A property manager is an individual or a company that deals with the operation, oversight, and control of the cash flowing property. They are experts in all manner of administering rental properties for owners and deal with all the day to day things that owners would normally be responsible for themselves. Many rental owners simply buy and renovate properties and hand them over to the property manager to deal with, with the owner having no involvement in how the property manager runs the business. However, since the property manager works for the owner, the owner can be as involved as they want.
In most cases property managers are responsible for all aspects of the rent. A good property manager will know how much to set the rent for a property depending on the area that the property is in, to make it attractive to prospective tenants. They also have an excellent understanding of the market where the property is located and have also looked at comparable properties in the area.
They will most likely be responsible for collecting the rent on your properties. They ensure you receive optimal cash flow by setting a date to collect the rent each month (almost always the first of the month) and by strictly enforcing late fees. They may also be responsible for adjusting the rent by increasing it by a fixed percentage each year, according to individual state and/or municipal laws. They may also decrease the rent if they feel it is necessary to keep the properties occupied.
They may also be responsible for all aspects regarding managing your tenants. They will market the property to find tenants to fill vacancies. They will know the effective places to advertise and what information to include in their ads. They also understand what things attract tenants, so they may even suggest making cosmetic improvements to help rent the property.
With regard to prospective tenants, they will sort through the applications to find the best tenant for your property. Using a consistent screening process, they will run credit and criminal background checks which can decrease your chances of being accused of discrimination. Very experienced property managers have seen hundreds or thousands of tenants over time, so they have a better idea of how to select the right tenants for you, such as those who pay their rent on time, have a propensity for a longer tenancy, and will create fewer problems and issues.
Other tenant-related activities they are responsible for is setting the length of time for the lease and making sure it has all the necessary provisions written into it to protect the owner. This includes determining the amount of security deposit that may be required. They will handle any maintenance requests or complaints, and will have the necessary contacts to handle any type of emergency situation. When a tenant gives notice of vacancy or moves out, the property manager is responsible for inspecting the unit and checking for damages, and determines what portion of the security deposit will be returned to the tenant. After the tenant moves out, they are also responsible for cleaning the unit, repairing any damages, and finding a new tenant. When a tenant is consistently late with the rent without good cause, has a back rent, refuses to pay the rent, or otherwise breaches the terms of the lease, the property manager will file and move forward with an eviction.
Repairs and maintenance are a common issue that property managers also have to deal with. Physical damage from tenants or outside forces, normal wear and tear, preventative maintenance, and emergency repairs are things the property manager is responsible for. They have to keep the property functioning in top condition, whether they do the work themselves or hire a company to do it for them. They deal with exterminations, check for various leaks, keep up the landscaping, shovel snow and ice from the sidewalks and walkways, and remove trash. They often have a large network of reliable plumbers, electricians, carpenters, and other contractors that they can call upon to deal with regular and emergency maintenance repairs quickly and efficiently.
Property managers are paid by the owners either through a fixed fee or, most likely, through a percentage of the rent collected. The property management company usually keeps ten to fifteen percent of the rent amount, and forwards the rest to the property owner. It is extremely important for your cash flow properties business to have a property manager handle all the headaches and you focus on your business of purchasing more inventory!
Should you use a property management service? It all depends on your needs. If you have properties out of state or at a distance that make it difficult to visit on a regular or emergency basis, don’t want to deal with the daily necessities of the business, or want the time to concentrate on other aspects of your business such as acquiring more properties and doing more deals, you might consider using a property management service.
However, be aware that property managers are strictly business people and may be a little unsympathetic and impersonal to tenants who are experiencing problems in their lives. Relatives with sudden medical issues, loss of employment, paycheck, government, or social service check issues, and a plethora of many other situations that could affect the tenants ability to pay the full rent on time, may be issues that you as an owner would work with to keep your tenant and help them through their difficult times. But most property managers would be looking to getting rid of the tenant instead.
To find a good property management company that fits into your business model, look at getting recommendations from colleagues such as other investors and from your local apartment association. You can search online for property management companies and for directories that list them. You can also visit the Institute of Real Estate Management at www.irem.org, and click “Find a Professional,” or the National Association of Residential Property Managers at www.narpm.org and click to search for property managers.
Make sure you interview companies of interest to get all your questions answered before deciding on one company over the other. You want to know that the company you choose will manage your properties within your guidelines, requirements, and rules. The amount of responsibility you give them and how they treat the property and your tenants ultimately reflects back on you. Choose the right company and both your income and your reputation will flourish.