Managing property is an extraordinarily complex job; rare is the person who can actually do it all on their own. Like, “two-horned unicorn” kind of rare. The reason why is simple — just take a look at the long list of things a property management company does on a daily basis.
The Big List of Roles Property Management Companies Need to Fill Expertly
- Research the property, neighborhood, and economy to understand the optimum level of rent to charge for each property.
- Ensure optimal cash flow by crafting a rental agreement with adequate rent and late (and other) fees, and then enforcing that agreement strictly but with judgment and common sense enough to not lose a valued tenant due to an unimportant one-time issue.
- Adjust rent as is necessary and appropriate — upward or downward — taking into account both relevant laws as well as the capacity of the tenants to bear such changes.
- Determine the appropriate security deposit, and accurately track the physical status of each property before, during, and after the stay of each tenant (for the purposes of accurately disbursing or spending deposit money).
- Create and maintain budgets for each owner’s portfolio of properties, each property individually, and the management company as a whole.
- Accurately predict and prepare for worst-case-scenario disasters by funding emergency accounts and keeping money set aside for genuine emergencies.
- Market properties so as to obtain the best ROI for the marketing efforts, but with an eye toward keeping properties full. This includes being able to discern and communicate the benefits of each property without breaking Fair Housing Laws.
- Guide owners in determining what property improvements will help improve the appeal of a property while achieving peak ROI for that improvement.
- Screen prospective tenants, including running credit checks, background checks, and following through on references and prior landlords. An experienced landlord may develop a “gut feel” for which tenants are likely to pay on time and be otherwise low-key, but a good landlord never allows his gut to dominate the conversation — putting in the effort at a full screening is absolutely vital.
- Set the length of a lease to maximize the owner’s profit (by balancing a tenant’s desire for flexibility with the owner’s desire to have the property full for a long stretch at a time).
- Fill maintenance requests and deal with emergencies on all properties, including crime, natural and/or manmade disaster, pest control, structure or appliance failure, and more.
- Handle noise, domestic disturbance, or other complaints both issued by and directed toward the tenants.
- When a tenant moves out, perform the final inspection, deduct any relevant amount from the security deposit, return the security deposit, clean the unit, make any necessary repairs or replacements, guide the owner in making any important upgrades, and begin the process of finding a new tenant. Not necessarily in that order.
- When a tenant needs to be moved out, deal with the eviction in court.
Deal With Vendors and Employees
- Maintain good relationships with skilled and affordable experts in a huge variety of fields, including plumbing, electricity, public relations, building inspection, private detective work, landscaping, accountancy, legal work, marketing, risk management, insurance, security, general contracting, tax filing, advertising, and more.
- Keep track of and adjust for changes in markets for housing-related material including wiring, drywall, plumbing, paint, cabinetry, fixtures, and much more.
- Screen and track each employee who works for the management company. Set salaries, duties, benefits, rules, and deal with all business interactions including discipline and firing those who don’t work out.
- Keep thorough records of all transactions related to each property, including transactions with the owner, the management property, the tenant, any and all vendors, and any and all material sources (i.e. Home Depot, The Garden Store, etc.).
- Keep a digital or paper record of every communication to and from every tenant, including the date, content of, and attitude of every communication. These records are vital from the basis of almost every housing-related court case, and their value cannot be overstated.
- Assist the property owner in understanding how to file taxes for each property. With permission, file taxes for the property.
As you can see, a property management company does the work of dozens of experts — mostly by having dozens of experts on staff or at least on hand. Most importantly, however, a property management company owns the job of being the connection between the big-picture, broad-stroke view of the property in terms of total ROI and investment value, and the little-picture, up-close-and-personal view of the property as the place some individual pays for in order to have a home to make a life for themselves. That’s a role that needs filling.
Investors: Weigh in — What would you add to my list? What roles have you found to be most vital for property managers to fill?
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.