If you’ve recently decided to list your home for rent rather than sell it, you’re likely juggling a lot of tasks. From finding tenants and determining a rental rate to writing a lease agreement and learning about your responsibilities, there’s plenty to manage on a day-to-day basis. So, you may be wondering whether to hire a property manager and what exactly they do for you.
In this Redfin article, we’ll answer the question – what does a property manager do? Before hiring a property manager for your home in Los Angeles or condo in Miami, read on to find out the pros and cons of investing in a rental property manager.
What is a property manager?
A property manager is a person or group of people who manage and oversee the daily responsibilities of a rental property. The responsibilities of a property manager include:
- Screening applications and potential tenants
- Marketing the property
- Writing, signing, and renewing leases
- Determining rent prices
- Collecting rent
- Maintaining the property and arranging repairs
- Determining budgets for ongoing maintenance costs
- Handling finances and taxes
What does a property manager do?
In addition to the above list, property managers or management companies handle a wide range of tasks from maintenance to finding tenants.
Follow landlord-tenant laws
Each city and state has its own laws and regulations that tenants and property owners must follow. If you have properties in different states or are new to renting your home, it can be difficult to keep track of these laws.
Property managers can ease potential confusion as they understand the landlord-tenant laws specific to your city and state. For example, some states cap the amount you can charge for a security deposit. If you’re unfamiliar with the laws, you could end up accidentally overcharging the security deposit. A property manager familiar with the regulations can help avoid scenarios like these.
Setting rent costs
A property manager should be an expert in the local rental market and understand what a fair rent price is. They know how to attract tenants while choosing the right rental price that helps your property stay competitive while still making a profit. Based on your home’s amenities, location, and condition, they can help you determine the right price to charge tenants.
Manage maintenance requests
It’s almost guaranteed that your future tenants will need maintenance at some point during their lease. From burnt-out lightbulbs and failing appliances to pest problems or a broken garage door, a property manager is a great resource to get these problems fixed quickly.
If you live out of the area or you’re not equipped to handle repairs quickly, it could cause issues with your tenants. Renters have rights and failing to repair certain things in a timely manner can violate those rights. A property manager can respond to maintenance requests and coordinate these repairs quickly to keep your tenants satisfied.
Tour and lease properties
Property managers help you show your property and market it to potential tenants. This alleviates you from being the sole person responsible for marketing your home and finding tenants to sign a lease. It can also help speed up the tenant screening process.
Collect monthly rent
Most property managers oversee rent collection, by using online systems or apps to quickly get you the income. They may also handle collecting late payments or eviction notices, if applicable. If you’re inexperienced in property management, a professional property manager can help you take care of these responsibilities.
How much does it cost to have a property manager?
The cost of hiring a property manager or property management company varies by location and company. You can expect to pay about 8-12% of the home’s monthly rental income. The property manager may also charge other fees for specific tasks
- Management fee: Some property management companies charge a percentage fee, as stated above, or a flat fee that covers the home’s management.
- Maintenance fee: Maintenance is an ongoing cost, regardless of whether you hire a property manager or you do it yourself. Some property managers will charge a monthly fee to take care of ongoing maintenance or they may bill you per repair.
- Leasing fee: Also known as a new tenant placement fee, this fee includes marketing your home to prospective tenants. The fee may be a percentage or a flat cost that covers the cost of marketing, managing applications, screening tenants, writing lease agreements, and coordinating move-in.
- Vacancy fee: If your property remains vacant for some time, a property manager may charge an additional fee. This typically covers the cost of continued marketing efforts and attempts to find a tenant.
- Lease renewal fee: This fee is often skipped, but your property manager may charge a fee to cover the lease renewal process, like drafting the new lease and obtaining the tenant’s signature.
- Additional services and costs: Property managers may charge additional fees for different services like accounting, handling an eviction, administrative fees, or landscaping costs. Speak with potential management companies to learn more about what they may charge.
Types of property managers
As you begin researching whether to hire a property manager or not, there are several types of property management companies that you’ll run across. Here’s a brief overview so you know what to look for.
Residential property management
Residential property managers oversee the day-to-day responsibilities of managing residential rental properties. This includes single-family homes, condos, and townhouses. If you’re renting your home for the first time, this is the type of property manager you’ll likely be looking for.
Commercial property management
Commercial property managers are responsible for commercial properties like office buildings and retail spaces. They typically handle multiple tenants and building owners in their day-to-day business.
Multi-family property management
These property managers often oversee larger apartment complexes with multiple tenants. This usually encompasses handling maintenance requests, touring units, writing lease agreements, offering lease renewals, and working to update the property.
Do you need a property manager?
Not everyone renting out their property needs a property manager. However, there may be some times where it’s more convenient to hire a property manager than manage it yourself. If you live far from where your rental property is located, it can be a great idea to have a property manager. That way, your tenants have someone local to contact if there are maintenance problems or if they have questions.
There are pros and cons to hiring a property manager, so let’s take a look at them.
Pros of hiring a property manager
You own multiple properties: If you have more than one property that you’re renting out, it can be difficult to manage all the tenants, their maintenance requests, and incoming rental payments. Having a property manager can help ease the workload – especially if you don’t have time to do it yourself.
You live in a different city or state: If the home you’ve listed for rent is located in a different area from where you currently live, hiring a property manager can be a great benefit. This means you don’t need to manage the property remotely and your tenants have someone local who they can contact.
Not responsible for upkeep and maintenance: With a property manager, you don’t have to deal with the home’s maintenance and repairs. Your property manager can handle executing the tasks, rather than leaving it up to you to oversee.
Less stress: Overall, having a property manager can be less stressful for you as the property owner. If renting your home is a side project and not your primary source of income, it can be beneficial to have a property manager who can handle day-to-day tasks for you.
Cons of hiring a property manager
No direct control of the property: With a property manager, you’ll have to give up control over your property, which can be good and bad. While it’s less daily stress, the property manager may oversee your property in a way that you may not.
Additional costs: It’s not free to hire a property manager and the added fees may not be in your budget. These costs can cut into the income you’re generating each month, which may not be worth it. Make sure to research property management companies to see which ones fit into your budget.
Less involvement in tenant screening: Often the property managers will screen potential tenants instead of you. They’ll have standards to screen and choose tenants, but they may not be the same as what you would require.
Finding a trustworthy property manager: Just like finding a great real estate agent, it can take a while to find a great property manager. It takes lots of research and speaking with different property managers to find one that fits your needs.
Communication: With a property manager you’ll need to have good communication skills to make sure that your rental is running smoothly. Having clear expectations and communication with your property manager helps keep all parties happy. However, if you and your property manager have a miscommunication, the problems could trickle down to your tenants.
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