What is the role of a property manager?
Property managers are hired to handle the operations, maintenance, and administration of property rentals for an owner. Their work, among many other tasks, includes marketing rentals and finding renters, ensuring rental rates are competitive while covering taxes and overhead, collecting rent, and complying with rental laws.
Their exact responsibilities will vary based on the type of property being managed, the amount they are getting paid, and the terms of the management contract. There are some important roles a property manager can take on to assist rental property owners.
A good property manager handles nearly every detail of running a rental property, from finding tenants to collecting rent.
Using a property manager can be a logical choice for an owner with multiple properties. But a manager also benefits owners who haven’t yet built a real estate empire. A property manager can oversee even small rental properties, such as duplexes or single-family homes. They take care of vacant properties as well, ensuring the sites are secure and tidy. A property manager can be well worth the investment if you don’t want to spend every waking moment dealing with property concerns.
Your property manager can be your best asset, and you’ll have more free time and less stress if you have the right manager.
Here are the typical responsibilities of a professional property manager, but please know that not all management contracts are the same, and everything is up for negotiation.
What Is a Property Manager?
Property managers are people that specialise in ensuring a rental is being operated according to the guidance given by the owner—whether the goals be financial or based on providing attractive living conditions, or both.
Guidance can take different forms—corporate property owners may issue mission and vision statements for their properties, while individual owners may give verbal guidance on their goals for the property.
The manager makes sure that responsible tenants occupy the property, payments are received on time, budgets are followed, and the rental is maintained properly.
Property managers, also known as community association managers, are responsible for overseeing properties to assure it has a nice appearance, proper maintenance, and keeps its resale value. They show the property to prospective renters and discuss the requirements and terms of occupancy. They may collect monthly fees, pay, or delegate bill payments like taxes, insurance, maintenance, and payroll.
How Does Property Management Work?
Property managers handle everything that occurs daily in a rental property. They should have a working knowledge of the real estate industry. The rental operates in, such as industrial property or housing.
The property manager then works to ensure that the owner’s goals are met by managing rent, tenants, maintenance, budgets, and rental property records. They must also have an in-depth familiarity of state and national laws regarding the legal methods to screen tenants, handle security deposits, terminate leases, conduct evictions, and comply with property safety standards.
For these reasons, some states require property managers to be licensed, real estate brokers. If this is the case, a property owner will need to hire a broker to ensure their property is managed legally.
Other states allow for managers to be licensed in property management instead of as realtors, while some don’t require licensing at all. In addition to licensing, property managers come with different specialties and experiences.
Setting rent is a basic responsibility of any landlord. Therefore, it is one of the most common jobs a landlord will pass on to a property manager. The property manager sets competitive rent prices to attract tenants to the property. Generally, this is done by conducting a survey of comparable properties in the area—this should also be done at least annually to remain attractive for tenants.
The property manager also sets up a system for collecting rent from tenants. To ensure optimal cash flow, they set a collection date to make sure that monthly property expenses are able to be paid, and strictly enforce late fee policies.
Screening and managing tenants is another core responsibility of a property manager. The property manager may be involved in finding and screening prospective tenants, managing daily complaints and maintenance issues, and handing tenant move-outs and evictions.
Property managers are the people that are normally dealt with by tenants. If you have many properties and tenants, you might need a property management firm.
The property manager must keep the property in a safe and habitable condition. Property managers are responsible for the physical management of the property, including regular maintenance and emergency repairs.
Work done by contractors and other maintenance specialists must be inspected to make sure it is up to standards and that they are completing their work in a timely manner.
Managing the Budget
Property managers can be responsible for managing the budget for the building and for maintaining all important records.
The manager must operate within the set budget for the building. In certain emergency situations when the occupants (tenants) or physical structure (investment property) are in danger, they may use their judgment to order repairs or likewise without concern for the budget.
Property managers should be versed in accepted accounting practices to ensure accurate bookkeeping for income, tax, and investment purposes.
