Is hiring a property manager the right thing to do? That’s the question many property owners have asked themselves as they look for help overseeing their rentable properties. While some people would prefer to take a more hands-on approach and manage their properties independently while keeping a healthier margin, others see the appeal of getting someone else to handle the day-to-day management, albeit at a cost. The property management industry has seen significant growth, with a market size in the U.S. expanding from over 61 billion dollars in 2009 to nearly 90 billion dollars in 2020.
But do you, as a property owner, need to hire a property manager or management company? What is property management, and how can it benefit you?
In this article, learn about what a property manager does, their primary responsibilities, the benefits of hiring one, and some tips for choosing the right person for the job.
What Does a Property Manager Do?
A property manager handles the daily tasks and responsibilities related to running a specific unit of real estate. Property managers, or a property management company, are the people who work directly with tenants. They showcase expertise in this field, as it is the sole job they have. In addition to maintaining the condition of a property, property managers look to preserve a property’s value for the owner. They excel at decision making and problem solving and demonstrate skills as a leader.
Responsibilities of a Property Manager
Property managers undertake a long list of responsibilities that generally make up a full-time job. They ensure that things run smoothly and handle tasks according to what the owner would like. The obligations and duties of a property include but are not limited to the following.
- Fill vacancies: When new units open up, a property manager should fill them as quickly as possible. Empty lots can become expensive since no one pays to be there. To occupy a vacancy, property managers need to make sure the unit is ready to lease. They should also place advertisements that let the public know it’s available. If you own rental properties like an apartment building, for example, property managers must make sure each apartment vacancy gets filled.
- Screen prospective tenants: When a property announces a vacancy, many people will likely apply for it. The property manager must screen each tenant to ensure they would be a good fit for the property. That includes rental history, background checks, credit, employment history, and more. Part of this process includes collecting any security deposits.
- Handle maintenance: During their stay, tenants will likely make multiple maintenance requests. Property managers must respond to these requests quickly. That includes any requests made during inconvenient times, such as the middle of the night. Additionally, property managers must ensure that any repairs and maintenance fall under current building codes as part of this responsibility.
- Collect rent: Property managers handle all rent collection. Whether collecting physical checks or setting up online accounts, they ensure tenants deliver their rent payments on time and collect late fees when appropriate.
Why Should You Hire a Property Manager in the First Place?
Besides handling the above tasks, why should you consider looking at residential property management companies at all? Owners spend a large amount of money just to buy the residential property in the first place. They may want to see to maintenance and rent collection personally, too. Even so, the following benefits may show the value of choosing a property manager.
It Might Be Tax-Deductible
When hiring a property manager, the cost of using one can sometimes be tax-deductible. This type of hiring qualifies as a business expense for owners. Note that this can vary depending on state and local laws, but it does provide a little extra incentive if you’re still on the fence about picking a property manager.
Easier Management of Multiple Properties
Going with a property manager makes sense when you own multiple different properties. Owners have the potential to stretch their investments too thin, but with a property manager, they can make sure all their properties receive the attention they need. An owner who has several apartment complexes, for example, would benefit from having other property residential management companies do the heavy lifting.
Hands-On Management for Long-Distance Owners
Some property owners live far away from where their actual properties are located. For instance, an investor in Florida could have properties in New York that they want to be managed. Property managers fill that void by doing the hands-on, day-to-day management when owners can’t do it themselves due to distance. Property management companies can also pay closer attention to local laws and regulations to make sure everything is up to code and compliant.
Even if owners live close to their properties, managing them can become a time-consuming task. While some owners might not mind it, others would prefer to have others deal with those responsibilities. This saves property owners a tremendous amount of time since they only have to check in every so often to make sure the manager continues to run things smoothly.
The Drawbacks of Choosing a Property Manager
That’s not to say that owners will only see benefits if they go with a property manager. Owners should note the potential drawbacks and disadvantages they could experience. There are two possible downsides to working with property managers to think about.
No Personal Investment
A property manager simply doesn’t have the same stake in a property as the owner does. To a property manager, the units they manage are a job. The best ones take it seriously and do great work, but it doesn’t carry the same weight or personal attachment. Consequently, they may not devote similar amounts of attention and care compared to the owner.
Hiring a property manager or going through a property management company represents yet another added expense in what can already be an expensive endeavor. Many property managers technically still work independently, so some of the expenses they encounter as they handle their responsibilities may get passed to the owner. Additional costs may include the following.
- Maintenance: This expense will depend on the property manager or company you choose. Many property managers charge owners a percentage of a repair’s cost, anywhere from around six percent and up. Make sure to hammer out the details of those costs in the contract.
- Leasing fees: Organizing and filing new leases has many costs associated with them, including the paperwork and marketing needed to receive new tenants. Background checks fall under this category as well.
- Lease-renewal fees: When a tenant chooses to stay, they’ll need to renew their lease. The renewal process represents an added cost that property managers will sometimes charge the owners. That cost can come from a percentage of the rent or a flat fee, though sometimes property managers choose not to pass the expense on to the owner.
Tips For Choosing a Property Manager
If you’ve decided to pick an individual or company to manage your property, you’ll need to choose the right one for you. Picking the wrong one could be costly in the end, so it’s a decision you need to get right. The following tips can give you the best chance at success.
1. Use Property Management Directories
While you could place an ad in the local newspaper or online, you can shorten your search by checking several property managers’ directories. Two, in particular, may be helpful in narrowing down your choices. The National Association of Residential Property Managers makes searching for one in your area easy. Or you can check out the Institute of Real Estate Management and their member directory for more information.
2. Gather Recommendations
If you own property, chances are you know someone who owns property as well. Feel free to ask for recommendations from trusted friends and associates. You may even get some additional suggestions from the apartment association in your area. Just like filling any other job, getting recommendations can make the task easier and bring you into contact with qualified candidates.
3. Ask Questions
If you’re looking closer into a property management company, you can gain more information by asking the company questions. Owners can do this informally, such as a quick phone call or email, or they can have a sit-down interview. Asking questions in this manner can help you get a good feel for the type of company they are and whether or not they’ll be the best fit for your property. Here are just a few examples of questions you can ask.
- How quickly do you respond to maintenance requests?
- Do you have testimonials from current clients and tenants available?
- What are your management fees?
- Will you provide updates on the property, and how often?
- What collections procedures do you have?
- What are your vacancy and evictions rates?
- In what way do you collect rent?
- What is the average length of tenancy at your properties?
- What marketing methods do you use to fill vacancies?
- How large is your staff, and how many will work on the property?
Property Managers Can Help
When you can’t manage your valuable properties yourself, property managers can handle the most difficult tasks. Use the tips from above to find a property manager who has the right skills and attitude for your investments. Talented property managers can also mitigate risks and give you peace of mind while you’re away from your properties. For the best maintenance and value preservation for what you own, consider working with a property manager as soon as you can.