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The Basics of Property Management

Last updated 03/19/2024 by

SuperMoney Team

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Summary:
Property management involves overseeing the day-to-day operations of a real estate property, including tenant relations, rent collection, maintenance and repairs, and more. Hiring a property manager can lead to reduced stress, increased tenant retention rates, and more efficient rent collection.
As a landlord or property owner, managing your property can be a stressful and time-consuming process. From collecting rent to dealing with tenant complaints and maintenance issues, the day-to-day responsibilities of property management can be overwhelming. That’s where a property manager comes in.
In this article, we’ll discuss the basics of property management, including the role of a property manager and how to find the right manager for your needs. By the end of this article, you’ll have a better understanding of what property management is and why it’s important for landlords and property owners to understand the basics.

What does a property manager do?

One of the most important aspects of property management is the role of a property manager. A property manager is responsible for the day-to-day operations of a property, ensuring that it’s well-maintained and profitable, in addition to the key responsibilities below.
  1. Collecting rent from tenants. One of the most important responsibilities of a property manager is collecting rent from tenants. This includes setting rent prices, accepting payments, and handling any late or missed payments.
  2. Screening potential tenants. A property manager is responsible for screening potential tenants to ensure that they are reliable, responsible, and able to pay rent on time. This includes conducting background checks, credit checks, and verifying employment and rental history.
  3. Handling maintenance and repairs. A property manager is responsible for ensuring that the property is well-maintained and any repairs are handled in a timely manner. This includes performing routine maintenance tasks, scheduling repairs, and addressing any issues that arise.
  4. Managing finances. Since managers handle rent payments, they also manage the property’s finances, including creating and managing a budget, paying bills, and handling taxes.
  5. Dealing with tenant complaints and issues. Much of property management revolves around tenants, including their complaints. In addition to screening tenants, a property manager addresses any complaints or issues that tenants may have, such as maintenance requests, noise complaints, or lease violations.
  6. Ensuring compliance with local regulations and laws. A property manager is responsible for ensuring that the property is in compliance with local regulations and laws, including building codes, safety regulations, and fair housing laws.
Overall, the role of a property manager is essential to ensure that the property is well-maintained, tenants are happy, and the property is profitable for the owner.

Pros and cons of property management

While property managers can be a great asset for landlords, property management comes with some downsides as well. Before hiring a property manager or taking on the work yourself, make sure you understand what you’re getting into.
WEIGH THE RISKS AND BENEFITS
Here is a list of the benefits and drawbacks to consider.
Pros
  • Reduced stress and hassle
  • Better tenant screening
  • Increased tenant retention rates
  • More efficient rent collection
  • Professional marketing and advertising
  • Reduced maintenance costs
Cons
  • Cost
  • Lack of control
  • Communication issues
  • Quality of service
  • Potential for conflict of interest
  • Loss of personal touch

Pros explained

  • Reduced stress and hassle. One of the biggest benefits of hiring a property manager is the reduced stress and hassle for landlords and property owners. With a property manager handling the day-to-day operations, landlords and property owners can focus on other aspects of their business or personal life.
  • Better tenant screening. A property manager has experience screening potential tenants and can help ensure that only reliable and responsible applicants become tenants. This can help reduce tenant turnover rates and increase retention.
  • Increased tenant retention rates. A property manager can help ensure that tenants are happy and satisfied, which can lead to increased tenant retention rates. Happy tenants are more likely to renew their leases and recommend the property to others.
  • More efficient rent collection. Happy tenants will more likely pay rent on time, which a property manager can also handle. This reduces the need for landlords and property owners to chase down payments.
  • Professional marketing and advertising. A property manager may have the experience and knowledge to market and advertise the property, which could attract more potential tenants and fill vacancies quickly.
  • Reduced maintenance costs. A property manager can help reduce maintenance costs by addressing maintenance issues promptly, preventing small problems from becoming bigger and more expensive issues.

Cons explained

  • Cost. Property managers typically charge a percentage of the monthly rent or a flat fee for their services. This can be an added expense that cuts into the property’s profitability.
  • Lack of control. Property owners may feel that they’re losing control over their property when they hire a property manager. The manager makes decisions about tenants, repairs, and maintenance, and the owner may not always agree with these decisions.
  • Communication issues. If the property owner and manager don’t have good communication, it can lead to misunderstandings and mistakes. For example, the owner may not be aware of a tenant issue until it becomes a major problem.
  • Quality of service. Not all property managers are created equal, and some may not provide the level of service that the owner expects. If the manager is not responsive, professional, or knowledgeable, it can lead to problems for the owner and tenants.
  • Potential for conflict of interest. Property managers may have their own agenda, which could conflict with the owner’s interests. For example, the manager may prioritize filling vacancies quickly, even if it means accepting tenants who are not a good fit for the property.
  • Loss of personal touch. Property owners who are involved in managing their own properties may feel a sense of satisfaction and pride in their work. Hiring a property manager can take away this personal touch and make the process feel more impersonal.

Finding the right property manager

If you believe that having a property manager is worth the cost, make sure you choose the right person for the job. When it comes to finding the right property manager, there are a few key factors to consider.
  1. Look for experience. When searching for a property manager, look for someone with experience managing properties similar to yours. This can include the type of property, size, and location.
  2. Check for licenses and certifications. Make sure that any property manager you consider is licensed and certified. This indicates that they have the necessary training and qualifications to manage your property.
  3. Ask for references. Ask for references from past and current clients to get a sense of their experience working with the property manager.
  4. Consider their communication skills. Look for a property manager who is a good communicator and keeps you informed about the status of your property. You want someone who will be responsive to your needs and keep you updated on any issues or concerns.
  5. Review their management agreement. Make sure to review the management agreement carefully to ensure that it covers all aspects of property management and that you’re comfortable with the terms and fees.
  6. Get multiple quotes. Consider getting multiple quotes from different property managers to compare their services and fees.
By considering these factors and taking the time to find the right property manager for your needs, you can ensure that your property is well-managed and profitable. With the help of a qualified property manager, you can enjoy the many benefits of property management without the stress and hassle of doing it all yourself.

FAQs

What degree is best for property management?

While a degree is not always required for property management, a degree in business, real estate, finance, or a related field can be beneficial. Additionally, professional certifications such as Certified Property Manager (CPM) or Accredited Residential Manager (ARM) can demonstrate expertise and competence in the field.

What are the two types of property management?

The two main types of property management are residential and commercial property management. Residential property management involves managing residential properties such as apartments, condos, and single-family homes. Commercial property management involves managing commercial properties such as office buildings, retail spaces, and industrial properties.

Key Takeaways

  • Property management involves overseeing the day-to-day operations of a real estate property, including rent collection, tenant screening, and more.
  • While a property manager can lead to reduced stress and increased tenant retention rates, they also come with a cost.
  • When looking for a property manager, consider their experience, licenses and certifications, communication skills, management agreement, and fees.

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