What does a property manager do you ask?
Have you ever wondered what exactly a property manager does? In most situations, they handle all the on-the-ground, day-to-day tasks like leasing units, dealing with tenant complaints, taking care of maintenance issues, and ensuring rent is collected on time. In essence, a property manager takes on all the burdens that come with being a landlord. They handle everything from finding tenants to handling lease agreements and even resolving disputes between tenants. But it’s not just landlords who benefit from property managers – tenants do too! Property managers ensure that repairs and maintenance requests are addressed promptly, creating a better living experience for renters. So whether you’re a landlord looking for some relief or a tenant seeking efficient management services, hiring a property manager can be an excellent solution.
Table of Contents:
- Understanding the Role of a Property Manager
- Advantages of Outsourcing Property Management
- Finding the Right Property Manager
- Understanding Property Management Fees
- Estimating Costs for Property Management Services
- Potential Insurance Discounts if you Work with a Professional Property Manager
- Locating a Property Management Company
Understanding the Role of a Property Manager
A property manager is responsible for handling various tasks to ensure the smooth operation of rental properties on a day-to-day basis. These tasks include screening tenants, determining optimal rent rates to maximize rental income, and collecting rent from residents promptly. When it comes to the important and time-consuming world of maintenance requests, this is an area you need to rely on your property manager. They have the necessary external resources and experienced staff to promptly address any maintenance issues that may arise — including those that happen in the middle of the night. Additionally, property management companies are experienced at handling lease agreements (with some trusty help from external counsel where needed) in compliance with local laws, giving you peace of mind knowing that all legal requirements are being met. In summary, residential property managers take on the responsibility of managing every operational aspect necessary for a successful investment. By outsourcing these duties to professionals in the field, you can gain numerous benefits.
Advantages of Outsourcing Property Management
Let’s dive into why landlords should consider outsourcing their property management needs.
Better tenant screening: Experienced property managers have an experienced and compliant process for spotting qualified tenants. They know how to conduct thorough background checks and verify references, ensuring only reliable prospective tenants occupy your rental properties. Again, all are coordinated with local and national regulations.
Easier rent collection:
A professional property manager handles the task of collecting rent each month. This ensures consistent rental income without you having to chase down payments or deal with delinquent renters who don’t pay on time. This can be a big distraction from other important projects like building or financing your multi-unit rental portfolio.
Your investment properties need regular maintenance and occasional repairs:
A strong property management company has established relationships with contractors and service providers, allowing them to handle these tasks quickly and reliably.
Legal issues are taken care of:
A seasoned manager is familiar with local landlord-tenant laws which can protect you from potential lawsuits by staying compliant.
As mentioned earlier, by delegating day-to-day operations like setting rents, signing leases, managing maintenance requests, etc., landlords free up valuable time that they could spend growing their portfolio instead.
Finding the Right Property Manager
It is very important to make a proper investment in your search. As you look into different opportunities, you will observe that not all companies offer the same quality or type of service. For example, some may specialize exclusively in commercial or residential properties, while others may cater only to larger properties or portfolios.
At the end of the day, your rental properties need to be matched with a manager who understands local landlord-tenant laws and can effectively handle day-to-day operations for your specific properties.
Step #1: Look for licensed and fully-insured companies with experience in managing rental properties similar to yours.
Step #2: Check online reviews of potential property managers or ask for referrals from other landlords.
Prioritize those who demonstrate knowledge about setting rent levels that will attract qualified tenants while maximizing your rental income.
Lastly, it is crucial to have well-defined protocols for initiating lease agreements, screening potential tenants, conducting move-in and move-out inspections, managing security deposits, ensuring building safety measures are in place, collecting rent punctually, addressing maintenance requests promptly, adhering to local regulations, and fostering positive relationships with tenants who often refer new tenants.
Beyond the above general points, when interviewing potential property management companies, it’s important to ask a variety of specific questions. Here are some additional inquiries to consider:
1. How do you handle emergencies?
2. Who will be the dedicated manager for my properties?
3. What strategies do you employ to promote leasing vacancies on your company website or other platforms?
4. How do you address tenant complaints, including those made online?
5. What digital tools do you provide for communication between landlords and tenants whether it relates to accounting statements, rent rolls, or maintenance?
6. What is the duration of your services agreement with landlords and what is the cancellation policy?
7. Do you carry insurance that protects both tenants and landlords?
8. Are there any industry accreditations or certifications that your company holds?
9. How frequently can I expect communication from you as a landlord, and what level of approval is required for repairs or expenses involving my property?
