What Does a Property Manager Do & How Much Do They Cost?
Property managers oversee the management, maintenance, and operation of residential and commercial real estate on behalf of property owners and investors. They are also responsible for finding and securing qualified tenants for vacant rental units and collecting rental payments. The responsibilities of a property manager differ depending on the type of property being managed, the management contract terms, and the amount of money they are paid.
If you’re wondering, “What does a property manager do?” continue reading to learn more about property managers, the differences from a property management company, manager responsibilities and duties, how much does a property manager cost, and what to expect from their role.
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What Is a Property Manager?
A property manager is an individual that manages rental properties. Landlords and rental investors hire property managers to grow and scale their businesses, free up their time, and increase their returns. Moreover, a rental property manager is responsible for screening and managing tenants, setting and collecting rent, responding to maintenance requests, establishing maintenance budgets, and marketing the rental as efficiently and cost-effectively as possible.
Most property managers provide monthly paid services and a la carte options, allowing landlords to choose which landlord duties and responsibilities to outsource and which ones to handle. A reliable property manager demonstrates excellent communication skills when dealing with landlords, tenants, and vendors, and has a keen eye for detail to maintain the property and increase its value.
According to Finbold, the average property manager’s salary is determined by the type of property they manage: residential, commercial, or industrial. Residential property managers earn an annual average salary of $48,583, with salaries typically ranging from $36,000 to $59,000.
On the other hand, commercial property managers earn an average yearly salary of $64,373, with the majority earning between $50,500 and $75,500. However, a property manager’s salary can vary widely depending on many important factors, including education, certifications, additional skills, and years you have spent in your profession.
Though property managers track and manage finances, execute contracts, and perform evictions, they are not lawyers or accountants, and owners shouldn’t rely on property managers for these services. The largest property management companies may have attorneys and accountants on staff or outsource to them. Smaller firms may be able to make a recommendation, but owners have to hire their own.
Difference Between a Property Manager & Property Management Company
What a property management company does is essentially the same thing as what property managers do, unless the property manager is an employee or on-site superintendent of residential or commercial properties. Property management companies can have one staff member or several managers, maintenance and administrative staff, security officers, advertising departments, and accounting professionals.
It’s important to know the difference so owners understand who to hire for their type of income property. Larger property management companies tend to manage larger portfolios of properties, while smaller property management firms handle smaller portfolios of either residential rental properties or small office buildings. Some online property management software platforms offer separate property management packages designed for property managers and property management companies based on portfolio size.
Responsibilities & Costs of a Property Manager
Property managers save landlords time by managing daily tasks and responding to emergencies. Despite having to pay property management fees, property managers save landlords money in various ways, such as reducing tenant turnover, expediting evictions, and staying up to date on current market rents to ensure landlords get the most income possible from their rentals.
The table below illustrates the number of hours landlords could save monthly by hiring a property manager, as well as the corresponding costs. These are average costs and may be higher or lower depending on various factors like the size of the rental and the number of properties to be managed. Still, they are a great starting point when deciding whether or not to hire a property manager.
Property Manager Duty
Time Saved by Landlords (Monthly)
Average Property Manager Fee
Tenant Turnover & Leasing
4 to 8 hours
$2,495 per unit
Included in the monthly fee
1 to 2 hours
$200 to $500 per eviction
Repairs & Maintenance
Routine maintenance included; repair reserves of $500 to $1,000
Increasing Rental Income
1% increase in fees
10 to 12 hours
Included in fees
Included in fees
The amount of time saved is calculated using the average amount of time landlords spend on various tasks. Consider how much time you spend managing your property to determine your potential time savings. As for the property management fees, they are based on national averages.
Here is a breakdown of these duties and more that a property manager must handle on a daily basis:
Increasing rent is an essential part of maximizing your real estate investment. Property managers increase the rent due to the following reasons:
- To keep up with the real estate market
- When the neighborhood transforms into a highly desirable location
- Employment opportunities increase in the area
- When you make improvements to your property
Moreover, the ideal time to increase the rent without negatively impacting your existing tenants’ living arrangements include during lease renewals and if your rental property isn’t currently occupied. Property managers use property market data, comparable properties and surrounding area averages, location, and the property’s amenities to determine how much to charge for rent and when rent should be increased.
Don’t forget to notify current tenants of a rent increase before their lease expires. Many states require 60 to 90 days’ notice. Double-check your state laws to see specific time frames. This will allow them to make necessary budget adjustments or decide whether to leave the property. In addition, sending your tenants a rent increase letter will notify them about the rent increase and its date of effectiveness.
