If you have recently made the decision to rent out your home instead of selling it, you are likely handling a variety of tasks. From finding tenants and setting rental rates to drafting lease agreements and understanding your responsibilities, there is a lot to manage on a day-to-day basis. You may be considering whether to hire a property manager and what their role entails.
In this article from Redfin, we will explore the question – what does a property manager do? Before hiring a property manager for your property in Los Angeles or condo in Miami, read on to discover the benefits and drawbacks of investing in a rental property manager.
What is a property manager?
A property manager is an individual or group responsible for overseeing the daily operations of a rental property. Their duties 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 responsibilities, property managers or management companies handle a wide range of tasks from maintenance to tenant acquisition.
Follow landlord-tenant laws
Each city and state has its own laws and regulations that tenants and property owners must adhere to. Property managers are well-versed in the landlord-tenant laws specific to your area, helping to avoid potential legal issues.
Property managers can ensure compliance with regulations such as security deposit limits, preventing inadvertent violations that could lead to problems.
Setting rent costs
Property managers have expertise in the local rental market and can determine appropriate rent prices that attract tenants while ensuring profitability for the property owner.
Manage maintenance requests
Property managers facilitate prompt resolution of maintenance issues, ensuring tenant satisfaction and property upkeep.
For property owners who are not local or lack the resources to address repairs swiftly, a property manager offers valuable support in maintaining tenant relations.
Tour and lease properties
Property managers assist in showcasing and marketing properties to prospective tenants, expediting the leasing process and tenant screening.
Collect monthly rent
Property managers oversee rent collection, utilizing online systems for efficient income management. They also handle late payments and eviction procedures when necessary.
How much does it cost to have a property manager?
The cost of hiring a property manager or management company varies depending on location and services. Typically, property owners can expect to pay around 8-12% of the property’s monthly rental income for management services. Additional fees may apply for specific tasks:
- Management fee: Percentage or flat fee for overall management
- Maintenance fee: Monthly or per-repair cost for maintenance
- Leasing fee: Cost for tenant placement and lease agreements
- Vacancy fee: Charge for extended vacancy periods
- Lease renewal fee: Fee for lease renewal process
- Additional services and costs: Extra charges for specific services like accounting or eviction handling
Types of property managers
As you consider hiring a property manager, you will encounter different types of property management companies. Here are the main categories:
Residential property management
Manages residential rental properties including single-family homes, condos, and townhouses.
Commercial property management
Oversees commercial properties like office buildings and retail spaces with multiple tenants.
Multi-family property management
Handles larger apartment complexes with multiple tenants, focusing on maintenance, leasing, and property updates.
Do you need a property manager?
Not all property owners require a property manager, as there are resources available for DIY management. However, hiring a property manager can be advantageous in certain situations, especially if you are located far from the rental property.
“Ultimately, the question is not simply whether property management is worth the monthly fee,” says JT Kelly and Jake Antonucci, owners of Greater Boston Property Management. “The better question is whether you have the time, proximity, systems, and knowledge required to manage the property properly yourself. Owners should consider how many rental units they own, how far they live from the property, how much time they have available, and how comfortable they are handling maintenance, tenant communication, rent collection, and compliance. For many owners, especially those with multiple units or properties located farther from home, professional property management can provide a more efficient way to manage the responsibilities that come with owning rental real estate.”
There are advantages and disadvantages to hiring a property manager, so let’s explore them.
Pros of hiring a property manager
You own multiple properties: Managing multiple properties can be challenging, and a property manager can help streamline operations.
You live in a different city or state: Having a local property manager is beneficial when you are not near your rental property.
Not responsible for upkeep and maintenance: Property managers handle maintenance tasks, alleviating the owner’s burden.
Less stress: Property managers reduce the stress of day-to-day property management for owners.
Cons of hiring a property manager
No direct control of the property: Property owners relinquish some control over property management decisions with a property manager.
Additional costs: Hiring a property manager incurs fees that may impact the property’s profitability.
Less involvement in tenant screening: Property managers conduct tenant screening, which may not align with the owner’s criteria.
Finding a trustworthy property manager: Selecting a reliable property manager requires time and research.
Communication: Effective communication with a property manager is essential for smooth property management.