. Even if they don’t charge for their handling of the eviction, you’ll likely have to pay court costs or legal fees associated with the eviction.
Lean on property managers
So much goes into managing property, from advertising the home to screening tenants to ensuring rent gets paid to handling repairs and complaints. This is often too much for the owner of the property to handle. So, hiring a property manager can save you the time and headache of dealing with these tasks yourself.
Property management may seem like an extra expense (and it is). But it’s well worth it, especially if you own multiple properties. Having a property manager on board will keep you from chasing down rent payments or coordinating repairs. You can just enjoy your real estate investment.
Source: rent.com