Real Estate Investing
What Is a Property Manager and What Do They Do?
Property manager is a term that is often used when talking about real estate investment, but what do they actually do? Property managers do a lot more than collect rent from tenants and handle requests from them. In this article, we will cover everything you need to know about property managers.
What is a Property Manager?
A property manager is a person or a company that a property owner can hire to oversee the daily operations of real estate property. Investors frequently hire property managers to manage their real estate so that they do not have to do so. Hiring a property manager is an especially good idea in an apartment complex or commercial property with multiple units as there are multiple tenants to work with. It is also often tax deductible for a property owner to hire a property manager.
What Does a Property Manager Do?
Hiring a property manager means that you can take a hands-off approach to real estate investments, and they do a lot to maintain the property on behalf of the owner. Let's take a look at some of the most common things a property manager is in charge of.
One of the property managers’ responsibilities is collecting rent from your tenants and depositing it for you. Many property managers now collect rent digitally, so the money can make it to you much faster than depositing checks would.
They also collect any deposits from new tenants and deposit those accordingly. A property manager will also handle any late rent payments and if a tenant ends up having to get evicted and sent to collections. The eviction process can be difficult, so having a property manager handle that is much more efficient and takes away the headache from the investor.
Property managers can also handle renewing leases for you with your existing tenants.
Fill Vacant Units
When you have an empty unit, you want to get it filled by the right tenant as quickly as possible. They have experience marketing new units, so they can attract new prospective tenants for you and screen them.
Prospective tenants want to see a property in person before they sign a lease, but if you live in a different area than the property, that can be difficult for a property owner, but a manager can handle showing units to the tenants before they move in.
When a tenant moves out, your property manager is also in charge of conducting a walkthrough of the property, noting any damages or cleaning that needs to be done. They then deduct the amount needed to handle that from the tenant's deposit and give them the remainder or bill them if damages exceed the deposit. They also handle the cleaning and maintenance of the unit to ensure it is ready to be moved into as soon as possible.
Handle Maintenance Requests
When you have a lot of units, it can become a headache trying to deal with all of the maintenance requests from tenants, as well as the general upkeep of the property. The property manager can handle fixing broken appliances and making sure the landscaping is taken care of.
Follow Laws and Regulations
If you have properties in many areas, it can be tricky to keep track of all of the laws and regulations for landlords and tenants. Your property manager can help you keep everything straight by taking care of all of that for you. They are experts, so they are well equipped to handle any local laws or regulations that may come up.
Give Out of Town Owners a Local Representative
If you live in New York, but you are renting a property in Oregon, you need to have someone local who can handle any maintenance issues or other operational things that can be hard to do remotely. So you will not have to try to find a plumber to fix a water leak in a unit on the other side of the country; your property manager will take care of that for you. They usually have a maintenance team to deal with any issues like that.
How Much Does It Cost to Work with a Property Manager?
The costs of hiring a property manager depend entirely upon the company and location. They usually take a percentage of the monthly rental income from the property, usually not more than 12 percent, but some charge flat fees instead. Some property managers also charge fees to cover monthly repair costs from the tenant. Other property managers will have a leasing fee that covers the costs of finding new tenants, screening applications, and getting a new lease for the tenant. They also may charge a fee when renewing a lease for a tenant, but this is not a very common fee.
The Pros and Cons of Hiring Property Managers
Now that you have a better idea of what a property manager can do for you, let's take a look at some of the pros and cons of hiring one.
Pros of Hiring a Property Manager
- Great for an investor with multiple properties or large multi-unit properties.
- Allows you to invest in properties that are not near your location.
- You do not have to worry about the operational tasks that come with owning rental property.
Cons of Hiring a Property Manager
- The management fees are typically a percentage of your gross rent
- Their ability to market and rent out your property quickly can vary widely.
- Their operational capabilities and quality of service they provide to your tenants can vary widely.
What are the licensing or certification requirements to become a property manager?
The licensing and certification required for property managers vary depending on the state they are in. Many states require them to have a valid Real Estate Broker License or a Property Management License. However, there are some states that do not require any licenses or certifications.
Types of Property Managers
The types of property managers reflect the types of rental properties. There are:
- Commercial property managers
- Multi-family property managers
- Single-family home property managers
When you hire a property manager, make sure you find one who specializes in the type of rental property you own.
The Bottom Line
If you own an investment property, hiring a property manager is a good idea. They can help manage everything for you so that you can make your rental property a completely passive income stream. Make sure you take the time to research property managers before you decide to hire them. Figure out what requirements you want them to meet, and then search for a company that will meet them and has a good reputation.
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