A property manager is someone or an agency who makes sure that both the owner and tenant follow all of the regulations of owning or renting a real estate property. The manager does this by having contacts with local and federal agencies and making sure all laws are adhered to, thorough inspections, and taking care of any issues in the house.
The property manager is also responsible for collecting rent and making sure the renter knows all rules, regulations, and laws concerning owning or renting a home. Property managers also negotiate rental rates on behalf of the owner, tenant, and everyone involved.
It’s essential to hire a property manager because they help ensure that the renter does what they are supposed to do. They also help protect the landlord from any mishaps or problems. Most importantly, a property manager serves as an intermediary, so both parties feel more comfortable and exactly know what is going on.
What is a Property Manager?
A property manager is a person or a company that can manage real estate property for other people. They usually have direct contact with both the owner and renter of a property and ensure that everything is going as it should.
Property managers help by being responsible for collecting rent, negotiating rental rates, performing inspections, relaying information, and making sure all laws are being followed.
The property manager is usually hired by the landlord or leasing agent. The role of a property manager varies depending upon whether they are employed full-time or part-time by the owner. Some homeowners use both systems to protect their property and properties.
The part-time manager works off of a commission usually. In contrast, the full-time manager is salaried and has more responsibilities than other managers, such as working with different government agencies or intermediary between owner and renter. The full-time manager may also help supervise maintenance while the landlord is away.
It’s crucial to hire a property manager because they help ensure that the renter does what they are supposed to be doing. They also help protect the landlord from any mishaps or problems and serve as an intermediary, so both parties feel more comfortable.
What Does a Property Manager Do?
A property manager has many responsibilities, including working with both the owner and renter of a property to ensure all laws are followed, inspections are made, and paperwork is up to date.
Some of the property manager’s responsibilities include:
- Setting Rent
- Collecting Rent
- Screening Tenants
- Property Management
- Managing the Budget
1. Setting Rent
The property manager sets rent for the property. The manager decides how much the landlord should charge for rent based on market value, laws, restrictions, past rental history, and other factors. There are several ways to set rent, including establishing a fee similar to what would be charged in the area or using past rental history to come up with an amount.
This responsibility is important because if the manager doesn’t set the correct rent amount, then one party might not be getting what they should be getting. Also, if a landlord has doubts about how much to charge for rent, it’s probably best to seek advice from someone else, such as a property manager or leasing agent.
2. Collecting Rent
The property manager collects rent from the tenant. The manager will either use a third-party system or keep track of renting themselves, then turn it over to the landlord once they are paid. The manager makes sure that any discounts are taken into account and that all fees are included in the amount of rent submitted. If the property manager charges the owner a fee for collecting rent, this money should be included in the final amount.
Collecting rent is crucial because it ensures that the renter pays on time and that all fees are taken into account when doing so. If a tenant doesn’t pay, the manager will have to figure out what needs to be done to get the renter to pay up. It also makes things easier for the landlord because they don’t have to worry about tenants paying on time.
3. Screening Tenants
The property manager screens tenants. This task ensures that a tenant is chosen who will be a good fit for the rental and checks the references and credit history of applicants. Once tenants have been selected, an interview might take place to ask questions about the property and renter.
This task is essential because it ensures that the right renter is chosen for a particular property, protecting both parties from any problems or mishaps. It makes things more accessible since the renter can ask questions and know what to expect.
4. Property Management
Overall, property management is responsible for ensuring that the property stays in good condition and is up to code. The manager takes care of minor repairs and makes sure that significant repairs get taken care of. Depending on the need, the manager might hire a contractor or handle it themselves.
This duty is essential because it protects the landlord from getting fined by the city for having a broken-down fence and ensures that tenants aren’t injured. It makes things easier because someone who is qualified to handle them can get taken care of quickly and efficiently.
5. Managing the Budget
The property manager manages the budget, including coming up with costs such as repairs and maintenance. The manager will develop a budget and submit it to the owner. If the budget is approved, then any expenses will be covered and paid for until the funding runs out.
This duty is essential because it ensures that the correct amount of money is spent on repairs and maintenance so that they can be taken care of quickly instead of falling off. It also makes things easier for the owner because they don’t have to worry about running out of money or not having enough.
What are the Types of Property Managers?
