Understanding property management responsibilities will help you determine if hiring a property management company is the right choice for your rental property. Property managers maintain properties as organized and financially stable environments. Some landlords choose to manage their own property (or properties) themselves. This is not easy work, as it requires education and experience to do well. That is why it is common for landlords to hire a property manager or property management company.
Responsibilities of a Property Management Company
A property management company should have the expertise and resources to fill vacancies quickly, increase property revenue, find quality tenants, ensure a steady rental income, and manage a well-maintained property.
Property Manager Role
- Oversees daily operations of the property
- Manages the day-to-day financials: it is essential that a property manager has some form of financial background as they oversee rent and fee collection, maintenance expenses, and various budgets.
- Screens Tenants: Tenant screening includes running a background check, credit check, income verification, and criminal background. A successful screening will ensure qualified renters, minimizing the risk of future evictions.
- Markets the property: A property manager should be versed in how to effectively market properties to attract qualified tenants and avoid vacancies.
- Collects Rent: it is the responsibility of the property manager to collect rent and other fees, if applicable.
- Signs lease contracts: Property managers will have the experience to ensure that a lease is legally binding and in line with federal, state, and local laws. A well-written lease is an integral part to a property’s success as it will protect the landlord and guarantee that the tenant is obligated to pay rent and follow property policies.
- Coordinates maintenance work: The property manager is responsible for finding and hiring maintenance vendors to resolve issues. See below for a detailed distinction between property management and property maintenance.
- Handles any delinquencies and, if necessary, initiates the eviction process: A property manager must have a comprehensive understanding in eviction laws and procedures.
Property Management vs. Property Maintenance
A property management company will handle all administrative tasks related to your property, including facilitating maintenance requests and scheduling repairs. However, a property manager is rarely responsible for routine property maintenance, the cost of which is not included in property management fees. After resolving an issue, it is the responsibility of the maintenance staff or worker to invoice the landlord or tenant.
Even though a property management company is not directly responsible for property maintenance, professional property management should make the process of addressing maintenance problems relatively easy. A quality property management company will have connections to licensed professional vendors and a maintenance crew ready to deal with any issues your tenants may encounter, 24/7.
Before hiring a property manager, it is important to know what a property manager is typically responsible for when property maintenance is needed. It is essential to ask a lot of questions when searching for a property management company to avoid any surprises and know exactly what you are paying for.
Property Management Fees
The costs of property management often depend on several factors including the type, location, and condition of the property. Additionally, the extent of services provided by the property management company will affect how much is charged.
What is included with property management fees?
- Start-up Fee: ranges from one to several hundred dollars and generally covers the time needed to process your contract. Be certain to ask how much this fee will be and what it covers, since it can vary!
- Monthly Management Fee: Typically, 8-12% of the monthly rental income will go to property management. Some companies choose to charge a flat rate instead of a percentage of the rental income. Be sure to clarify whether this fee is expected when rent is due or when rent is paid.
- Leasing fee: Cost can range from half to a whole month’s rent. This includes advertising expenses and leasing agent commissions.
- Renewal Fee: This fee, generally less than one month’s rent, covers the time required for market research, preparing offers, negotiating with tenants, and preparing new leases.
- Inspection Fee: Inspections by technicians are routinely necessary; most companies charge an inspection fee.
- Early Termination Fee: This fee will differ between companies, but it is often paid when a contract is broken early.
Are there any additional fees?
The cost of professional property management covers a lot of ground in managing your property, however, it is not comprehensive. Below are some examples of fees not paid directly to a property manager.
- Eviction Fees: An eviction is a long and demanding process, so a property manager will charge a fee for handling an eviction. This fee is often $200-$500, approximately.
- Court Costs: This could include but is not limited to serving notice fees, attorney costs, and court appearance expenses.
- Compliance Fees: Rental license inspections, housing certifications, and lead paint inspections and certifications. Depending on the area, your budget should plan for these expenses to be anywhere from $300-$1000.
- Maintenance Fees: A property manager will schedule repairs and facilitate maintenance, but it is the landlord’s obligation to pay these expenses.
As a property owner, you should be aware of these additional expenses, so you can plan your finances accordingly.
Who needs a property manager?
It is recommended that landlords who have limited experience with property management or leasing should hire a property management company. There are also several other reasons why a landlord should choose to invest in a property manager to oversee properties with the expertise and resources to ensure success.
- Owns multiple properties: a property management company has the means to successfully manage several properties with ease.
- Vacancy: a property management company has the resources and marketing expertise to find quality tenants and fill vacancies.
- Difficult tenants: a property manager knows how to professionally handle problem tenants.
- Lives out of proximity to property (or properties): Living far away from your rental property makes it difficult to efficiently resolve issues and oversee the day-to-day property operations.
- Not well versed in lease and contract law: a professional property manager will guarantee sound contracts that adhere to the law.
Pros of Property Management
- Your properties are managed by a professional with years of experience.
- You have the reassurance of knowing that all regulations are met.
- Any problems that arise for tenants are quickly addressed.
- Properties are professionally advertised.
- All administrative tasks are handled by the company.
- All lease contracts are legally binding.
- Save the time and energy!
Cons of Property Management
- Decrease in monthly revenue.
- Monthly property management fees
- Less involvement in your property
While it certainly is an investment, the pros of hiring a property management company most often outweigh the cons! Bay Property Management Group is an outstanding choice for your property management needs. We have the expertise and years of industry success to manage your properties seamlessly. Contact us today for more information!
About the Author
Lucy Levinson is a senior at Roland Park Country School working as a summer intern at Bay Property Management Group. Lucy hopes to pursue marketing or journalism in college. Her hobbies include reading and playing tennis.