Thorough records regarding the property are important for accounting purposes. Records should include all income and expenses; a list of inspections, signed leases, maintenance requests, complaints, records of repairs, costs of repairs, maintenance costs, and a record of rent collection and insurance costs.
Property Manager Vs Landlord
While both a landlord and property manager perform similar jobs in this industry, the main difference between these two roles is that a property manager does not own the rental property. In contrast, a landlord owns the property he self-manages. Essentially, property managers act as the middle man between the owner of the property and the renter. A rental property owner employs a property management company to maintain their investment, so they do not need to attend to daily tenant or property issues.
A property manager must perform all the duties of a landlord but is also responsible for managing money and records for multiple owners, tenants and properties while following federal, state and local landlord-tenant laws.
A property manager‘s responsibilities involve the management of rent, tenants, property maintenance and repairs, owners, landlord-tenant laws, business operations, property records and accounting, and taxes.
Property managers assist owners with setting the right rent amount that will ensure quality tenants occupy the property, and that will allow an owner to collect appropriate rental income. An equally important role of a property manager is collecting rent and communicating any rent increases to tenants.
Property managers are familiar with market rent prices in their area. They understand how to evaluate a property’s features in order to find the best rent price that will help an owner capitalise on their investment and ensure it is always occupied.
Property managers create a policy for collecting rent from tenants that can include personal checks, online payments, certified funds, or cash that is mailed, dropped off at a secure location, or picked up in person. Rent collection comes down to which method results in the highest portion of prompt payments with the littlest amount of effort from both management and tenants. A property manager will also deal with late payments, unpaid rent and the process of evicting a tenant due to non-payment of rent.
Property managers will facilitate legal and appropriate communication with tenants regarding rent increases. They will advise owners on the pros and cons of increasing rental prices in order to match market rates, to pay for property maintenance or improvements, to accommodate tax increases, or to increase profits.
A property management firm should have a clear rent collection procedure that outlines collection policies, late fees, how non-payment of rent will be handled, how outstanding tenant debts are handled and how rental funds are paid out to owners.
One of the primary responsibilities of a property manager includes all tenant-related issues including finding and screening applicants, communicating and enforcing lease terms, managing complaints, dealing with bad tenants and proper handling of tenant funds.
A property manager provides the necessary support to market vacant properties in order to find the most qualified tenant for the property. A vacant property is always bad news for an owner, and a manager works hard to get the property rented as quickly as possible to a qualified tenant. They will put out the effort to post For Rent signs, update online rental advertisements, host open houses and communicate with current tenants for qualified referrals.
A manager will enforce the owner’s requirements for finding a qualified tenant who will pay rent on time, follow lease terms, and take care of the property by performing legal tenant screening. Legal tenant screening includes evaluating objective qualification criteria like reliable income, employment verification, credit check, criminal background, and positive rental history.
Enforcing Lease Terms
A manager will review important lease terms with tenants during the lease signing process prior to residency. A manager will communicate appropriately with the tenants if any violations occur, and enforce the consequences during the lease term. The lease agreement should include a policy for how the manager will handle rule-breaking behaviour and the consequences for any violations and repeat offenders. A violation may incur a fine, null the contract, or be grounds for eviction.
Deemed as one of the biggest headaches of property management, dealing with tenant complaints can take up a lot of time and energy. A complaining tenant may be voicing concerns about property maintenance or other community-related issues regarding tenants or neighbours. A property manager may require tenants to submit written notifications through email correspondence or an online tenant portal.
Even the best tenant screening can cause a few bad apples to slip through the cracks, leaving a property manager to deal with the legal side of asking a tenant to move out. Evictions are an incredibly lengthy process, and the right property manager will know the correct steps to take to make sure everything is handled appropriately. If the proper legal steps leading up to eviction are not followed, the lawsuit could be dismissed in court, resulting in wasted time and money.
Property managers are charged with the responsibility of the physical management of the rental property in regards to maintenance and repairs, in order to ensure the property remains in liveable condition for current tenants, and attractive, rent-ready condition for future tenants.
