Property management is a service provided to landowners who lack the time or expertise to handle the business aspects of owning a property. Hiring a property manager allows the owner to delegate tasks such as property maintenance and act as a mediator between them and the renters.
If you’re considering a career in property management, it’s important to understand the responsibilities and duties that come with it. In this article, we will explore the definition of property management, the requirement for a property management license, and the daily tasks that property managers encounter.
What Is Property Management?
Property management refers to the regular supervision and maintenance of residential, commercial, or industrial properties by a contracted company that is not the owner. The primary responsibilities of property managers include handling repairs, maintenance, security, and overall upkeep of the properties.
They typically work for property owners who have investment properties like apartment complexes, condominiums, private home communities, shopping centers, and industrial parks. The main objectives of property managers are to effectively manage day-to-day tasks assigned by the owners and ensure the properties maintain their value while generating income.
What is a property management license?
In order to pursue a career in property management, it is typically necessary to obtain a property management license or a real estate broker’s license. This license grants property managers the ability to work in the real estate industry and carry out various business responsibilities associated with their profession.
The specific requirements for obtaining this license may vary depending on the state in which you reside and operate. Obtaining a license not only ensures legal compliance, but also enhances your professional credibility in the field of property management.
Property management licenses can be acquired from state governments, local authorities, or real estate boards. Meeting certain requirements such as being at least 18 years old and possessing a high school diploma is necessary to obtain a property management license. However, many companies prefer property managers to hold a bachelor’s degree in business, real estate, or a closely related field.
What is a property management firm?
A property management company is a business that employs property managers. Property owners have the option to enlist the services of these companies to oversee and maintain their properties if they lack the time, expertise, or ability to do so themselves. Numerous property management firms are available across the United States, providing valuable assistance in the real estate industry.
Property management responsibilities
The specific duties of a property manager can vary greatly depending on the terms agreed upon in the contract with the landlord. While some landlords may only require rent collection services, others may delegate the property manager to oversee all aspects related to their property. Here are several responsibilities commonly associated with property management:
1. Understanding landlord-tenant laws and regulations
In order to excel as a property manager, it is essential to possess a comprehensive understanding of both local and national laws pertaining to landlord-tenant relationships.
This entails being well-versed in the process of tenant screening, eviction procedures, lease termination, and various other aspects.
The more proficient you are in these regulations, the more effective and equitable you will be as a property manager.
2. Handling maintenance requests and repairs
Property managers are responsible for maintaining and ensuring the upkeep of a property. They play a vital role in creating a safe and habitable environment by promptly addressing maintenance requests and repairs.
These tasks include dealing with issues like water leaks, pest control, and waste disposal. Property managers can either handle these tasks themselves or hire professionals such as plumbers or electricians.
By effectively managing maintenance and repairs, property managers can ensure tenant satisfaction and make the property more appealing to potential renters in the future.
3. Marketing properties
Landlords often enlist the assistance of property managers to effectively promote their rental properties and attract new tenants. This entails capturing appealing photographs of the property and showcasing it on different platforms like housing websites.
A successful marketing campaign increases the likelihood of generating significant interest in the property. When property managers receive numerous inquiries, they have the luxury to be more discerning in their tenant selection process.
4. Managing tenants
When it comes to property management, one of the key responsibilities is handling multiple tenants. This includes the important tasks of selecting suitable tenants for a property and conducting thorough background and credit checks to ensure that the right candidate(s) are chosen.
Property management involves the responsibility of handling all aspects of tenant leases. This includes dealing with tenant emergencies, move-outs, and evictions. When a tenant moves out, a property manager is responsible for assessing any property damage and determining the amount of the tenant’s deposit that will be returned.
Additionally, property managers are responsible for ensuring that the unit is cleaned, making any necessary repairs, and marketing the unit for rent again. In the case of an eviction, it is the property manager’s duty to initiate the eviction process if a tenant violates the lease agreement.
5. Managing rent
Property management includes the crucial task of overseeing rental payments. A property manager is responsible for determining an appropriate rental rate for a property by evaluating factors such as the property’s condition, location, and the current market conditions.
Once a tenant moves in, the property manager is responsible for collecting rent on a specific day and through a designated method. It is important to note that property managers can adjust the rental rate as long as they comply with the relevant state or city regulations.
6. Supervising other employees
When it comes to property management, one of the responsibilities is overseeing other employees who work on the property, such as security guards.
Property managers are in charge of supervising these employees, which includes discussing their salaries and, if necessary, terminating their employment.