Property managers are in charge of collecting rent in-person or using online rent collection software to ensure that payments are made on time. If you want to use an online rent payment service, check out TenantCloud. TenantCloud provides robust financial features, allowing landlords to accept credit and debit card payments via Stripe payment processing, PayPal, and Automated Clearing House (ACH) transactions. It offers free and paid subscription plans starting at $12 per month.
One of the essential duties of a property manager is marketing vacancies in the rental property. Their industry knowledge and experience allow them to know when, how, and where to advertise a vacancy. Managers should also be cognizant of when leases are going to expire. If the current tenant is not renewing, they should begin listing the apartment for rent before the end of the current tenant’s lease term. This will minimize vacancies in the building and continue to build profits for the landlord.
To effectively advertise your rental vacancies, follow these marketing strategies to fill your vacancy faster:
- Use high-quality and professional photos of your property to capture the attention and spark people’s interest.
- Utilize highly visual social platforms like Instagram and Facebook, where you can easily share photos of your property. Post at least twice daily to maximize and maintain an active online presence.
- Order custom signs with essential details, such as your contact number, email address, monthly rent, and the number of bathrooms and bedrooms. Place more than one signage in the yard, each with different text and information to draw attention to your property and stand out.
- Host an open house event to promote your property to a larger audience. Curious passersby have the opportunity to look inside your property; in turn, they will tell their friends about it, increasing the exposure of your property. Furthermore, an open house is an excellent opportunity to distribute flyers for your other rentals if you own multiple investment properties.
Landlords need to be familiar with popular listing sites like Zillow, Realtor.com, and Apartments.com so they can get as much exposure for the property listings as possible. For example, by promoting the property on listing sites like Zillow, you can attract a pool of quality tenants, filling all of your property’s vacancies with the ideal tenants faster and easier.
Zillow offers Zillow Rental Manager (ZRM), enabling landlords to list their properties. They can create their rental lease using the online lease builder and templates drafted by local law firms or upload their lease and e-sign it with their renters. ZRM provides messaging and tenant screening integrated into its listing platform to help you find and screen applicants quickly.
The property manager is also responsible for tenant screening. Before approving a rental application form, a property manager should review and inspect the following:
- Credit score and history
- Proof of income and employment
- Previous addresses, landlords, and eviction history
- Background checks
Here are some of the best tenant screening services you can use to ensure you’ll have the right tenant:
$24.99 per applicant
$21 per applicant
$4 per applicant
Free; paid plan starts at $5 per monthly
A property manager establishes lease conditions to protect the rental property and the property owner’s interests. A lease agreement must cover everything, including the late rent fees, security deposit, and the consequences of not adhering to it.
The property owner or manager determines the lease term—either short-term or long-term lease. Short-term leases last less than six months, while long-term leases last longer than six months. They must create the lease to include all necessary information, such as lease terms, price, address, security deposit, and late fees. In addition, your lease should detail available amenities, insurance requirements, pet and house policies, and consequences for violating the lease terms.
For more information on creating a rental agreement or lease, check out our Free Month-to-Month Rental Agreement Template & What to Include article.
The property manager should review the lease with tenants or send it to them to review on their own so they can ask any questions or raise concerns before signing. Tenants will sign the lease first and provide the landlord with the aforementioned fees to receive access to the premises. Then the landlord will sign to finalize the lease agreement. Two copies will be signed, and both parties can keep an original copy for their records.
If you want to easily and quickly send and sign the lease agreement without being physically present, consider DocuSign, which allows landlords to sign a lease electronically via computer or mobile device. Starting at $10 per month, you can send documents for e-signature and track the progress of your document with the real-time audit trail. You can easily prepare and manage DocuSign within your favorite applications by integrating with Dropbox, Google Drive, and Microsoft Office 365.
A professional property manager is responsible for all property maintenance, both routine and emergency. They ensure that your property’s appliances and items are well-maintained and serviced on time. They cooperate with their preferred vendors (e.g., handypersons, painters, and plumbers) to ensure a timely and professional response to urgent maintenance requests, such as leaking faucets and broken appliances.
A tenant and a good property manager can also recommend and request improvements, such as repainting the walls or redoing the floors to increase the property’s overall value.
Property management software like Avail simplifies maintenance request tracking—enabling property managers to track repairs with in-app messaging, photos, and automatic maintenance records. It also offers a free subscription plan, and the paid plan starts at $5 per unit, paid monthly.
Read our Rental Property Maintenance Checklist to better understand what is involved in routine, seasonal, and preventative maintenance.
A move-in and move-out inspection is a walk-through conducted by the landlord, assessing the condition of a rental property. These inspections are conducted to keep track of your property’s maintenance requirements and for landlords who want to refund tenants’ security deposits properly. They are also necessary for documenting any damage to your property, the repairs required, the expense of repairs, and to avoid any disputes with your tenant regarding their security deposit refund.
