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Perhaps the best way to consider the role of a property manager is to think of how an attorney represents a client in court, or a store manager at Walmart oversees operations in all departments. A property manager is a third-party representative who works for a property owner.
Property Management 101
The job involves serving multiple functions, which means property managers must be versatile and resourceful. A property management company is an organization, which employs experienced property managers on staff. The primary job of the property management company is to match its managers with clients and situations best suited for big-picture success.
Why Hire a Property Manager?
Some property owners own numerous multi-tenant buildings. Some older owners are no longer capable of handling traveling demands, assessing issues, hiring repair services, collecting back-rent and more. A property manager also frees up your time. Many property owners own properties for the sole purposes of purchasing, renovating, and flipping them once renovations are complete and in compliance. Others use income from one property to purchase the next one in perpetuity. Regardless of purpose, these processes require focus and time spent seeking out locations, deals, financing (when applicable) and potential buyers. A property management company handles all routine day-to-day activities and tenant requests and needs, which allows you to spend time pursuing more real estate purchases or simply enjoying your life.
Here’s What Property Managers Do for Their Clients
Property managers manage both residential and commercial properties for owners. Responsibilities and duties for each sometimes merge, while each also involves unique tasks and requirements. A property manager handles all business pursuant to your properties as a direct representative of your business protocols, instructions and needs. Direct tenant communications, repairs, maintenance, rent collection and eviction processes are all part of the job for every property manager.
Collecting rent from tenants is a potentially time-consuming task each month, especially if you have varied due-dates and habitual late-paying tenants. Even in the best-case scenarios, rent collection takes time, especially if you own numerous multi-unit properties. Pursuing late rent payments is a hassle when you are busy dealing with other aspects of your business at the same time. A property manager handles both wayward and timely rent collection on your behalf, saving you time and protecting your income.
Routine Maintenance and Repairs
Dealing with routine maintenance issues and handling repairs is another time-consuming albeit necessary aspect of property ownership. How tenant view the urgency of their maintenance or repair requests is also varied. Tenants typically believe their needs require prioritization, however. This is true for even minor repairs, especially when tenants have medical or disability issues. Fielding multiple daily calls about problems is disruptive to your ability to do business elsewhere. Lawn care, plumbing problems, broken appliances, leaky roofs and failing AC or heating units are common scenarios when you own properties. Contracts between you as the property owner and your property management company often stipulate spending limits for maintenance, repairs, and other scenarios. Stipulations typically include the hiring of third-party repair services. Handling and purchasing common necessities and parts without the need for your additional consent saves you valuable time and effort.
Tenant Research, Move-Ins, and Inspections
Researching multiple prospective tenants to find the best fit for your rental units is a key element to the success of your property ownership-based business. Property managers handle submitted tenant applications and the vetting process on your behalf. Move-in and move-out processes are sometimes complicated but always involved. Smooth transitions between tenants prevents loss of income. Security deposits must also be returned or prorated based on damages done to the property (inside or out). Move-in inspections are performed to make sure the property is in compliant, rentable condition. Move-out inspections are conducted to assess any damages the tenant caused along with estimated repair costs and the length of time needed to complete the repairs.
The way tenants receive communication and attention has a huge impact on the success of your business. Tenants need to know their requests are taken seriously and handled as expeditiously as possible. Most property managers are skilled with communications, de-escalation of conflicts and (perhaps most importantly) listening.
Handling Your Books and Other Duties
A quality property management company also handles your bookkeeping. Invoices, tax minimization, expenses, receipt-keeping, and needs are all organized by property managers on your behalf. Preparing tax documents, dealing with accountants and general record-keeping are all part of a property manager’s duties. Additional tasks and duties handled by property management companies include:
- Marketing empty properties to attract high-quality tenants.
- Rental calendar organization.
- Resolving access problems (lost keys, broken locks, etc.).
- Managing length and timing of guest visits.
- Assigning parking spots.
- Hiring security when applicable.
- Overall quality control and tenant safety assessments (especially for pools, stairs, elevators, playgrounds, exercise rooms, etc.).
Evaluating Average Costs vs. Overall Benefits
The purpose of owning rental property is to collect and benefit from a passive income. Because of this, some property owners hesitate to invest in a property management team as a perceived way to save money. The truth is, hiring a quality property management team is a viable investment into your present quality of life and the longevity and future of your business. Benefits include shorter vacancies, more reliable tenants, higher ratings, and mitigated liabilities.
Perhaps one unorthodox aspect to hiring a property manager is the concept of prioritizing the breadth and quality of services offered over their costs. This includes how well the company matches your needs and expectations. On average, a property management company charges between four and twelve percent of your rental income, depending on the scope of their provided services and regional economics where your properties are located. Additional fees sometimes include:
- Setup (when opening a new client account).
- Leasing fees (approximately fifty percent of first-month’s rent).
- Vacancy (flat or standard-management fee even for unrented units).
Find Property Management Companies Near You
Research a company before making hiring decisions to find the perfect match. This includes conducting interviews, receiving word-of-mouth insights and enacting standard vetting protocols. Take advantage of reliable online information from trusted resources such as:
- National Institute of Real Estate Management (NIREM).
- National Association of Residential Property Managers (NARPM).