Owning and operating a rental property is a lot of work, and it can quickly become a full-time job as you build your investment property portfolio. At the same time, you might not be excited about the prospect of giving up a percentage of your rental income to a property manager. What does a property manager do, exactly, and is it worth the cost?
Property managers can take care of tasks like collecting rent, finding and screening tenants, dealing with tenant turnover, performing or hiring out regular and preventative maintenance, and dealing with repair requests. They act as boots on the ground in terms of the daily management of a property and communicate pertinent information to property owners.
Property managers can be either an individual or a company that a property owner hires to oversee and manage an investment property. There is a long list of responsibilities that property managers can take on, including setting and collecting rent, filling vacant units, handling maintenance requests, and dealing with tenant communications.
Whether you’re thinking about hiring a property manager for your rental property or you’re considering property management as a career, it can be useful to understand exactly what this role entails. Let’s look at some of the common tasks taken on by property managers.
Landlord-tenant laws and regulations can get complicated, particularly if you are an investor that owns properties in a number of different municipalities or states. The last thing you want is to deal with legal issues when it comes to your rental property, and hiring a property manager can help to mitigate that risk.
Each state has its own laws about things like security deposits, evictions, and other typical landlord issues. On top of that, many cities have their own regulations regarding the relationship between landlords and tenants.
Property managers are often better equipped to deal with the laws and regulations in their area than remote property owners, as they tend to be experts in the local area where they work.
Another important task of property managers is keeping the property in good shape, which involves both routine and preventative maintenance. Tenants are quick to up and move out of rentals that a landlord isn’t taking care of, and property managers can step in to deal with everything from lawn care and snow removal to HVAC servicing and gutter cleaning.
While some property management companies might have an in-house maintenance team or take on the tasks themselves, others hire out of the job.
If there are any repairs required, property managers will communicate the issue to the owner and, pending approval, schedule any necessary repairs. This might mean something as simple as light bulb replacement or something as extensive as HVAC system repairs.
Property managers use the requirements outlined by the owner (and local, state, and federal housing laws) to perform legal tenant screening.
Through this process, they find qualified tenants that are likely to follow the terms of the lease, pay rent on time, and generally take care of the property.
It also falls within a property manager's responsibilities to communicate important terms of the lease to tenants during the lease signing before they move in. As a part of this process, they’ll also inform tenants about what the consequences are if they violate the lease.
If you’re a property owner, it’s possible that a lot of your time will be taken up dealing with tenant complaints, particularly if you’re responsible for a number of units. Property managers can take on this task to reduce the burden on owners, promptly respond to complaints, and act as a go-between when necessary.
Prevention is key when it comes to keeping costs low for rental property owners, so property managers take on the task of conducting regular inspections. This way, they can identify anything that needs to be fixed before it becomes a costly repair.
Even when you have a strict tenant screening process, evictions are never completely avoidable. If they’re necessary, property managers can help deal with the legal aspects of removing a tenant from the property.
Property managers also collect rent payments as well as any other fees owed by the tenants.
These might include pet fees, storage fees, or late fees. Of course, they are required to follow all federal and state laws regarding security deposits, trust accounting, and other issues that relate to tenant funds.
Another major part of a property manager's job is communication with the owners. Considering the rental property is an investment, it makes sense that owners will want to know everything from income and expenses to vacancy rates and maintenance requirements. Property managers can even provide advice to owners about raising rent prices in the area, legal issues, or maintenance and repairs they believe are necessary.
Whenever a tenant moves out, there’s generally some sprucing up that needs to occur. This is the case no matter how well the previous renters took care of the place. In addition to collecting keys, refunding security deposits, and enforcing move-out dates, managers will inspect the unit, clean it, and restore it to rent-ready condition.
How much it costs to hire a property manager depends on a number of factors, including your location, the type of property, and the particular company or individual you hire.
That being said, the average cost is typically somewhere between six and twelve percent of the overall monthly rental income of the property.
There are frequently additional fees on top of the percentage of monthly income that you’ll want to know about. These can include:
It can be hard to part with your rental income as a landlord, but hiring a good property management company can be well worth the cost in some circumstances. This is particularly true as your portfolio grows, as being an owner can quickly become a second full-time job. Additionally, property management is absolutely key for remote rental property ownership.
Whether or not it makes sense for you to hire a property manager has to do with your particular situation. For example, hiring out property management is basically a necessity if you’re investing in real estate from a distance and is common for people that have expansive rental portfolios.
On the other hand, if you’re just planning on owning one rental in your hometown and you possess the skills needed to manage income-producing real estate, you might choose to keep your money in your pocket and take on the task yourself.
Of course, how hiring property management impacts your rental profit is another major factor. In order to view all of the most important investment property metrics in one place, you can use our rental property calculators to help you determine whether the cost of hiring management aligns with your financial goals.
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