Many people become landlords without really knowing much about property management. Thus, they may struggle with essential responsibilities such as maintaining facilities, collecting rent, and screening tenants. In order to protect the value of your property, it’s important to be familiar with the basics of real estate property management. Here’s what you need to know.
What Is Property Management?
In this section, we will discuss the definition of property management and how it is different from a homeowners association (HOA) or a condo association (COA).
Property Management Definition
Property management involves the control, maintenance, and oversight of real estate. Typically, the term has to do with the process of leasing or renting residential properties such as apartments, condominium units, or single-family homes, as well as commercial establishments such as shopping centers, medical offices, and business parks.
In property management, an individual or group will have ownership of the entire property. They do not necessarily reside in that property well. Instead, they find tenants to live in their property in exchange for rent each month. Depending on the property management laws in your state, landlords must fulfill certain obligations to their tenants such as making the property habitable and up to code.
In comparison, separate people own the homes or units in an HOA or COA community. Because each property owner has a stake in the community, they establish an HOA/COA board to take care of the community and its property values.
Landlords may choose to manage their own property. However, a lot of property owners — especially those who have a large portfolio or live far away from their property — choose to hire a property management company to oversee operations on their behalf.
What Do Property Managers Do?
A property manager typically works for a property management company. However, property managers can work as independent contractors too.
They handle the day-to-day operations of your property. Serving as the official representatives of landlords, property managers ensure that all the landlords’ obligations — as mandated by the law and lease agreement — are taken care of.
Property managers also function as a bridge between landlords and tenants. They will be the primary contact person in case tenants have maintenance issues or requests. Property managers also take over marketing responsibilities and the screening process for potential tenants.
To gain a better understanding of property managers, here are key property management services that they perform:
1. Setting and Collecting Rent
Property managers will use their experience and expertise to set competitive rental rates for your property. This is beneficial for landlords who are not familiar with the local market and may end up with too high or too low rent rates.
Property managers also handle the rent collection process each month. They employ strategies, such as online payment channels and monthly invoices, to ensure that tenants pay rent on time.
In addition, a property manager will send official notices to late payers and handle the eviction process if necessary. You can trust that a property manager will be strict in enforcing rent policies to ensure your cash flow and property expenses are taken care of.
2. Property Maintenance and Monitoring
Maintenance is one of the most important responsibilities of a property manager. They perform a variety of maintenance tasks to make your property beautiful and habitable. This serves two main purposes: to keep tenants happy and to keep property values high.
Property managers will routinely monitor the facilities to ensure that they are in good working condition. They are also likely to spot minor maintenance issues before they become bigger and more expensive problems. If there are necessary repairs beyond their skill level, property managers will have a network of maintenance professionals to call on.
3. Screening Tenants
Landlords rely on their property managers to find and screen tenants. Since it is one of their major responsibilities, property managers will put in the time to thoroughly check an applicant’s credit score, employment history, and rent history to determine their ability to pay rent each month.
Landlords can be confident that the property manager will choose the highest quality tenants. You want to avoid having difficult tenants who pay rent late, damage property, or cause tension with other tenants.
4. Marketing and Budgeting
Property managers have expertise in marketing and budgeting. They will advertise your property on a variety of platforms — both online and offline — to reach as many potential tenants as possible.
Property managers also budget a property’s finances so that there is enough money to pay for scheduled and unexpected repairs, essential services such as garbage collection and pest control, and updating facilities.
What Are the Benefits of a Property Management Company?
Hiring a property management company is another significant investment for landlords. However, the benefits they provide to you and your property can be invaluable. Here are the top benefits of a property management company.
1. Years of Experience and Expertise
Property management companies have experience handling different types of properties. Thus, they have tried-and-tested strategies for dealing with a wide variety of circumstances. Their expertise in property management will be very helpful, especially for first-time property owners.
2. Time Freedom and Convenience
A lot of landlords have difficulty finding the time to take care of all the essential property management tasks. They end up sacrificing their personal life in order to protect their property.
With a property management company, landlords can regain control of their time and concurrently, ensure that their property is being taken care of. It’s also convenient to have a property manager if you live far away from your property.
3. Easy Way to Enjoy the Benefits of Your Investment
Leasing property can be a very profitable business, but most landlords do not want the hassle and stress that usually comes with property management.
When you hire a property management company, you can enjoy the passive income generated from rent payments without having to deal with stressful situations such as dealing with delinquent tenants and late rent payments, frozen pipes and other plumbing issues, and performing tedious background checks on potential tenants.
A Better Understanding of Property Management
By now, you are no longer asking, “What is property management?” You have a solid understanding of the term and how it can benefit you as a landlord.
Though hiring a property management company entails additional costs, it will also give you peace of mind — especially if you are not interested in handling the intricacies of property management. A property manager will always act in your best interests and ensure that the property is well-maintained and profitable.
If you need help finding a suitable property management company, HOA management company, or real estate agent, feel free to browse our online directory.
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