According to the most up-to-date statistics compiled by True List, 44% of landlords prefer to use property managers to oversee their properties. Meanwhile, the 45% who choose to manage their property single-handedly report high stress levels, low profitability, and difficulty keeping good tenants long-term.
This guide will explain the different types of property managers landlords can work with, what a property manager does, the cost of their services, and whether working with a property manager is right for you.
First, let’s ensure we’re on the same page by beginning with a definition. What is a property manager, exactly?
A property manager is a real estate professional who oversees the daily operations of a rental property on behalf of the owner. Property managers are responsible for rent collection, maintenance and repairs, tenant screening, lease agreements, and other daily tasks.
When first exploring the world of property management, it’s best to be aware that not all property managers are created equal. We’ve divided property managers into these five categories to help you find the type that meets your needs.
This type of property manager is part friend, part business associate.—someone you already know with some experience managing properties. It’s not usually a formalized partnership but more like calling in a favor from a friend. And while this comes with little to no fee upfront, it also usually translates to you not being a top priority and falling to the bottom of their to-do list. We don’t recommend this arrangement to solve your property management needs.
You’ll often find a side hustler within another type of company, but the company isn’t necessarily a property management company. It may be another real estate or investment firm with a small management department.
This property manager typically manages the properties their firm wants to purchase. Typically they’re not involved with the day-to-day workings of a property and don’t offer hands-on service. Their priority isn’t managing the property but keeping it on the back burner for the day you (the owner) finally decide to sell.
The one-man–or woman–band is a highly motivated, meticulous, hands-on property manager. They work as a team of one, are qualified, and have real property management experience. This type of property manager may have recently left a more prominent firm to cherry-pick their clients and offer more robust and personalized attention to everyone they serve.
While this property manager can be brilliant, they may have higher pricing. But, the heftier price tag may be worth it for customizable services and creative solutions to save money and improve your property’s worth.
The small-to-medium-sized property management company is generally locally or regionally focused. They provide hands-on service with one point of contact (your property manager) who handles your property personally, and they work with a competent admin team to back them up. These team members can carry the torch if the property manager gets sick or needs to take a few personal days.
Property management companies typically handle 100 to 500+ properties, while individual managers (and their admin teams) tend to manage portfolios of 100 to 200. Plus, if they manage residential properties, they’re an active member of NARPM, a national organization of residential property managers, to consistently hone their skills and stay current on laws and other relevant practices.
Most national brands, averaging 500 to 1000+ properties, fall into this category. Large or departmental property management companies can offer lower pricing for their services as they use their size to increase efficiency.
Unlike a smaller firm, larger companies will have several property managers who handle many management aspects. While this works well with routine needs and can be one of your most cost-effective options, property owners should understand that managers in this situation can’t spare much individual attention for each property.
Not sure yet which property management type is best for you? Read more about the different options.
Simply put, property managers handle the day-to-day management of a property. However, what a property manager does is highly individualized and can be tailored to the specific needs of each property owner.
Typically, a property owner can choose from a variety of property management services, including:
Because of the flexibility available when procuring property management services, the costs can also vary widely. As a baseline, property owners should expect to pay a typical residential property management firm between 8-12% of the monthly rental value of the property, plus expenses.
Property managers typically charge two different ways—a fixed monthly fee or a percentage of the rent. Additionally, many property managers will offer various services depending on a property owner’s needs.
If you’re a “hands-on” owner looking to delegate only specific tasks and functions to a property manager—such as tenant screening, recruiting, and annual inspection fees—you can expect to hand over only a tiny percentage of your profits in exchange for these basic services.
But suppose you’re looking to be a “hands-off” property owner delegating most day-to-day tasks and functions to a property manager. In that case, you’ll pay closer to 8-12% of the monthly rental value, as previously mentioned. In exchange, your property manager will take a vacant unit to a tenant-occupied one as soon as possible. They’ll cover marketing, the tenant application process, all necessary maintenance, any late payments, and—fingers crossed it won’t happen to you—evictions if necessary.
In either situation, property owners will usually pay a small setup fee when getting started.
As a property owner, ask yourself the following questions to determine if you need a property manager:
These answers can help you discover if hiring a property manager is the next right step.
There are many reasons to partner with a property manager. Still, we’ll outline the top four for you below.
Setting a fair and competitive rental rate is critical when advertising your property. You’ll want to research what’s typical for the neighborhood and your property type. All Property Management’s Rental Calculator can help you make the best decision. Alternatively, partnering with a property manager makes setting rent—and marketing your property—simple.
Finding and keeping great tenants can be one of the most challenging aspects of managing a property. You’ll need a solid system for recruiting quality applicants, a strong application process, and a delightful property for your residents to live in. Luckily, property managers have their own tried and true systems in place, so you won’t have to start from scratch.
Managing property comes with more than a few rules and regulations. Renting your space to others means a property owner should always comply with local housing regulations and property laws. These laws vary by state, making it tricky, but the right property manager will know exactly how to ensure your property is compliant.
Property managers help owners maximize the profitability of their time and money. Whether you want to manage one property efficiently or grow your real estate portfolio, a professional property manager’s expertise is invaluable.
A property management professional can leverage their expertise to help you find the next right investment and the perfect tenants to match.
If you’re ready to partner with a professional property manager, let All Property Management help you start your search for free.