A property manager (PM) is someone who is licensed by the state to carry-out the management of tenants and properties. A PM can be a key member of your real estate investing team, but what exactly does a property manager do and what can you expect from them? The answer differs from PM company to PM company. However, there are key activities that all PM’s should excel at. In this article we will be going over what a typical property manager can do from when you first purchase a rental property to when you sell it.
Highlights
- Property managers are licensed, bonded, and insured in the state that they do business in.
- A good PM should be able to market your property, screen prospective tenants, manage the tenant and property, and more.
- PM’s should have systems in place to handle issues that pop-up such as repairs, unit turnovers, and non-payment of rent.
- A PM should be proactive and market soon-to-be vacant units before they become vacant to ensure that there is little to no vacancy.
1. Marketing the Property
A good property manager will post the rental listing on many websites that prospective tenants frequent. Many PM’s use software to create a rental listing on multiple websites at once. Getting your property in front of as many prospects as possible is key to quickly renting out the unit. A good PM will have a referral network as well that can refer qualified tenants to fill vacancies. A property manager should also have a good idea of what your property can be rented out for so that you can get the highest rent possible. As of spring 2022, RMA is filling vacancies before the old tenants move out, which means there is no down-time for your rental. This is why it is important to have a great property manager with a marketing strategy in place.
2. Screening tenants
A tenant can make or break your real estate deal. There is a number of background info that the PM must find out about any potential tenant. For instance, the PM should ensure that the prospect has the income to comfortably cover the rent. A PM should also perform a background check to determine if the prospect has any prior evictions, or a criminal background. A good PM will also look at the prospect’s credit report to look at their debt payment history and conduct interviews with the prospect’s previous landlords.
3. Rent Collection
A great PM stays on top of rent collections and enforces late-fees. Typically a tenant can set up autopay for their rent so the tenant doesn’t even have to take the time to pay it. However, some tenants choose not to set up autopay and instead pay via cash or check. If paying by cash then the PM should retain a copy of a signed receipt indicating how much was paid and on what date to prevent any “tenant says they paid the rent while the PM says they didn’t” moments. If a tenant is late on their rent payment then a PM should reach out to them the very day the rent is late and find out when the rent will be paid as well as inform the tenant how much the late fee will be. The PM should continue to stay on top of the situation through phone calls and email communications to the tenant until the tenant pays the rent and any associated late fees. If this process drags on for longer than a few days after rent is due then the PM should begin the eviction filing process.
4. Handling tenant maintenance requests
If a tenant has a maintenance request such as getting a broken dryer fixed or fixing a leak a property manager will answer the tenants phone call/ maintenance request and will contact the right professionals who can diagnose and repair the issue. A good property manager should also have your wallet in mind by ensuring that the person doing the repair charges a fair price and that the tenant is billed for any repairs that are the tenant’s responsibility ex: a clogged toilet. Some PM companies have in-house maintenance crews. Having everything under one roof usually means the PM can charge less for repairs. Another benefit of in-house maintenance is that the PM can’t point the finger at a 3rd party contractor if things aren’t fixed properly or the repairs don’t stay on schedule and vice-versa. In-house maintenance can have drawbacks for the homeowner though. For instance, The PM could possibly be a little overzealous with repairs without homeowner oversight. Counter this by setting a limit on how much the PM can spend on repairs without your input. The PM should handle all of the details and ensure the work is done properly and quickly. This not only means that you save money on not having to fix something twice due to an improper repair, but you also don’t risk the tenant becoming unhappy with the slowness of repairs and not renewing their lease.
5. Property inspections
When the property is rented out a property manager should inspect the inside of the unit at least twice a year. This is to ensure that the tenants are maintaining the property, things are functioning as they should be, and that the air filters have been replaced. Another component of the inspection will be making sure that no adults not on the lease are residing in the residence. If an adult is not on the lease, but lives at the property then they may not be bound by the rules of the lease. This can create a number of issues if this occupant fails to abide by rules such as quiet hours or if they break something on the property they may not be legally bound to pay for it.
6. Tenant evictions
Unfortunately, some tenants are unwilling or unable to pay their rent and must be evicted. Even if the PM properly screens tenants no screening process is 100% fool-proof. Reasons for a tenant eviction can include non-payment of rent, or not following the rules of the lease and/or the community. For instance, If smoking is not allowed in the unit and the tenant smokes within the unit and refuses to stop after a notice to comply has been served then this is grounds for eviction. The good news is that this should be a very rare occurrence, and if it occurs the process should only take about 3 weeks.
If an eviction must occur then the PM will go to court and show the judge the lease, as well as the late notices. Evictions must be done correctly to a T as any deviation from the process may lead the judge to rule that the eviction will not go through as the proper procedures were not followed, and the eviction process must be restarted. This is another reason why having an experienced PM on your team can be very important. We at RMA take our tenant screening seriously, which is why only one tenant out of our 150+ tenants had to be evicted in 2021.
7. Unit turn around
After a tenant leaves a unit the PM will send a maintenance and cleaning crew into the unit to get it ready to be rented out again. It is important that this is done as soon as possible after the previous tenant vacates as every day the unit sits empty is one less day of rent collection. The vacating tenant should leave the unit in a good and clean condition, as per the rental contract, but normal wear-and-tear is to be expected. For instance, the paint may need to be touched up in some spots, or worn-out carpeting may have to be replaced. Any damage above normal wear-and-tear will be fixed and the vacating tenant will be billed for this damage. This is also a good time to perform any remodeling to ensure that the property remains appealing to the changing tastes of tenants. Once the maintenance and capital expenditures have been performed and the unit thoroughly cleaned, the rental is ready for new tenants.
This article is not investment, legal, or tax advice and is for informational purposes only