What Is a Property Manager?
Property managers are individuals or companies that are hired to manage a rental property. Their duties include managing day-to-day operations, finding tenants, collecting rent, and maintaining the property. Typically, they charge a fee of between eight and 12 percent of the monthly rent, although that can decrease if they’re overseeing several properties or complexes. Typically, property managers are used for office or retail spaces and apartment complexes.
What Does a Property Manager Do?
In addition to managing the day-to-day tasks of a rental property, such as finding and managing tenants, a property manager is also responsible for repairs, regular maintenance, and walkthroughs to prevent larger problems from arising. Property management companies not only find tenants, but can also be responsible for evictions and cleaning after move outs. Beyond those tasks, property manages may also:
- Manage the budget for the rental properties and keep records
- Put together income and expense reports and handle any tax documents
- Market properties by taking photos, making listings, and doing showings
- Processing tenant applications and conducting background, criminal and credit checks.
What Fees Do Property Managers Charge?
Property managers typically charge a monthly management fee that ranges between eight and 12 percent of the monthly rent. This can be much lower depending on the number of properties you’re renting through them.
Some managers also charge a leasing fee, which is a flat fee — usually 50 to 100 percent of the first month’s rent — for getting a tenant to sign (or resign) a lease.
Types of Property Managers
There are many types of property managers, with the two broad categories being residential and commercial properties.
- Residential properties include single-family homes, apartments, and condominiums
- Commercial real estate includes office buildings, retail shopping centers, and malls.
Different properties require different fees based on complexity — for example, high-rise condos or public housing usually requires higher fees. Commercial property management tends to be a bit more complex, too. Office building managers have one of the toughest commercial property management jobs, because these properties tend to be the most competitive and have more maintenance requirements. Managing medical office buildings is also a speciality that may require higher property management fees.
Advantages of Property Managers
One of the key advantages of a property manager
— besides allowing an investor or property owner to take a hands-off approach to ownership — is that it allows them to own investment property all over the country. An investor can live in New York, buy a property in California, and hire a property manager. They could potentially even buy properties outside of the United States. This creates diversification, an essential element of a healthy real estate portfolio.
Good property managers should also know the local landlord-tenant laws, which can overwhelm real estate investors with properties in a number of different cities or states. Remembering which states require holding security deposits in separate accounts can be difficult, as can be managing those accounts. They can also screen prospective tenants, reducing risk. In addition, property management fees can be booked as expenses and are tax-deductible against the rental property’s income.
Property managers may also be able to get owners a deal on repairs and maintenance, especially if they manage a large stable of properties, because they likely get volume discounts. They can also provide 24 hour repairs or emergency services. And if things do go south with a tenant, property managers can represent you in court.
Arguably the greatest advantage of a property manager is giving real estate investors the ability to focus on the things they enjoy most, such as deal sourcing or flipping properties.
When to Hire a Property Manager
Investors and property owners may turn to a property manager when the amount of rental units and properties they own hits a level that’s too tedious or time-consuming to manage, or if they
Hiring a Property Manager
The most important things to consider when hiring a property manager are reviews, fees, and experience. But those aren’t the only factors: You want a manager this is open and receptive to input. What information will the property manager regularly share? Keeping track of vacancy rates, income and maintenance issues is important. Not sure what questions to ask? Make sure to follow the BiggerPockets guide to hiring property managers
Here’s a quick overview: Consider inquiring about their historical vacancy and lease renewal rates, and make sure to get the details on their tenant screening procedures, including the level of detail and background checks.
Property Manager Requirements
Each state has different requirements to be a property manager, but most require a real estate broker license, as it’s generally considered a real estate activity. Some states also require a property management license, which are issued by state and local governments or real estate boards. These licenses lay out the practices and guidelines property managers must follow when managing properties, and require an exam, coursework, and continuing education.
A lease is a legal agreement between a landlord and a renter allowing the renter to use a property for a specific period of time in exchange for rent payments.