Property managers manage, maintain, and operate residential and commercial real estate for property owners and real estate investors. Property managers perform a variety of tasks and range of duties, including finding and securing qualified tenants for vacant rental units. Some landlords who own fewer than 10 rental properties act as a property manager, self-managing their properties.
What a Property Manager Is
Property managers work as go-betweens between landlords and tenants. They’re contracted by the property owner and manage daily operations. They also advertise vacancies, find and screen prospective tenants, show vacant units, handle leasing and contracts, manage maintenance and repairs, and pay bills for the property.
Most property managers offer both monthly fee-based services and a la carte options so landlords can decide which landlord duties and responsibilities they want to outsource and which they want to do themselves. A good property manager has solid communication skills when working with landlords, tenants, and vendors, and great attention to detail to maintain the property and help increase property values.
Property Manager vs 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 large 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. The median salary for property managers is around $58,000.
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 offers separate property management packages designed for property managers and property management companies based on portfolio size.
What Does a Property Manager Do?
Property managers free up time for landlords by managing the daily tasks and responding to emergencies. Despite having to pay property management fees, property managers often save landlords money in a variety of ways, including reducing tenant turnover, expediting evictions, receiving vendor discounts, and keeping abreast of current market rents to ensure landlords are getting the highest possible income for their rentals.
The table below shows typical property manager duties and responsibilities and how much time landlords might save by hiring a property manager. These are averages and could be higher or lower depending on a variety of factors but can be a good starting point when weighing if hiring a property manager is right for you.
Property Manager Duties & Responsibilities
Property Manager Duties | Landlord Monthly Time Savings | Average Property Manager Fee |
|---|---|---|
Tenant Turnover | Four to eight hours | $1,400 per unit (national average rent) |
Vendor Management | Four hours | Included in monthly fee |
Evictions | One to two hours | $200 to $500 per eviction |
Repairs & Maintenance | 12 hours | Routine maintenance included; repair reserves $500 to $1,000 |
Increasing Rental Income | One hour | 1% increase in fees |
Tenant Management | 10 to 12 hours | Included in fees |
Financial Management | Six hours | Included in fees |
Total | 38 to 45 hours per month | 4% to 10% of monthly rent plus fees |
The amount of time saved is calculated based on the average amount of time landlords spend on various duties. To determine your potential time savings, consider how much time you currently spend managing your property. Property management fees are estimated based on national averages.
Tenant Turnover
Tenant turnover is when current tenants move out, and new tenants move in. Property managers inspect the unit, return security deposits, cover move-in/move-out maintenance, and find new tenants. Some of the property manager’s duties are included in monthly property management fees. Average property management fees are 4% to 10% of the rental income. Most property managers also charge a leasing fee to secure new tenants. Leasing fees are typically equal to one month’s rent.
Our figure of $1,400 is based upon the national average rent for a family of four. Property managers can find tenants fast and may have applicants on file, reducing turnover time. Although leasing fees can be costly, when you consider the time savings, fast turnover, and fewer vacancies leading to less lost rent, the fees can potentially save money.
Vendor Management
Property managers usually have established relationships with a variety of vendors like contractors, electricians, repair personnel, cleaners, landscapers, and plumbers. The vendors they use are vetted, and they are often able to negotiate lower rates than landlords would pay on their own since they bring them a lot of work. Managing vendor relationships and scheduled maintenance and repairs typically are included in the monthly property management fees. However, landlords will pay for repairs.
Evictions
Property managers have systems for handling evictions. This saves landlords time trying to navigate the courts on their own. It also saves attorney fees and reduces lost rent since property managers evict faster. Property managers charge approximately $200 to $500 per eviction, including filing fees and sheriff service. The average eviction takes 90 days. Hiring an eviction lawyer costs $250 to $500 per hour. When you consider the time and cost savings, property managers offer great value.
Repairs & Maintenance
Maintenance is the most time-consuming and expensive cost of owning rental property. On average, landlords spend 12 hours per month caring for their properties. Property managers handle routine maintenance and perform regular inspections to look for anything that needs repair. While most routine maintenance is included in the monthly management fees, landlords can expect to provide a repair reserve fund for unexpected repairs. Some property managers charge additional inspection fees.
If maintenance is outsourced to a vendor, landlords typically pay for it. Property managers deduct maintenance costs from monthly collected rent before paying owners. Landlords can set a cap on repairs and maintenance, meaning a property manager needs to call the owner for approval before exceeding repairs and maintenance budgets.
Increasing Rental Income
Great property managers stay on top of current market rents and perform rental market analyses to make sure owners are getting the most they can for their units. They also increase property values by keeping properties in pristine condition, making the properties places where people will pay a premium to live or work.
Do-it-yourself (DIY) owners often lose money by not keeping on top of current market rents, and not increasing existing tenant’s rent. The 1% fee we listed in the table is an estimate of the percentage property managers might earn by increasing rents. It’s not an additional fee—or an increase in monthly management fees—and can vary.
Tenant Management
From filling vacancies to emergency repair calls, managing tenants is the next most time-consuming aspect of property management. Property managers become the intermediaries between owners and tenants, including handling those 2 a.m. calls.
Property managers perform tenant background screening to find the best-qualified tenants. They have strong policies to make sure rent is paid on time, tenants don’t disturb neighbors, and properties are not damaged by tenants and their guests. Tenant management is included in monthly property management fees, and landlords can save a lot of time by outsourcing to property managers.