Property managers will perform routine and preventive maintenance for the owner to make sure the property remains in great condition. Managers will perform maintenance tasks personally, via onsite management, or hire a vendor to perform the job. Maintenance can include landscape duties, HVAC servicing, exterior cleaning, animal proofing, gutter cleaning, etc.
Should the property require any home repairs, a manager will communicate the issue with the owner and schedule repairs pending approval. Common property management repairs include plumbing and HVAC system repairs, broken railings, common area light bulb replacement, etc. Repairs can be noticed by management during an inspection or brought to the manager’s attention by a tenant.
A property manager will conduct regular inspections of the rental unit in order to identify any maintenance issues that need to be fixed before they become expensive repairs and to ensure compliance with tenant required maintenance. Rental property inspections may include move-in/move-out inspections, seasonal inspections, and drive-by inspections.
Tenant turnover involves getting a property restored to rent-ready condition in between lease terms, collecting keys and leased property, and refunding the past tenant’s security deposit. A property manager will enforce move-out dates, and charge a tenant accordingly if he has not vacated the unit on the agreed-upon date and time. The vacated unit has to be inspected, cleaned and restored to the condition it was at the start of the prior lease term. If the property owner wants to make additional improvements to the unit during the time, the manager can help coordinate and oversee the property maintenance.
Property managers work directly with the rental property owners they serve and must communicate relevant information in regards to property performance, owner funds, and legal issues.
Acquiring new owners
Understanding the types of individuals who own rental housing, helps property managers create user profiles of their target audience. These profiles establish the needs and wants of individual owners so the property manager can best serve them. A property manager will be able to attract new business and retain clients by appealing to what the owner needs during their buying process for the right property manager.
Owner funds are usually considered rent payments collected by a property manager from a tenant that is then disbursed to the property owner. In order to properly (and legally) handle owner funds, a property manager must understand the basic principles of trust accounting. Trust accounts for property managers are typically used to keep tenant deposits and rent payments separate from operating capital. A property manager must keep owner funds separate from operating capital and follow state guidelines on the timeline required to deposit owner funds.
Types of Property Managers
Commercial property managers specialise in real-estate used for business purposes. These managers may be well versed in industrial buildings or administrative-type spaces.
Multi-family property managers are accustomed to managing facilities such as apartment complexes. These specialists need to have good customer service skills and the ability to de-escalate situations, as well as perform the usual duties of a property manager.
Single-family home property managers work for real estate investors who hold their investments and rent them out for additional income. These types of investors generally purchase homes in areas where there is a high rate of residential turnovers, such as in a military community, where there is a tendency not to purchase homes.
They hire property managers to make sure all of the facets of the property are handled, and that value is maintained while the property is being lived in.
How do you choose?
The days when the management of rental properties, just entailed collecting money are well and truly over. Besides being well-trained and highly skilled, one of the main things you should be looking for in a property manager is experienced in the industry – particularly deep knowledge of the area you’re looking to invest in (or have already invested in). When asked, they should be able to give you a detailed record of all the services they offer, including fees.
The Real Estate Institute of Australia recommends asking questions like What are your processes in choosing good tenants? Can you explain your charges and how much exactly I will be paying? How will you assist in maximising my return and optimising capital growth? How much would you market the property for, and why?
Provided that the answers supplied are satisfactory, you may have found the manager for you. But just like any relationship, don’t feel the need to rush into anything.
An excellent property manager is worth his or her weight in gold, but as with every profession, it isn’t easy to find the real stars.
Every property manager runs their business a little differently, so be sure to ask them about every duty and task listed here before you hire them. If they don’t have a clear and straightforward answer for you, then you might be better off managing the property yourself.
Managing a rental property yourself is not as hard as it seems. Modern technology, like Cozy, let you accomplish most of these tasks at no cost. When compared to the 8-12% fee that property managers usually take, managing it yourself certainly seems more profitable.