You’ve probably heard of the job of Property Manager, but what does a property manager do? Property Managers provide management services to homeowners and investors that either don’t or can’t deal with the day to day activities of taking care of rental properties.
Like any service-related profession, there are varying levels of services available from different property management companies. At the most basic level, the Property Manager places the tenant, and the owner handles the rest. On the full-service end of this spectrum, the Property Manager handles everything, and the owner simply receives their monthly rent check without ever dealing directly with tenants.
If you are considering renting your home instead of selling right now, hiring a property manager to manage your property may be the right decision for you. Let’s break down the complete list of services a “Full Service” Property Manager would be expected to offer.
Establishes a Competitive Rental Rate
Like any market, there are fluctuations in the rental rates for any given rental market. It’s essential to stay on top of these fluctuations. Underpricing a rental rate can leave money on the table every month, which means your investment in that property is underperforming.
On the other hand, overpriced rentals can sit waiting for a tenant for weeks or even months. This means you are potentially losing a lot of money every month until the property gets leased. A good property manager is in the field and looking at different properties every day. They do the research required to understand where rents are now and where they are going tomorrow. When it’s time to decide on a rental rate, a good property manager will perform a comparative market analysis looking at the rental rates from similar properties in similar areas. Their knowledge and experience can really maximize your rentals’ earning potential.
Markets The Property
Vacant rentals will eat your profit, so leasing and re-leasing or turning your rental properties over is vital for any successful rental portfolio. This is why marketing available rentals to the broadest group of potential renters are essential.
The idea is to get the largest pool of potential renters and then to vet the resulting applicants to find the best possible renter. This means using a wide range of platforms from the local MLS system and associated websites along with print, signage, and word of mouth to get the vacant property in front of as many potential renters as possible.
Finds Qualified Tenants
If the property’s marketing plan was well designed and effective, it should have produced many applicants. At this point, the Property Manager’s job is to sort through these applications and assess their qualifications. This is done by doing a thorough background check, this is done by:
- Checking the Applicant’s Credit: Tenants with low credit scores have proven to be less likely to pay rent on time and, in many cases, pay rent at all. A good property manager will have the ability to pull a three-bureau credit report to determine if the applicant has a history of paying their bills.
- Checking their Income and Employment: This lets us know if they can afford the property. A good guideline is the applicant’s gross monthly income should be three times the monthly rental payment. This is a guideline, and different property managers may use different percentages. Either way, the property manager must do the digging.
- Check With Past Landlords: A tenant’s previous landlord is often the best source of information about a tenant. While a good job and a good credit score go a long way in determining what makes a good tenant, they don’t tell the whole story. It’s also good to know how the tenant has treated previous properties and any potential red flags.
- Criminal Background Check: This is a sensitive topic because, in many states and markets, you are prohibited from discriminating against someone with a criminal record. There are exceptions to these rules, especially for crimes related to sexual offenses and other crimes. Because of this, a good property manager will look into the criminal background of any potential tenant. If offenses arise in the search, the property manager will need to discuss the legal and financial implications with the homeowner.
Prepares and Manages the Lease
The lease might be the most critical aspect of the entire rental process. This is the document that details what is expected of all parties involved in the transaction. If there is a disagreement or a problem, the resolution should be addressed in the lease.
The Tenant-Landlord legal landscape changes consistently. Not being aware of these updates and changes can cause severe problems from a regulatory standpoint. A good property manager will stay on top of these changes and reflect them in their lease.
Documents the Property Condition
One of the biggest problems encountered at the end of each lease period is deposit disputes and disagreements over cleaning and damage. A good property manager will perform detailed documentation of the property condition before and after each lease period. The Property Manager would use this information in the event there are disagreements. If the conflict escalates to small claims court, before and after pictures are the most effective form of evidence.
Ensures Tenants Adhere to their Lease
It is a property manager’s job to make sure tenants follow the lease terms. This involves things like the number of occupants as well as adhering to any neighborhood covenants or rules. Failure to monitor these types of issues can result in property damage as well as fines from Home Owner Associations (HOAs).
Handles Repairs and Replacement of Damaged Items Between Tenants
Good property managers have a list of access to quality tradespeople and vendors. When repairs are required between tenants, time is money. Quality and timely repairs are essential to getting the home back on the market and re-leased. Waiting weeks for a repair or cleaning of the property can end up costing thousands of dollars. Remember, vacant units don’t produce income.
Regularly Inspects the Property
Regular inspections of the property are essential to ensuring the lease is adhered to. The inspections check for undocumented pets, roommates, smoking, and other arrangements that violate the lease. In addition, regular inspections of the lawn and yard can head off costly repairs at lease turnover and can assure that the tenant is properly caring for the yard.
Collects Rents, Manages, and Disperses Funds
The property management company is responsible for collecting rents and dispersing funds to the appropriate people on time. They also deal with late rents and works with those tenants to get their rents in on-time.
Manages Late Payments
Late payments and the associated fees are an ongoing issue for property managers. Careful and accurate documentation is essential, especially as it relates to the eviction process. Problems or lack of detail and documentation at the start of the problem can translate to big delays in the eviction process.
Processes and Manages the Eviction Process
Evictions might be the most challenging aspect of property management. Evictions involve the courts and law enforcement, because of this, the eviction process must be strictly adhered to, and the final results are challenging to be a part of. On eviction day, the property manager will have organized movers and a locksmith. The movers take the tenant’s belongings and place them outside of the property while the locksmith changes the locks to keep the tenant from moving back in.
Handles Tenant’s Service Requests
The daily grind of managing properties involves staying on top of repairs and maintenance requests. As the maintenance or repair requests come in, the property manager evaluates the request, decides what the appropriate next steps are, and schedules the vendors in to take care of the problems—all the while communicating between the property owner and the tenant.
Once repairs and maintenance are completed, the property manager is responsible for paying for these services and accounting for those payments. Because it involves other people’s money, the rules about property management accounting are stringent and must be followed to the letter in order to avoid serious penalties.
Records Maintenance Activities
Strict records need to be maintained for rental properties both financial and maintenance records. The property manager is responsible for this as well. Work on the property generally needs to be approved by the homeowner. A record of any work needs to be kept for the homeowner’s records and the property’s maintenance history.
Protects you from Lawsuits
The regulatory landscape in landlord-tenant law is in a constant state of change. Good Property Managers stay up to date on the latest issues related to the business. Not being aware of or understanding how these regulations apply to your rental property can be both disastrous and costly.
Prepares Monthly Reporting
A Property Manager should provide the homeowner with detailed monthly reports, including income and expenditure information. This keeps the owner informed about their investment.
Supplies Documents For Tax Filing
At the end of the year, the Property Manager should provide the owner with 1099s. This allows them to report their rental income and expenses to the IRS timely and accurately.
Knowing What a Property Manager Does
This is a good sampling of what a Property Manager does and why it is important to have a well-qualified one managing your property. There is also a range of additional services provided by property managers everywhere. These include different types of insurance and services for both landlords and tenants.
If you consider hiring a Property Management Company to handle your property, this list is a great place to start. If you are considering a Colorado Springs Property Management Company, take a look at SpringsHomesForRent.com. This is our property management company and we handle everything included in this list and a little more.