7. Managing the budget
In the realm of property management, it is common for property managers to have the responsibility of overseeing the property budget and maintaining crucial records.
This entails carefully managing the property budget, arranging and keeping track of tenant leases, addressing complaints, calculating repair expenses, and handling various other important tasks.
8. Handling taxes
In the final analysis, property owners may seek the support of a property management company to aid them with their tax filings. On certain occasions, the property management company might even handle the responsibility of filing the property taxes.
Types of Property Management
Property management encompasses a diverse range of properties, and as such, property managers come in various specializations. Certain firms focus on providing management services for specific types of properties, while others offer their expertise across a wide range of property types. The scope of property management is extensive and encompasses a multitude of property types.
Residential Property Management
Property management professionals specializing in residential properties are commonly employed to oversee the rental process. They are responsible for managing various aspects related to rental properties, including:
- Single-family homes
- Vacation rentals
- Multifamily homes
- Town houses
- Condominiums
- Apartments
- Manufactured homes
- Real estate-owned (REO) properties
Commercial Property Management
The requirements of commercial property owners vary compared to residential property owners. Property management for commercial properties can encompass various aspects such as:
- Public accommodations like hotels
- Retail properties like malls, restaurants, and gas stations
- Office properties like real estate brokerages or doctors’ offices
- Co-working spaces where professionals rent work space by the day or the hour
Industrial Property Management
Management can greatly benefit industrial properties that require oversight and maintenance.
- Heavy manufacturing facilities such as automotive plants and steel mills
- Light manufacturing factories such as food packaging
- Warehouses
- Distribution facilities
Special-Purpose Property Management
There are various kinds of properties that do not easily fit into the aforementioned categories but still need to be managed. These properties encompass:
- Theaters
- Sports arenas
- Resorts
- Senior care facilities
- Schools and universities
- Places of worship
Who Needs a Property Manager?
Property management services can be beneficial for various types of property owners.
There are many reasons why landlords choose to hire property management firms. For instance, some landlords have multiple rental properties but lack the necessary time or knowledge to maintain them and handle tenants.
Others simply have an interest in owning rental properties and making a profit, so they rely on professional property managers. Additionally, absentee landlords also utilize property management services. In some cases, property management companies specifically cater to individual landlords who rent out a single property, like a vacation home.
Many property owners who are part of affordable housing programs find it beneficial to utilize property management services. This is due to the fact that their rental properties are required to adhere to intricate federal guidelines, which necessitate specialized knowledge and expertise. In some cases, real estate brokers also function as property managers.
For instance, a broker in a resort town may offer services as both a buyer and seller agent, in addition to providing property management services. In such instances, the real estate broker handles tasks such as listing, showing, leasing, and maintaining vacation rentals on behalf of multiple property owners.
Is a property manager worth it?
The decision of whether to hire a property manager depends on various factors. Property management can be expensive and time-consuming. If the cost of hiring a property manager is lower than the potential loss in time and resources that would be required to manage properties on your own, then it is likely a wise investment. However, each investor will need to evaluate this equation for themselves to determine the best course of action.
Who benefits from hiring a property manager?
Property management can be a valuable solution for property managers who wish to avoid the hassles of daily property management tasks. This service is beneficial for residential property owners who want to avoid tenant-related issues and for commercial property owners who prefer to delegate the tasks of finding and managing tenants, leases, and maintenance to others.
Are property managers regulated?
Indeed, the requirements for property management licensing differ from state to state. However, the majority of states necessitate that property management companies obtain a license from the local real estate board. It is crucial for property owners to verify that the firms they engage with possess the appropriate licensing credentials.
What Do Property Managers Do?
Investors often choose to hire property managers or property management companies to safeguard their real estate investment and generate passive income. Property managers are hired for various reasons, such as having a local expert handle property management or adopting a hands-off approach.
So, what exactly do property managers do when they are responsible for overseeing properties? Let’s explore some common responsibilities that are typically entrusted to property managers.
1. Follow Landlord-Tenant Laws And Regulations
For investors who own multiple properties across different states or areas, it can be challenging to stay updated with various landlord-tenant laws and regulations. Hiring a property manager can be beneficial in avoiding potential legal issues as they take care of these regulations on your behalf.
Property managers are knowledgeable about the specific regions they work in, making them well-prepared to handle local laws and regulations. For instance, certain states have regulations that dictate the maximum amount a tenant can be charged as a security deposit.