10. What sets your company apart from competitors?
By asking these types of questions, finding an ideal property management match should become easier. Now let’s move into understanding property management fees – a topic everyone wants to know more about!
Understanding Property Management Fees
Deciphering the cost of hiring a property management company can seem daunting at first.
Fees can vary widely, depending on your location, type of property, and services required.
The typical monthly management fees range from 8 to 12 percent of rental income. In certain cases, higher-volume clients can likely negotiate lower percentages.
Ongoing Monthly Fee:
This is usually calculated as a percentage of collected rent each month.
Tenant Placement or Leasing Fee:
A flat rate or percentage of annual rent is charged for finding and placing qualified tenants in your investment properties. This typically includes screening prospective tenants, setting up signed leases, and ensuring they pay their initial rent plus deposit.
Maintenance Request Service Charge:
This pertains to the handling of maintenance requests from tenants, which is typically charged at an hourly rate. It’s important to note that while these costs may initially appear high, “investing” in professional property managers could ultimately save you money in the long run by avoiding costly mistakes resulting from a lack of experience or knowledge about local landlord-tenant laws. Additionally, addressing maintenance issues promptly has two significant advantages. Firstly, it preserves the value of your property and prevents larger repair issues from arising later on. Secondly, taking a proactive approach minimizes disputes with tenants and fosters a high level of tenant satisfaction (which can often lead to various benefits such as higher lease rates, lease renewals, referrals, etc.).
The Wrap-Up on How Much Property Management Costs
In essence, estimating costs requires understanding what’s included in your contract with the property management company.
Avoid surprises by asking about any additional or hidden charges upfront before signing anything.
To offset some of these expenses, now let’s look at how working with professional property managers could lead to potential insurance discounts.
Potential Insurance Discounts if You Work with a Professional Property Manager
Partnering with professional property managers may result in potential insurance discounts. By diligently maintaining properties, there is a higher likelihood of reducing claims. Property managers also ensure compliance with leasing and other regulations, minimizing the risk of incidents. Additionally, well-managed properties tend to have higher occupancy rates, eliminating vacancies that may require additional coverage or separate policies leading to increased insurance premiums. Property managers are knowledgeable about installing safety devices that comply with local building codes and may even qualify for insurance discounts. These measures can include 24-hour monitored burglar and fire alarms as well as stove-safe devices to mitigate the risks of kitchen fires. Moreover, property management companies often have established relationships with insurance agents who work with top landlord insurance providers to find comprehensive coverage at competitive prices.
Locating a Property Management Company
Finding the right property management company is key to ensuring your investment properties are well-managed and you meet your Net Operating Income (NOI) expectations.
Locating a business that comprehends regional landlord-tenant regulations, is capable of taking care of everyday tasks effectively, and has expertise in overseeing rental properties just like yours is critical to making sure your investment assets are managed properly.
Start with referrals:
- Talk to other property owners or real estate brokers for recommendations. They often have firsthand experiences with different companies and could point you toward those that others rave about.
Check online reviews:
- A quick Google search of local firms will give you an idea about their reputation among clients. Reviews on sites like Yelp, or local platforms provide valuable insights into how these companies operate.
Your chosen company should be able to screen tenants effectively, set appropriate rent levels based on market trends, and collect rent punctually while also handling maintenance requests promptly and professionally.
We now know what a property manager does – from overseeing tenants to managing maintenance and collecting rent. Outsourcing these tasks can be an incredible lift for landlords, freeing up time and potentially boosting rental income. Take your time to invest in a vetting process that will yield a better partnership for all parties involved — tenants, landlords, and property managers!
We hope that you find this article helpful! Notable Risk leverages 20+ years of expert risk-management experience (and both MBA and Law Degrees!) that is not often found at independent insurance agencies. Hopefully, we will have an opportunity to help you with your insurance needs!
Please click here to schedule an intro meeting or call us at 888-897-4815.
DISCLAIMER: The information provided in this blog post is intended for general educational purposes only and should not be relied upon by any individual or party for any specific purpose. Additionally, the information contained herein is not regularly updated. Neither this blog post nor any of its content (express or implied) should be considered legal, financial, health, or other professional advice. It is essential to consult with your own advisors regarding any matters discussed in this blog post or elsewhere. Notable Risk LLC and its owners, members, managers, directors, officers, partners, consultants and similar entities do not make any representation or warranty regarding the accuracy or completeness of the information presented in this blog post or elsewhere.