Property managers come in all shapes and sizes. Some specialize in a specific area such as commercial, apartment complexes, or residential homes. Others choose to work with a mix of those types of properties and those management services and associations for property owners. The manager types include the “Favor” property manager, property management side business, lone ranger property manager, small to medium portfolio property management company, and large or departmental property management company.
The “Favor” property manager is an individual agent doing it as a favour or doing it on the side for their customers. This manager typically works with one landlord and not a large management company.
Property Management Side Business is a company that is usually a part of a sales brokerage. A small service business that is attempting to grow its property management division. It will take on larger and larger accounts as it grows in size and experience. Its main priority is to achieve the five-digit sales commissions, so they don’t usually have invested resources.
The lone ranger property manager is usually pro-active, highly hands-on, and constantly updated on practice and laws. Usually, this manager is not associated with any specific real estate company but is independent. It will take on large portfolios and usually be the primary person running the management business.
The small to medium portfolio property management company has slightly less involved managers than the large or departmental property management companies. They are usually privately owned and manage up to 100 units. Yet, they’re not as large as the larger property management companies.
The large or departmental property management companies are usually publicly traded and own tens of thousands of units. They employ hundreds to thousands of people and handle every type of property. They also manage properties worldwide and can be quite an affordable option for those looking for a property manager.
They all have many similarities regarding their services, but they also have differences. For example, the “Favor” property manager usually can’t afford to stay on top of new laws and updates, so their properties are criticized heavily, unlike the lone ranger property manager.
How to Hire a Property Manager
One of the essential steps for finding a property manager is deciding whether you want to go with an individual or a company. You should consider how many units will be managed, how much time you have available for management-related tasks, what services are offered, and how long it takes for repairs to get completed if needed.
Once you’ve decided to go with an individual or company, you need to begin looking. You can ask friends and family for recommendations or do your research on the internet.
It would be best if you ask many questions to any property manager before hiring them. Significant questions must be asked, such as “how many years have you been in business?”, “Do you have any references?”, “What services do you provide?” and “Are there any extra charges for vacancies, repairs, or move-ins?”. It may also be beneficial to ask them if they are bonded and insured.
Also, remember that you don’t need to run out and hire the first company you find. Ask questions like “How do you handle vacancies?”, “What are your fee structures?” and “What type of reports will I receive?”. Remember, this is a long-term relationship so choose wisely.
How much does a Property Manager Cost?
The cost of hiring a property manager differs per individual or company. Some companies will charge an hourly rate or flat fees depending on what services you need to be performed. Others may charge either way, depending on the size of the property.
The average monthly fee is 8% to 12% of the collected monthly rent. Other property management fees usually include:
- Management fee: This is a fee for saving your time. It’s the fee that is charged to cover all expenses incurred by the manager during their duties for you. The request for this fee should be made at the start of a property management contract. It can also cover bookkeeping, maintenance requests, advertising vacancies, rent collection, and more.
- Administrative fees: If allowed by state law, you may have to pay an administrative fee in addition to your monthly property management fee if approved by your Association or Homeowner’s Association.
- Leasing vacant property fee: Property managers charge a fee if the property is empty and you need to find a tenant for you.
- Routine inspection fee: The inspection fee includes all expenses for inspections of your home before it is put on the market as well as during any showings. In addition, the inspection fee will also cover other expenses such as advertising the property for rent, showings, and corresponding reports.
- Repair and maintenance fee: If a tenant damages the home during their tenancy, you may have to pay for repairs. Property managers will charge an hourly rate if they need to fix any damages caused by tenants.
- Overseeing vacant property fee: Property managers charge an overhead fee for managing a vacant property.
- Contract setup fee: If you and your property manager agree to a contract, there may be a fee associated with the agreement.
- Late payment service fee: If the property manager collects rent on your behalf, there might be a fee associated with late payment processing.
- Contract termination fee: This fee is charged if the contract between you and the property manager ends. It may cover expenses the property manager incurs due to terminating your agreement, such as advertising the property for rent, showings, and corresponding reports.
Every state has different laws regarding property managers, so it’s best to ask your agent what fees you may incur if any. Some states also don’t allow late payments, so check before signing a contract.
What are the Pros of Hiring a Property Manager?
As a property owner, you have many responsibilities on your plate. You have to find great tenants who will look after your investment and pay rent on time, maintain the property, ensure that everyone is abiding by the terms of the tenancy agreement, and of course, deal with disputes between parties or potential eviction if necessary.
