In 2022, 86% of property managers started working with new clients. These clients run the gamut of property owners from seasoned investors to first-time landlords.
Why are so many owners working with property managers? What property management services are they investing in? And what benefits are they looking for to justify that investment? In this post, we’ll answer these questions and help you get the most value out of property management.
The services provided by a property manager or property management company can provide are broad and their scope can often shrink or grow to meet your needs as a property owner. Many companies offer both "full service" options and partial or "a la carte" property management services, depending on what property owners desire. That said, there is a standard set of services you should expect from any professional property manager.
Below is a non-exhaustive list of the types of services you can expect property managers to offer.
Property managers can assess a property’s value and help owners determine a fair rental rate for prospective tenants. They know their local market, all the relevant laws, and pricing strategies to help you get the most profit.
A property evaluation also sheds light on any changes you might need to make to your property before putting it on the market. For example, property managers can install security measures such as a lockbox or alarm system. This helps ensure your property is able to provide a safe space for tenants to make their home.
Property managers are pros at prepping homes to rent. They’ll oversee minor updates, such as zhushing up your curb appeal through a few landscaping updates. You can also expect a property manager to clean the home and have it staged for marketing photos. They’ll then create ads for the property to attract the perfect tenants for your place and post listings across several sites, so you don’t miss out on applicants.
Once the property is in tip-top shape, property managers work tirelessly to find a tenant. This might include offering 24-hour answering services, hosting open houses, partnering with realtors, or meeting for private showings with prospective residents.
Whatever it takes, a professional property manager will get your place occupied. They’ll provide potential tenants with applications and collect completed applications accompanied by application fees.
With a beautiful property that potential tenants will clamor for, a property manager will take on the tedious task of sorting through applications to determine the perfect tenant for your property. They’ll perform background and credit checks to ensure top-quality tenants.
Plus, since they’ve got the necessary experience, they’ll remain impartial and cognizant of all fair housing laws and obligations so your property provides housing ethically. You won’t have to second-guess yourself about staying compliant or letting the wrong renter into your property.
With a property manager, an owner doesn’t have to lift a finger come move-in day. A good property manager will coordinate all aspects of move-in with the tenant(s). They’ll also complete essential paperwork, including any move-in or move-out inspections necessary between tenants.
Daily worries are also a thing of the past with a property manager on hand. They’re equipped to handle both routine and emergency maintenance and repair requests. They’re able to utilize convenient technology to collect rent, manage any late fees, and perform property inspections and evaluations throughout a tenant’s occupancy.
Of course, maintenance isn’t always routine. If you find your property is in need of a renovation, whether minor or major, you’ll be glad to have a property manager on call. They’re adept at managing vendor relationships, coordinating elements of the renovation, and ensuring everyone gets paid on time. With the right property manager, renovations can be a painless process.
Taking care of day-to-day financials is another welcome task to turn over to a property manager. Property managers will handle bookkeeping, file taxes, and manage routine paperwork so all you have to do is skim your monthly owner’s report to monitor your profit margins and the health of your investment.
Tracking rental property finances is a fine balance between staying aware of all the details that are vital to your property without drowning in paperwork and reports. The best property managers keep you in control of your investment while handling the incidentals and busy work.
No one looks forward to evictions, but if you find yourself in messy eviction proceedings, you’ll be glad for the assistance of a property manager. A property manager will not only know the proper legal process to pursue, but also will ensure that every possible mediation avenue is explored prior to an eviction. This way, you’re not committed to the process unless absolutely necessary.
Of course, property managers are not lawyers. Make sure that the company you choose is both experienced with evictions and has licensed legal resources at its disposal. If you’d prefer a more hands-on approach, seek legal counsel to supplement what a property manager can provide.
Beyond the lengthy list of services available, a property manager also provides value at every step of the rental process, helping you save money. Here are just some of the ways investing in a property manager grows your profits in the long run:
Professional property management reduces costs by negotiating better (aka cheaper) contracts with various professionals. Plus, they bring those contractors more work than just one property. Because of this, property management companies are able to negotiate lower rates than the typical landlord can.
Property management companies aren’t legal professionals, but they do have experience with legal issues that your typical landlord does not. In fact, through years of industry expertise, property management companies have a solid understanding of local laws. They’ll be able to offer you initial advice to help avoid common pitfalls and the legal fees that can accompany them.
Long gone are the days when people were willing to write a check and drop it off in someone’s mailbox. Property owners need to be operating online in order to stay relevant. But, building a rental website from scratch is daunting—and unnecessary.
Property management companies circumvent the need to build an online presence yourself. They’ll have the technology already in place to make it easy for tenants and to pay rent, file maintenance work orders, and submit other requests online—and for you to keep tabs on any of these activities as you see fit.
In addition to negotiating cheaper contracts, most property management companies have access to better-quality contractors. They’ve already done the leg work of vetting contractors and building relationships. They have established connections and access to better workers that ultimately provide more cost-effective, higher quality, and longer-lasting results.
When you need to renovate your property quickly to be more competitive in today’s market, partnering with a property management company makes that process painless. The bottom line: you end up with high-quality work that doesn’t break the bank.
Property management companies have experience with a variety of worst-case scenarios that you can benefit from. Whether that means making sure that your property has the right insurance in case of emergencies, protecting the property owner if accidents occur on the premises, or settling disputes between tenants, property management companies have you covered.
What’s more, many property management companies have a human resources team ready and waiting. They’ll ensure that your property has the right insurance coverage and that all contractors and specialists on the premises are bonded and insured. Plus, you’ll no longer need to mediate disagreements between tenants. There’s an unbiased third party ready and waiting!
The cost of property management services can vary greatly, as it’s not a one-size-fits-all type of arrangement. Typically, property managers are able to create specialized offers for property owners based on their unique needs. But there are a few indicators you can plan for.
Are you a hands-off or hands-on landlord? Do you live locally or out of state? Maybe you’re the type of landlord who lives on the premises and enjoys taking on basic non-urgent maintenance requests. Or maybe you’d rather just collect a check each month.
Your desired level of involvement will influence how much you’ll spend on property management services. Generally, the more services property managers offer, the higher their cost will be, but the ROI they’ll deliver will also grow.
There are two basic ways fees break down. You’ll either pay your property management company a percentage of the monthly rent or a fixed monthly property management fee.
As a baseline, expect to pay a typical residential property management firm between 8% and 12% of the monthly rental value of the property, plus expenses.
While most property management companies charge a percentage of the monthly rental payment, some companies may offer a monthly flat rate per unit. Depending on your property’s rental value and the scope of services covered in the agreement, this may or may not be a good deal for you.
Another angle to consider is whether your property management company will be paid every month or only on months when the property is occupied.
No matter what you decide is best for you, approach hiring a property management company as an investment in your property, not an extra commodity to indulge in someday.
If you’re ready to find a local property manager, learn what property management services are available in your area.