Financial Management
Property managers collect rents and fees, pay property bills, track invoices, maintain budgets, and provide some accounting management. They send owners monthly statements, tracking income, and expenses. Property managers provide landlords with financial reports so they can easily file taxes. Accounting management is included in property management fees. Owners can expect to save six hours each month on financial management by hiring a property manager.
Time & Cost Savings
To calculate if hiring a property manager saves money, review bookkeeping records. How much money do you spend each year to self-manage your rental property in each of the areas we covered? How much rental income was lost from slow tenant turnover, lengthy evictions, deferred maintenance, no rent increases, and hiring expensive vendors. Compare these to what property managers charge in your region to determine if hiring a property manager saves you time and money.
Property Manager Fees
Services | Monthly Fees |
|---|---|
Monthly Management | 4% to 10% of gross rental income |
Repair Reserves | 1.5% of gross rental income |
Account Set-up | One time; up to $300 |
Leasing | One month’s rent |
Advertising | $100 to $200 per vacant unit |
What a Property Manager Doesn’t Do
Though property managers track and manage finances, execute contracts, and perform evictions, they are not lawyers or accountants, and owners shouldn’t rely on managers for these services. The biggest 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 would have to hire their own.
When to Hire a Property Manager
You may want to consider hiring a property manager if you are:
- Managing out-of-state properties: If you don’t live near your property, hiring a property manager can save you time and travel expenses. It’s also wise to have someone nearby to respond to emergency calls.
- Maintaining large properties: Large rental properties require a lot of work to manage and maintain and could be better left to property managers.
- Handling hard-to-manage tenants: Property managers serve as buffers between tenants and landlords. They understand landlord-tenant laws and handle evictions, property inspections, leasing, and have policies on rent collection.
- 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 properties and manage properties after they’re stabilized.
- Required by your lender to outsource property management: Some lenders require hiring a property manager. They also may require hiring one if the borrower has no prior experience with investment property or if your property is struggling financially.
Where to Find a Good Property Manager
If you are in the market for a property manager, you can ask landlords, investors, and real estate agents if they know property managers and what those property managers do for them. Look on property managers’ websites and social media pages for testimonials and check out online reviews. Search professional directories such as the National Association of Residential Property Managers (NARPM) or the Institute of Real Estate Management (IREM).
Qualities to Look for in a Property Manager
In addition to reviewing what they do to manage your rentals, it’s important to look for specific qualities in a property manager. Remember, the property manager will interact frequently with your tenants, so finding a manager with great communication skills and an amiable personality is part of the success or failure of your rental property business.
Qualities important in a property manager include:
- Strong communication skills: Being able to communicate 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 who is easy to work with.
- Detail-oriented: Managing rental properties with many moving parts requires strong attention to details and great organizational skills. Ask how many properties they manage and what tools they use to organize it all.
- Timeliness: If the property manager is always running late, is slow to return calls, and seems stressed out, consider it a red flag. Dealing with this property manager will make more work for you.
- Firm when necessary: While a friendly personality is important, a good property manager also must be able to handle challenging tenants and protect your property and your interest when issues arise.
When to Change Property Managers
If things go wrong, you may need to change property managers. Breaking your property management contract is not easy. This is why it is critical to vet a property manager thoroughly before entering into a contract. To break the contract, you’d have to be able to show that the property manager is not exercising duty of care of your property or interests. Duty of care includes making sure your property is rented, maintained, and the manager is living up to the contractual agreement.
Review your contract’s termination policy. Most contracts have a termination clause. If you haven’t hired a property manager yet, make sure a termination clause that supports your interests, as well as the management company, is included. This item can be negotiated. If you need to let the property manager go, don’t waste time doing so as it is putting your property at risk. Be slow to hire and quick to fire is applicable here.
Alternatives to Hiring a Property Manager
There are other types of property managers to consider when looking to outsource rental property management, such as online property management software and turnkey real estate. Depending on the type of property you own and your proximity to your rentals, you also may consider self-managing your rentals.
Online Property Management Software
Online property management software can help you manage your maintenance, tenant screening, leasing documents, and listing vacancies across the internet. Online property management software offers both comprehensive and a la carte property management services. Landlords can handle everything conveniently in one convenient place.
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 property management services are included. When considering a turnkey property, make sure the property management company is experienced. Review their property management agreement and interview them to make sure they’re a good fit.
Self-Manage Rental Properties
If you only have a few units or are planning to buy a duplex or triplex 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.
Pros & Cons of Hiring a Property Manager
Hiring a property manager to handle the day-to-day operations of your rental property can save you time and money, but they’re not inexpensive. A good property manager can also increase your rental income and the property’s value. There are many pros and cons to hiring a property management company for your rentals.
Pros of Hiring a Property Manager | Cons of Hiring a Property Manager |
|---|---|
Provide a barrier between landlords and tenants | Property management fees cut into revenue |
Strict rental guidelines | Landlords don’t choose tenants |
Thorough tenant background screening | Locked into a property management contract |
Stay current on market rents | Won’t necessarily care for your property as much as you do |
Keep on top of property maintenance | |
Vet contractors for repairs and maintenance | |
Sometimes get discounted contractor services |
Bottom Line
A good property manager does a lot to save time and money for landlords and may be worth the fees. Property managers advertise vacancies, screen applicants, manage leasing, maintenance, vendors, pay bills, and provide detailed reports to busy landlords who outsource their property management duties. DIY landlords may wish to self-manage rentals by using online property management software.
If you decide to self-manage your rentals, you may want to consider using online property management software like Avail. Avail lets you list properties on dozens of popular rental websites, screen applicants to find ideal tenants, create custom leases with e-signatures, and accept rent payments and fees online. Prices start at $10 a month, and the first unit is always free.
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