Landlords can inspect the property in two ways after giving tenants advance written notice:
- Move-in inspection: Before the property is handed over to the tenant, the landlord should inspect the property to make sure it is ready for the tenants. It’s recommended that the landlord do this prior to the tenant arriving, but can also conduct the inspection with the tenants. Landlords should take pictures and complete a checklist to document the condition of the property before the tenant moves in.
- Move-out inspection: When a tenant vacates a property, the landlord should walk through the apartment and check each room for damage beyond normal wear and tear. This enables landlords to cross-reference the initial documents from the move-in inspection and determine which damage is new. Following the damage assessment, landlords can calculate and deduct repair costs from the tenant’s security deposit or through other financial agreements with the tenant.
Property managers are responsible for evicting troublesome tenants because they know what to do and how to evict tenants legally. Before proceeding with the eviction, property managers must inform the property owners and must have a valid reason to evict your tenant. Common grounds for eviction include failure to pay rent, staying after the lease has expired, property damage, and using the property for illegal activity.
Make sure to record any violations and include supporting documentation because you will use them as evidence in court if you file for tenant eviction. These records include images of the damages, printouts of email or text messages exchanged with the tenant, bank statements, or returned checks.
However, if your tenants refuse to vacate the property and you want to evict them as quickly as possible without going through the eviction process, consider offering them cash for keys. A cash for keys agreement is a voluntary agreement entered into by a landlord and tenant to exchange money for access to a currently occupied property. Create a lease termination agreement that your tenants must sign and date if they agree. Also, ensure they fulfill their commitments and inspect the unit before handing over money.
If you want to learn more about evictions and landlord-tenant laws, visit Lorman. It offers a wide range of courses from understanding laws to business skills. Also, it provides a professional directory, blogs, articles, and white papers to support and enhance your online learning experience.
A property manager is in charge of maintaining accurate, up-to-date, and comprehensive records of your investment. Property reports must include your property’s expenses, gross income, invoices, and receipts for maintenance. These records offer pointers for landlords and property managers to understand what the goals are. They are also useful when tracking your property’s growth and financial status.
Consider Buildium for its powerful property reporting tools. Property managers and landlords can use Buildium to generate customized reports on tenants, properties, and financial accounts. It also compares your data to industry benchmarks and similar companies in your area. See how you compare with the competition and discover the options to help your business reach its full potential.
When to Hire a Property Manager
Even though there are many benefits to hiring a property management company, it can be costly. Aside from the cost, hiring a property management company isn’t for everyone. Consider the following factors to see if hiring a property management company is good for you and if you do need one:
- Managing out-of-state properties: Hiring a property manager can save you time and travel expenses if you don’t live near your property, like managing your vacation rental property. It’s also wise to have someone nearby to respond to emergency calls.
- Maintaining large properties: If you manage more than five rental properties, you will probably reach a point where the work becomes too challenging to handle on your own. Even the most basic tasks can become exhausting when managing multiple properties. When you reach this threshold, hiring a property manager or property management company is wise.
- Handling hard-to-manage tenants: Property managers serve as buffers between tenants and landlords. They understand and know landlord-tenant laws, how to deal with terrible tenants, and handle evictions, property inspections, leasing, and policies on rent collection. Therefore, hiring a property manager or management company will help you avoid stress concerning managing difficult tenants.
- Building a portfolio: If you’re building an investment property portfolio, you may want to hire a property manager. The property manager can help stabilize and manage properties.
- Required by your lender to outsource property management: Some lenders require hiring a property manager. They may also require hiring one if the borrower has no prior experience with investment property or if your property is struggling financially.
How to Hire a Good Property Manager
Assess your prospects carefully if you decide to hire a property manager. You can get referrals from other landlords, real estate agents, and your homeowner’s association. Also, look for testimonials and reviews on property manager websites and social media pages to find a suitable property manager for your business.
In addition, you can search online professional directories like the Institute of Real Estate Management’s Membership Directory to find certified property managers or the National Association of Residential Property Managers site for a NARPM property manager.
Looking for specific characteristics like timeliness and attention to detail in a property manager is essential. Remember that the property manager will have frequent interactions with your tenants, so finding one with solid communication skills and a pleasant personality is critical to the success or failure of your rental property business. Qualities important in a good property manager include:
- Strong communication skills: Communicating well with you, your tenants, vendors, and service providers is critical to the success of your business. Keeping you informed is part of good communication.
- Friendly personality: A property manager who is easy to get along with equates to lower tenant turnover, faster response from service professionals, and someone easy to work with.