If you hire a property manager for your investment property, you’re off the hook for most of those responsibilities.
Here are some benefits of hiring a property manager:
- Tenant screening: When you hire a property manager, they will list potential tenants with whom they have had prior experience. They can introduce you to the tenant and run credit checks on them. In addition, they’ll also screen the tenant for past evictions or any lawsuits that may be filed against them.
- Tenant communication: When you have a property manager looking after your investment, you’re able to focus on other areas of your life, knowing that they’re working hard to find great tenants and look out for your best interests.
- Maintenance: As a landlord, you need to ensure that all repairs are done on time. It can be challenging and take time away from the rest of your life. When you hire a property manager, they are responsible for all maintenance on the property, saving both time and money for you.
- Landlord liability: If there’s an accident involving your tenants at the rental property that results in injury or damage to another party, who is liable? The landlord. When you have a property manager taking care of your property, you’re able to protect yourself from liability issues.
- Increased tenant screening: When you hire a property manager, they provide more than just the credit check for potential tenants. They’ll also conduct interviews with each prospect and show them the unit if necessary.
What are the Cons of Hiring a Property Manager?
If you hire a property manager, you are less involved in the day-to-day of your investment. It could be beneficial if you have a busy life outside of renting out your home, but it’s also important to remember that this means less control over your investment.
Here are some disadvantages:
- Responsibility: If something happens with your property that you are at fault for, the manager won’t be liable for any damages. Only the owner of the home is responsible.
- Less cash flow: If you have a property manager overseeing your investment, they’ll collect rent on your behalf of you, so it may take longer to receive your income. Also, fees might be added to your rent for this service, which means you’ll receive less cash flow.
- Less control: When something goes wrong with the property or tenants aren’t paying their rents on time, there’s no guarantee that the manager will quickly take care of the issue. You might need to step in and do it yourself if they don’t respond appropriately.
- Less tenant loyalty: Your tenants may be loyal to the property manager instead of you when they’re in need. It could be problematic if they try to rent another unit from you or there is a problem with their place.
What is the Difference between Landlord and Property Manager?
In most cases, a property manager will manage their properties and have clients they work with. It is different from a landlord that rents out their own homes or investment property.
A landlord is the one that rents out their homes and takes care of the day-to-day responsibilities. A property manager is hired to work on behalf of the landlord. They will inspect properties, screen tenants, take care of repairs, collect rent payments, and more to help increase their cash flow.
When you hire a property manager, they can be involved in all areas of the rental process. Landlords tend to be more hands-off and may not live close to their investment properties.
How to Become a Property Manager
If you have a real estate or property management background, the job might naturally fit you. It’s essential to have high integrity and communicate well to become a property manager.
You need to be able to work on behalf of your clients and manage tenants’ concerns while also being responsible for tenant screening, repairs, rent collection, maintenance management, and more. It can be a great job if you don’t mind working with people and living the life of a landlord.
If you want to be a property manager, you need to be at least 21 years old and have excellent communication skills to work with tenants and potential tenants. You must be organized and detail-oriented, especially if you plan on managing maintenance and repairs for multiple properties. Also, you should have a background in real estate or experience as a property owner or investor and have the ability to multitask while paying attention to details.
When applying, you should have a good knowledge of your local and state laws and keep up-to-date with monthly changes. You need to work well under pressure and prioritize your tasks so everything gets done on time. You must also be ready to go through background checks, drug tests, and credit checks to ensure you can pass all qualifications for being a property manager.
Does a Property Manager Need a Real Estate License?
Yes. Most property managers need to be licensed to work as one since it can increase their credibility and knowledge base. They need it to do real estate transactions, especially leasing tasks and collections.
A license can also help you take better care of your investment property if you decide to rent it out instead of using a property manager’s services. You must have a real estate license to manage your property in certain states.
A property management license or real estate broker’s license is a license you must have to be a property manager in your state. To get it, you need to check local requirements by contacting your city’s a business licensing department or the state real estate commission. You might also want to meet with an attorney or accountant.
What is the Salary of a Property Manager?
The average salary for a property manager is around $104,217 and ranges anywhere from $90,475 to $119,892. You might make less as a property manager since the job doesn’t require much education beyond a high school diploma or GED.
However, if you work in a larger city like New York City or Boston, you can make up to $100,000 in just a few years.