“What Is Property Management?”
Ok, you have acquired some rental property to manage… and you have just been called a “property manager”.
What does that even mean?
I get that… because that’s how I felt when I got my first couple rental properties. It felt a bit overwhelming at first. I didn’t know what I should or shouldn’t do for the tenants; or really what was really required of my new title….
To help shed some light on the issue, I felt it would be valuable to give you an outline of the property management roles and responsibilities (note that the local laws may vary in your area and this is not legal advice).
Role of the Property Management
Before we get started… what exactly is a “property management”?
The “Property Management” Title
A “property manager” may be the owner of rental properties (ie. landlord) or a third party professional who was hired to handle daily operations of a real estate investment. Property management manages different types of properties, from large apartment complexes to single family homes.
Depending on the size and scope of the properties they manage, they are awarded or win properties to manage (and a respective salary or commission) based on a specific terms of their management contract.
So let’s dive into the roles of a property manager.
Property management is responsible for filling every unit available on a monthly basis with qualified renters.
To rent out a unit they must first set a rent that the market can bear. Determining the correct amount to rent a unit is called setting the initial rent level.
They should know how to set the right rent level to attract the renters to your property. You should have the idea and understand the market, property location, and other like properties that can be compared to their property.
They are also responsible in adjusting the rent according to individual state and/or municipal law.
They set the rent due date for each month and strictly enforcing late fees.
Collecting rent from tenants and adjusting the rent is only a small part of what a property manager does on a daily basis..
Property management is mainly responsible for finding and managing the renters that will be qualified to rent the units they manage.
Finding qualified renters entails, advertising vacant units, searching and finding candidates to rent, and going through and determining the most qualified renter that would be the best for the vacant unit.
Finding renters for the units normally starts with advertising in local media, online, and posting signs of the vacancy in the building. When possible renters come into inquire about the vacant unit they are given an application used to determine if they are qualified to rent the unit or not.
One of the most important roles of a property management is checking the prospective tenant applications to find the most qualified renter for the property. In reviewing applications and doing interviews, you must develop a strong screening process that includes credit checks, speaking with past landlords, and the criminal background checks. Following a screening process they have the best idea on how to select the most qualified renters who have the best chance to pay their rent on time and not damage the property they will be renting.
Property management are also responsible in determining if the rental property should have a lease or be rented on a monthly basis. A lease is normally preferred as it locks a renter into a specific time period that the property manager knows that the unit will be rented for, for instance a lease usually last 6 months to 12 months. After a lease expires, the property normally goes into a monthly rental until the lease is renewed.
Handling leases includes setting up the length of the lease, as well as determining the amount of the security deposit the owner requires for the unit.
As leases expire and renters move out, it is the property management’s role to inspect the unit and determine any damages and if the previous renter is due any of their deposit back. If no unusual damage you must return security deposit to the former renter according to the lease contract they signed. When renters move out they must organize the cleaning of unit, and have any damages repaired so the unit will be ready to be rented.
Property management is also involved with the eviction if ever the renter:
- Fails to pay the rent,
- Cause damage to property
- Disturbance to neighborhood
- Police reports of illegal behavior on property
- Fail to allow access with notice to property
When it is determined the renter must be evicted, follow all your local rental laws so that the eviction can be quick and successful.
Maintenance and Repair
Property management is responsible for preparing the property to get it ready to rent. They are also responsible for regular maintenance during the course of the renter’s lease.
They should make sure that the property is safe and comfortable for the renters. If there is any kind of damage on the property, they may use their own staff or manage contractors fix the damage.
Property management should also be knowledgeable of the statewide and national laws regarding the proper ways to:
- Screen a Tenant
- Handle security deposit
- Terminate a lease
- Evict a Tenant
- Comply with the property safety standards.
Last Thoughts About Property Management
Property Management plays a very big role in the rental property business. Although we talked about this in greater depth, in general they take care of rental property for the owner (landlord) and to work with the tenants. If you are looking for a property manager to manage your properties, be sure to interview and hire only the best.
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