Landlord vs. Property Manager: What's the Difference?

Question

Hey guys! New to the whole rental property game, but I'm in love! I just have a quick question. The books I've been reading have been using "landlord" and "property manager" interchangeably. What's the difference? When should I just hire a landlord? When should I hire a property manager? What type of properties needs a landlord? What type of properties needs a property manager?

Is a step up from a landlord a property manager?

Does the property manager manage the landlord? I'm confused.

If you could help, that'd be great! Thanks guys :)

Is a step up from a landlord a property manager?

Does the property manager manage the landlord? I'm confused.

If you could help, that'd be great! Thanks guys :)

Anna Sagatelova · Answer

"Landlord" does not always mean owner, it is whoever the tenant is entering a rental agreement with. If you self-manage your rental, by default you are the landlord - you are executing the lease with your tenant, without a middleman.

Some property management companies use leases that designate themselves as "landlord" - the owner is not a party to the rental agreement. Other PMs create the agreement and expressly include the owner in it designated as landlord, and the owner countersigns the lease.

A property manager (PM) is just someone who you pay a fee to who will do some/most/all of the work associated with running your property as a rental operation. Generally, they can lease your property, then collect rents and deposit them with the owners. Different property managers perform different ranges of functions; full service property management usually means the owner can be completely hands-off except for providing approvals for certain expenses. Not all property managers do rent-ready/rehab work, and property managers have different fees for the same or similar services; some charge a high "all-inclusive" fee, while others break down the cost of each service separately. In most states, property managers have to be licensed agents working for a brokerage, or a broker. An exception to this is if an owner self manages, or employs (W-2 employs, not contracts with) someone to manage their property. A property management company can itself be a brokerage, and often that is the case. Some PMs only manage for 3rd party clients, while others may own and manage their own portfolio of properties in addition to 3rd party clients.

There is no "type" of property that "needs" a property manager. It's more a question of what investor needs a property manager:

1) Generally, if you are out of state, I'd say you need a property manager (of course there are exceptions... if you are close by, if you have good vendor/contractor relationships in the state you're investing in, maybe you lived there before or you're renting out your home and have a handyman and a real estate agent you work with). Most homeowners who are relocating and just renting out their home instead of selling it probably should use a property manager - these are people who aren't really "investors" and typically don't have the time to deal with the headaches of being a landlord - the rent collections, the maintenance calls at 3 am.

2) If you are in a very competitive rental market, I think you can get a leg up by working with a professional, but that might not necessarily mean a whole PM company - maybe you just need to work with an agent for marketing/leasing/screening. Not all real estate agents are good at this, and keep in mind that if that agent isn't working for a PM company that will then continue to manage your property, they don't really have the incentive (or might not necessarily have the tools and experience) to do a super thorough screening.

3) If you are just starting out, I think there are good arguments for both hiring a PM from the start (they know what they're doing, you might screw up royally and it will be hard to recover) or starting out self-managing (you learn so much more about the process AND about your property). I don't agree that having experience self-managing necessarily gives you all that much insight into evaluating a property manager, because a property manager isn't JUST managing your property or properties... they are managing many (often hundreds) more for many other clients, and they are running a business.

I hope this shed some light on your questions! Feel free to message me directly if you have further questions or want to continue the discussion.

Theresa Harris · Answer

Landlord is the owner whereas the property manager is not the owner.  The two may both manage the property, but who owns it is the fundamental difference.

Property managers do not need to be managed by the landlord nor do they manage the landlord (ie owner).  They know what they are doing and while both owner and PM may have questions from time to time, the PM should be able to do their job without input from the owner.

Why would you need a property manager?  You need to remain at arm's length (eg, avoid any possible conflict of interest with the tenants such as you are an employer and the tenant pools are your employees), you don't live in the area, you don't have the time to manage the unit, or you simply don't want to manage it.

Kelly Boyne · Answer

The landlord is typically the legal term used in your lease that defines who the owns the property.

The landlord can self manage or hire a third party Property Manager to perform all or some of the required tasks as listed by Andrea. So the landlord manages the Manager and defines their responsibilities.

Andrea L Eskew · Answer

@Benjamin Bigger

You (the owner) are the landlord.

You may managed the property yourself, in which case you would also be the property manager.

You might hire out the duties to a property manager which may include all or some of the following:

Tenant placement

Rent collection

Repair requests

Evictions

Benjamin Bigger · Answer

Thank you to everyone who responded! I completely understand now what the titles mean, etc.

For example, if I own 1 rental property, I am the "landlord" by definition. And if I manage the property myself, I am the property manager.

But if I have a 3rd party manage my rental for me, then that makes them the property manager, but still, by definition, I am the "landlord".

The term "landlord" always threw me off because when I think of landlord, I think of the guy managing the property, evicting tenants, etc. (which sometimes can be the case if you do it yourself). Thanks, everyone!

Landlord vs. Property Manager: What's the Difference?

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