A property management professional who is familiar with the local area would be more proficient in ensuring that tenants are charged the appropriate amount, as opposed to the property owner unknowingly requesting a deposit that exceeds the legal limit.
In this scenario, the property manager would effectively avert any potential legal complications that may arise due to the property owner’s lack of awareness regarding local laws.
2. Act As A Local Presence For Out-Of-Town Owners
Property managers serve as knowledgeable individuals on-site and also serve as representatives for property owners who are not local. For instance, if a property owner has spent their entire life in Texas, they may not have the necessary expertise to handle the complexities of managing a property in a location they are unfamiliar with, such as California or New York.
In such cases, a property manager can take charge of these responsibilities, including handling maintenance and other operational matters that would be challenging to address from a distance.
3. Handle Maintenance Requests
Property management involves the management of properties by a property manager or a property management company. This includes addressing maintenance requests and performing necessary in-person upkeep tasks.
It is important for landlords to respond promptly to maintenance issues as tenants can become frustrated when their concerns are not addressed in a timely manner. Having a property manager onsite can be beneficial as they can quickly address tenant concerns and ensure prompt resolution of maintenance problems.
Property management involves addressing maintenance requests that can range from broken appliances to the presence of pests or wildlife in a tenant’s residence. It is crucial to have someone readily available to handle these issues as they arise.
Insufficient support from landlords regarding rental property issues can result in tenants seeking alternative options once their lease expires. Therefore, maintaining a robust local presence is essential for effectively meeting the needs of tenants.
4. Show And Lease Vacant Units
Property management services are beneficial for property owners as they can prevent financial loss caused by vacant units. Instead of personally promoting their property to potential tenants, owners can entrust this task to a property manager who has the expertise to attract new tenants and even encourage existing tenants to renew their leases.
Prospective tenants might feel uncomfortable or hesitant about renting a property without physically visiting it beforehand. Moreover, showcasing the property may not be feasible if the property owner resides in a different state.
However, collaborating with a property management service enables owners to have a representative present on the property to address any issues and effectively demonstrate the property’s complete potential to potential tenants.
5. Collect And Deposit Rent
As part of their responsibilities, property managers are responsible for collecting and depositing rent for the properties they manage. In order to ensure prompt payment to property owners, some property managers and property management companies utilize online platforms or payment applications for rent collection.
Property management encompasses various responsibilities, including managing delinquent payments, handling collections, and overseeing evictions. By entrusting these tasks to a property manager, property owners can rest assured that any challenges associated with managing their properties remotely will be efficiently addressed, ultimately saving them both time and money.
How Much Does It Cost To Work With A Property Manager?
The price of hiring a property manager or management company can differ depending on the specific company and its location. Typically, the average cost ranges from 8% to 12% of the property’s total monthly rental income.
In addition to the management fee based on a percentage, there may be other expenses associated with employing a property manager.
Management Fee
Instead of charging a percentage, certain property managers or companies may opt for a flat fee for their services. The specific cost of this fee can differ depending on the company, individual, and location.
Maintenance Fee
Property management involves handling maintenance costs, regardless of whether you have hired assistance or not. Certain property managers may impose a fee to cover monthly repair expenses that may arise for tenants, while others may charge on a per-incident basis.
Additionally, the manager or management company may also levy an additional fee for their services in managing these incidents.
Leasing Fee
When you hire a property management company, they may also charge a leasing fee, which is also referred to as a new tenant placement fee. This fee is used to cover the expenses associated with advertising your property to prospective tenants.
It includes the costs of marketing the property, processing applications, managing tenants, and covering move-in expenses. Similar to the other fees, this leasing fee can be a fixed amount or a percentage of the monthly rent.
Lease Renewal Fee
When it comes to property management, certain managers may impose a fee when tenants decide to renew their lease. This fee can be either a fixed amount or a percentage of the monthly rent.
Its purpose is to cover the time and effort required to complete the lease renewal process and obtain the tenant’s signature. It should be noted, though, that not all property managers charge this fee.
The Bottom Line
Property management refers to the supervision and administration of real estate assets, typically carried out by a professional property manager or a property management company. These experts are responsible for overseeing various types of properties, including residential, commercial, industrial, and those designated for specific purposes.
The role of property managers involves overseeing the daily activities related to real estate, such as tenant screening and organizing repairs and maintenance. They receive compensation in the form of a fee or a percentage of the rental income. Each state has specific laws that govern property management, so it is crucial for property owners to ensure that prospective property managers hold the appropriate license for their state.