- Detail-oriented: Managing rental properties with many moving parts requires strong attention to detail and excellent organizational skills. Ask how many properties they manage and what tools they use to organize them.
- Timeliness: If the property manager is always running late, is slow to return calls, and seems stressed out, consider them a red flag. Dealing with this property manager will result in more work for you.
- Firm, when necessary: While a friendly personality is essential, a good property manager also must be able to handle challenging tenants and protect your property and your interests when issues arise.
Reasons to Hire or Not Hire a Property Manager
Owning real estate can be an excellent way to gain financial security, but it takes a lot of effort to maintain one property, let alone multiple investment properties. A property manager is a great strategy to take if an owner needs additional assistance or if they do not want to deal with the day-to-day maintenance of their property. However, hiring a property manager has its drawbacks too, as it adds to your monthly expenses, and it’s not easy to find a good property manager.
Here are things to consider when you’re making a decision whether or not to hire a property manager:
|Save time and money: As an investor, your time should be spent investing in other properties, spending time with family, or making time to do things you enjoy. By delegating the day-to-day management of your income property to a property manager, you free up your time to pursue other investment opportunities or advance your career.||Additional monthly expenses: While property managers can help landlords save time and avoid stress, property management fees can be expensive. Whether your property manager charges a percentage, a flat fee, or a per-project fee, the average cost is 7% to 10% of your monthly rent. Before hiring a property manager, determine whether your rental property investment will still generate the desired profit margins.|
|Property managers know the law: A professional property manager ensures that your property complies with housing regulations and assists you in avoiding lawsuits. Property managers are highly knowledgeable about local, state, and federal landlord-tenant laws and fair housing regulations that help avoid legal issues and ethical transactions.||Less involvement with your investment: Hiring a property manager is not the best option if you are a property owner who desires complete control over all aspects of your investment. Even though you still dictate to the manager how you would like to handle the property, you are not involved in day-to-day tasks. This may be difficult for owners who have an emotional attachment to the property or like to monitor every aspect of their business.|
|Strong vendor network and relationships: Property managers keep in touch with suppliers, contractors, maintenance workers, and tradespeople. Building relationships with vendors requires a complex process that takes time and expertise that can be difficult for a landlord to match.||Challenging to find the right property manager for you: Like with any role, there are people who are better at their job than others. Finding a manager that fits your business model and ideals can take extra effort and screening time for landlords.|
Alternatives to Hiring a Property Manager
If you decide that hiring a property manager is not for you, there are other options to consider when outsourcing rental property management. Depending on the type of property you own and your proximity to your rentals, you also may consider self-managing your rentals. Here are a few options:
Online Property Management Software
Online property management software helps you manage your maintenance, tenant screening, leasing documents, and listing vacancies across the internet. Online property management software offers comprehensive and a la carte property management services. Also, it allows landlords to conveniently handle everything in one convenient place.
Here are the best online property management software providers that provide the best features at an affordable price:
Free property management software for up to 75 units
Independent landlords seeking comprehensive property management services
Property management firms handling up to 5,000 units
Most affordable paid subscription plan for property owners
Monthly Starting Price
Free; paid plans start at $12
Free; paid plan costs $7 per unit
Free; paid plans start at $4.92
Turnkey Rental Properties
Turnkey properties are a good option if you want to buy a property that doesn’t require upfront maintenance, is sometimes fully rented, and has property management services. When considering a turnkey property, ensure the property management company is experienced. Review their property management agreement and interview them to guarantee they’re a good fit.
If you want to invest in a turnkey real estate property, Roofstock provides several investment options for passive real estate investors. It includes the opportunity to invest in a property, a portfolio, or bring their own property. Roofstock operates in 27 states and sells brand-new and completely renovated single-family homes occupied by renters and maintained by a property management company. It also provides a 30-day money-back guarantee and a lease-up guarantee.
Self-manage Rental Properties
If you only have a few units or are planning to buy a duplex, triplex, or fourplex and live in one unit, you might want to self-manage your rental properties. Hiring a property management company for a few units typically isn’t cost-effective. If you self-manage, you’ll need a separate bank account for handling rental income and expenses.
Read more about multiplex buildings in our article Buying a Duplex, Triplex, or Fourplex: The Investor Guide and see if self-managing this type of investment property is right for you.
Landlords can save time and money by hiring a good property manager. Property managers for rental homes take care of routine tasks, such as screening applicants, resolving property maintenance issues, and collecting rental payments for busy landlords who outsource real estate property management. However, hiring a property manager can be expensive. Review your finances and investment portfolio to see if hiring a property manager is right for you.