What Is the Role of a Property Manager in Real Estate?
A property manager performs various duties - but what do they do? Whether you're a landlord, an investor, or just curious about real estate, you've probably heard of them. Property managers often do more than collect rent; their responsibilities go far beyond what you expect.
We'll examine some property managers' responsibilities and what you can expect from them.
Property Managers: What Is Their Role?
A property manager is in charge of supervising the daily functions of a rental property. Suppose the property owner or real estate investor needs help managing the property. In that case, they typically hire a property manager.
Investors often hire property managers to take care of properties they can't manage personally or don't live close to. Depending on the owner's needs, a property manager can be a single person or an entire management company.
In many cases, a property manager's salary can be deducted from the income generated by the property. Property managers manage commercial properties such as apartment complexes, shopping malls, and office buildings.
What Do Property Managers Do?
You must hire a property manager or management company to protect your real estate investment property and passive income. Rental property investors hire property managers for various reasons, including taking a more hands-off approach to their properties or hiring a local professional to handle the property.
But what do property management companies or managers do when they oversee properties? The following are some typical responsibilities that property managers typically hold.
1. Complies with Landlord-Tenant Laws
Keeping track of all landlord-tenant laws and regulations can be challenging for investors, especially if they own multiple properties in several other states or areas. Your property manager can handle these regulations for you, avoiding potential legal headaches. Property managers know the laws and regulations in the areas where they work because they are typically experts.
Landlords are subject to state regulations that limit the maximum amount they can charge tenants for a security deposit. Suppose the property manager knows the area well. In that case, they may be better equipped to ensure tenants are assigned the correct amount than the property owner if they accidentally charge a deposit that exceeds the legal limit and creates a legal issue due to the lack of knowledge of the local rules.
2. Serves as a local presence for out-of-town owners
Besides providing expert advice, property managers also act as local contacts for owners living outside of town. Property owners who have lived in Texas may need to prepare to manage a property in a state they aren't familiar with, such as California or New York. It is possible to have a property manager look after those details for them and other details that may arise, such as maintenance and other operations that would be difficult to handle remotely.
3. Responds to maintenance requests
Property managers are also responsible for handling maintenance requests and other in-person tasks. Tenants can become frustrated if their landlord does not respond promptly to maintenance issues. Hence, having an on-site manager promptly address tenant concerns can be helpful.
Tenants might request maintenance on anything from broken appliances to pests or wildlife in their homes, so having someone on-site to handle these issues as they arise is essential. Renters may take their business elsewhere when their lease is up if landlords don't provide support with problems in their rental properties, so it's necessary to have a local presence to meet their needs.
4. Provides vacancy showings and leases
Property managers can also prevent owners from experiencing financial losses when their units sit empty for an extended period. Property managers can help you hire new tenants and renew existing leases rather than trying to market your property remotely.
Additionally, tenants may only be willing to move into a property once they've seen it first - and showing off properties from out of state may not be an option. An owner who works with a property manager will be able to fix problems on the property and show potential tenants what the property has to offer.
5. Handles Rent Collection and Deposit
In addition to collecting and depositing rent, property managers are also responsible for overseeing the properties they manage. Several property management companies and property managers collect rent online or through payment apps to help expedite payment to property owners.
Evictions, collections, and delinquent payments are also sometimes handled by property managers. One advantage of collaborating with a property manager is that they can efficiently handle tasks, ultimately saving investors and owners time and money.
How Much Does It Cost to Hire a Property Manager?
An owner/landlord pays a set of fees for a property manager's services. You may be charged an initial setup fee, a monthly management fee, a tenant-placement fee, a maintenance fee, an eviction fee, and an early termination fee. Landlords also charge vacancy fees or fees for maintaining unrented properties.
Property management firms charge different fees based on the services they provide. Expenses that are commonly charged include:
- A property manager's initial account setup fee includes notifying tenants of the change of property manager and inspecting the property.
- Most often, 4% to 12% of monthly rent is collected as a management fee, based on the property size.
- One-half to one full month's rent is typically charged as a tenant placement fee.
- The management fee usually includes the cost of maintaining the property.
- Generally, eviction fees are a fixed flat fee plus any court costs if the owner wants the property manager to handle the eviction.
- There is typically a one-month fee for early termination of the property management contract, depending on the agreement with the manager.
Property Managers: Pros and Cons
Property managers provide the owner with the advantage of not requiring their physical presence and active management of the property. A real estate investor can now concentrate on investing in quality properties instead of managing a portfolio. In contrast, the level of attention and service provided to tenants, the ultimate source of income, may not be as high as it would be if the landlord were managing their own property.
If real estate investors intend to scale up their holdings, they need to overcome this concern about cost. Rather than managing properties themselves, large real estate investors hire professional property managers.
Real Estate Property Managers: Pros and Cons
When you choose to work with an investment property manager, you have advantages and disadvantages to consider. Before hiring a property manager, it's crucial to consider various factors such as the advantages and disadvantages, budget, and personal requirements.
Advantages Of Hiring A Property Manager
- Maintaining multiple properties while still keeping tenants satisfied can be challenging if you own more than one. When you hire a property manager, your properties and tenants will still receive the attention and care they need, even if you do not have time.
- By collaborating with a property manager or management company, investing in properties far from your residence is feasible without the need to handle their management on your own.
- Someone else will take care of maintenance and upkeep when they manage your properties. Instead of attempting repairs on your own, enlisting a property manager or their in-house maintenance team is advisable.
Disadvantages of Employing a Property Manager in Real Estate
- A property manager can care for you when you relinquish some control over the property. This will help you avoid the hassle of managing a property, but it may also mean they will do things differently than you.
- Managing a property is costly - as noted above, property managers typically charge various fees in exchange for their services. A range of costs are involved, but they usually account for a good portion of the overall rent you receive each month. It is essential to confirm a property manager's budget before hiring one.
- Property managers may need more rigor in the tenants' screening process. Some property owners might not like that property managers have less stringent screening standards than they would if they checked tenants themselves.
How Should Owners Pick A Property Manager?
It would help if you continuously verified that a property manager or company has the licenses or certifications required by your state before hiring them. Your property manager must understand the regulations governing Section 8 housing if your property requires particular expertise. Check for a strong reputation. In addition, the company must have low vacancy rates and strong policies to maintain a good reputation. Make sure you understand all parts of the contract.
The Bottom Line
As the title implies, a property manager is someone who manages property on behalf of someone else. Some states require licenses for property managers, while others do not.
You should first find out what licensing requirements (if any) your state requires for property managers, then familiarize yourself with potential duties to ensure this career field genuinely interests you.
It would be best to decide what you want your property manager to do first and then what you will handle yourself. When searching for a manager or firm, it is essential to find someone who can meet your requirements and fits within your budget. Additionally, it is necessary to choose a reputable manager to ensure that managing the manager is a manageable task.
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