A property manager is a common name for investors, renters, and anyone interested in real estate. You might not expect property managers to do so much more than collect rent, but they do much more than that.
Let’s look at some of these responsibilities and what you can expect to do if you work with one.
What is a property manager?
Property managers are people or entities hired by property owners to oversee and manage their investment in real estate.
Responsibilities of the property manager include collecting and paying rent, handling maintenance inquiries, filling vacant units, as well as setting the budget.
Many property managers manage properties that are not in the immediate vicinity of real estate investors or they do not wish to manage. The needs of the owner will dictate whether a property manager is one person or a whole company.
What does a property manager do?
A property manager or management company’s main purpose is to protect and increase your passive income. There are a variety of reasons investors hire property managers to manage rental properties, including the need to have a local professional handle it or the desire to be more hands-off with their properties.
But what do property managers or companies do with the properties they manage? Let’s take a look at some of the common responsibilities property managers have.
1. Follows landlord-tenant laws and regulations
Particularly if you have multiple properties, it can be difficult for investors to keep track of all of the various landlord-tenant laws. By taking care of these regulations for you, a property manager could help to avoid any legal problems.
Property managers are typically experts in the area they work in, so they are better equipped to handle local laws and regulations.
For example, some states have specific rules about how much a tenant may be charged for a security deposit. An area expert property manager might be better at ensuring tenants are charged the correct amount than a property owner asking for more than the legal limit. This could create a potential legal problem because the property owner didn’t know the laws.
2. Acts as a local presence for out-of-town owners
Property managers act as a local experts for out-of-town owners. A property owner who has lived in Texas all their life may not have the knowledge or skills to manage property elsewhere, such as in California or New York.
The property manager can handle all of these details, as well as other operations that might arise that would be difficult to manage remotely.
3. Handles maintenance requests
Maintenance requests and other in-person upkeep can be handled by a property manager. Tenant frustration can result from landlords being slow to address maintenance issues. This is why it is useful to have a manager available to address tenant concerns quickly.
There are many maintenance requests that can be made, including broken appliances and unwanted pests or wildlife. It is important to have someone available to handle these issues immediately.
Tenants may leave their rental properties if there isn’t enough landlord support.
4. Shows and leases for vacant units
Owners can avoid financial loss by working with a property management company. You don’t have to advertise your property to prospective tenants from far away. Instead, you can trust a property manager to help you find new tenants and renew existing leases.
Tenants may be uncomfortable with or unwilling to move into a property unless they have seen it first. If the owner is out of town, showing off properties might not be possible.
A property manager can be a partner for owners who want to resolve any problems or show potential tenants the property.
5. Deposits and collects rent
Property managers are responsible for collecting and depositing rent on behalf of the properties they manage. Property management companies and managers may use online payment methods to collect rent faster.
Property managers might also be able to handle collections, delinquent payments, and evictions. A property manager can help owners save time and money by handling difficult tasks.
How much does it cost to work with a property manager
The cost to work with a property management company or manager varies depending on where the company is located. Turnkey Property Management reports that the average cost for managing a property can be anywhere from 8% to 12% of the property’s monthly rental income.
In addition to a flat fee for management, there may be additional charges such as the following:
- Management fee: Many property managers charge a flat fee, rather than a percentage. The cost of management can vary depending on the individual or company and the location.
- Maintenance fee: Maintenance costs are a part of managing a property. Property managers might charge a fee for monthly repairs they have to make. Others may charge you according to the incident. Either way, you may be charged extra by the manager or management company for their handling of the incident.
- Leasing fee: Your property manager might charge a lease fee (also called a new tenant placing fee) to help cover the costs of marketing your property and finding potential tenants. This could include costs associated with marketing your property, managing tenants and applicants, and even move-in expenses. As with the other fees, it might be charged either as a flat fee (or a percentage) of the monthly rent.
- Lease-renewal fee: Some property managers charge a fee for tenants who want to renew their lease. The fee may be a flat rate or a percentage of the monthly rent, just like other fees. This fee covers the cost to renew the lease and get the tenant’s signed signature. However, many property managers skip this fee.
These are the pros and cons of hiring a real estate property manager
You have both benefits and drawbacks to working with a property management company to manage your investment properties.
Before you hire a property manager, weigh the pros and cons, your budget, and your personal requirements.
The Pros Of Hiring A Real Estate Property Manager
- Beneficial for multi-property investors: Managing multiple properties can make it difficult to keep tenants happy while also managing them. You can be sure that your tenants and properties will get the care and attention they require, even if it isn’t possible to do so yourself.
- It allows you to make investments in other areas: A property manager or management company can allow you to make investments in properties far from where you live without you having to worry about everything.
- They will not be responsible for all operational tasks: You don’t have to handle all repairs yourself. Instead, you can depend on the property manager or their in-house maintenance team to take care of it for you.
The cons of hiring a real estate property manager
- You must surrender control of the property to a property manager: Although this allows you to get away from the actual work of managing a home, it does mean they may take on different tasks than you would.
- High property management costs: As we mentioned above, working with a property administrator is not free. You will likely be charged multiple fees to use their services. These costs can vary in amount but are usually a significant portion of the monthly rent. To confirm that it is within your budget, you should research property managers before hiring one.
- Some property managers take over screening potential tenants for your properties: Although they may still adhere to the same screening standards as you, some property owners might not appreciate that property managers are less stringent than those of you screening potential tenants.
The bottom line: Property managers can be trusted with great responsibility
Real estate investors might not be able to manage their properties themselves or are unable to travel to them. However, property management services are not free. They may not be suitable for all real estate investors.
Before working with a property management company, you should consider your financial and personal goals as well as your property’s requirements. Once you have decided to work with them, decide if it is worth letting go of some of the control over the investment.