A property manager is someone who oversees the day-to-day operations of a rental property. With an estimated 44% of real estate investors hiring a property manager, it’s worthwhile for real estate investors to consider if hiring a property manager is worth it.
Types of Property Management
Several property types may be overseen by a property manager including:
- Residential properties – single-family homes, multi-family homes, apartments, vacation rentals, condos/townhomes
- Commercial properties – office properties, retail properties
- Industrial properties – warehouses, factories
- Special-purpose properties – churches, hospitals, theaters, schools
When searching for a qualified property manager, it’s important to note that most property managers only specialize in one type of property. If you have a diverse portfolio, make sure to use a manager with experience that matches your needs.
Property Manager Responsibilities
Common property manager responsibilities include:
- Finding New Tenants and Handling Tenant Turnover
- Ensuring Owners Follow Laws and Regulations
- Collecting Rent and Paperwork
- Marketing Properties
- Handling Repair Tasks
- Maintaining Properties
- Managing Tenant Complaints
- Assisting with Taxes
1. Finding New Tenants and Handling Tenant Turnover
Property managers need to ensure their units are occupied. This can include filling new units or replacing tenants once a lease ends or after an eviction. These tasks typically consist of:
- Inspecting the property at the end of the lease
- New tenant screening
- Returning the security deposit
- Drawing up a new lease
- Showing the property
2. Ensuring Owners Follow Laws and Regulations
Many states—and even cities—have specific laws that property owners must follow. Federal laws also impact the types of investments one can make, how investors have to treat tenants and more.
For example, certain federal laws affect both landlords and property managers. These laws include:
- The Fair Housing Act – This prohibits discrimination based on race, color, religion, sex, familial status, and other protected attributes.
A property investor cannot disqualify a rental applicant because they have a child
- The Fair Credit Reporting Act – This limits how a property owner can use a tenant’s credit history when screening them for a potential rental property.
Written permission is required to pull an applicant’s credit report for both the owner and property manager.
Investors often employ property managers to make sure that landlord laws and regulations are followed within their state and local city or municipality. Especially if the investor is unfamiliar with the laws in that area.
For instance, property managers can make sure that:
- Leases and other official paperwork have all the sections needed to be legally binding
- Tenant screening is completed fairly, accurately, and consistently without compromising properties or revenue
- An investor isn’t accused of discrimination, unfair hiring, or poor application practices
This is highly valuable to investors, as it can help them avoid trouble with the law in the future. Property management companies also protect property owners by sharing liability in some cases.
Property managers can also assist in ensuring things like:
- A rental building has enough parking spaces to follow local city rules.
- Apartments adhere to federal and state safety standards.
- Rental properties do not risk catching fire or succumbing to other environmental hazards.
Bottom line: property managers are crucial for ensuring investors stay legally protected as property owners.
3. Collecting Rent and Paperwork
Property managers are typically responsible for collecting rent. If collecting via cash or checks, they must also deposit the money into a bank account for the owner.
They may handle various paperwork tasks like:
- Accepting rental applications
- Maintenance requests
- Official complaint forms
- Rental renewal forms or leases
Properly safeguarding in-depth records for all tenants is also necessary.
4. Marketing Properties
Successful marketing strategies help property managers maintain interest in their properties and keep them filled. Depending on the type of unit(s), a property manager may advertise the rental property by:
- Scheduling a professional real estate photographer
- Creating a physical advertisement
- Posting the property on rental listing sites
- Posting the property to social media accounts
- Holding an open house
5. Handling Repair Tasks
Every rental property occasionally needs some repair work done whether they are vacant or filled, a property manager will help resolve or fix the issue. This may include:
- Plumbing repair
- Electrical problems
- Lack of hot water
- Resolving issues with pests or vermin
- Fence repair
Larger property management companies will often have people to do this sort of work on their staff. Smaller companies will often have a network of contractors they can call for the service they need—or the manager can do the work himself.
After the work is complete, property managers also need to ensure the contractor is paid. Many property management companies have investors maintain a reserve that is charged while others include repair services in their monthly fee.
6. Maintaining Properties
Property managers spend a lot of time maintaining their properties by:
- Yard maintenance like watering plants, fertilizing plants, trimming trees
- Garbage clean-up left behind by tenants or people on the road
- Making sure that tenants park their cars in the appropriate spots
- Fixing damage that might appear on the outside of the space
- Cleaning sidewalks and driveways when necessary, such as by sweeping up leaves and debris from the weather
There’s no limit to the type of property maintenance property managers might undertake. It all depends on what exactly their properties need and what services they offer, as well as the type of property. A large apartment complex has different needs than a single-family home.
7. Managing Tenant Complaints
To maintain high-quality tenants, property managers need to work to ensure tenants are satisfied. This often includes handling tenant issues like:
- Noise complaints from neighbors or environmental factors
- Complaints that something is broken and that they need someone to fix it
- Complaints about other apartment or rental property dwellers
Most property managers handle these complaints by:
- Assisting the tenant in completing a property maintenance request
- Helping tenants solve interpersonal disputes or sending official warnings to troublesome tenants
Furthermore, property managers collect and file tenant complaints. This is important so they have a paper trail of all communications between a tenant and a property owner. This can be important if a tenant ends up being troublesome in the future, or if they need to prove something in court during or after a lawsuit.
8. Assisting with Taxes
Some property managers offer tax assistance by filing taxes for investment properties. They may also be required to fill out certain tax documents.
The 1099-MISC Tax form is required for property managers to file if they work with an unincorporated vendor or pay a vendor more than $600 in a calendar year.
Investors can have a property manager file taxes for them if they trust the manager completely. Alternatively, they may decide to have a property manager deliver tax documents to a tax preparer or other office. This is a similar responsibility to picking up and depositing checks or cash at a bank.
Benefits and Drawbacks of Hiring a Property Manager for Real Estate Properties
Hiring a property manager could be one of the wisest decisions to make as an investor. There are many different benefits to hiring at least one property manager to oversee portfolio properties. However, this decision doesn’t come without some drawbacks.
Check out this table below to help you determine the best decision for your business.
| Benefits | Drawbacks |
| More time for other tasks | Extra expense |
| Invest in areas away from home | Lack of control in day-to-day operations |
| Experienced tenant screening | Potential lax screening procedures |
| Avoid the stress of property maintenance and repair | Deferred maintenance |
Benefits of Hiring a Property Manager
- More time for other tasks – property managers take care of tasks that otherwise require the owner’s attention, such as maintenance tasks, handling tenant complaints, and more. Property investors can then focus their attention on other things, like growing their portfolios
- Invest in areas away from home – without a property manager, an investor is limited in new properties by how far they can drive in a few hours. With a property manager, an investor can purchase a new property anywhere they like since day-to-day operations are handled by that manager
- Experienced tenant screening – finding the right tenants to fill an investment property can be time-consuming and difficult. Experienced property managers have a screening process and can help avoid any unqualified applicants legally
- Avoid the stress of property maintenance and repair – getting a call in the middle of the night that a pipe burst may not be something an investor wants to deal with. A property manager may handle all maintenance and repair issues or schedule someone who can
Drawbacks of Hiring a Property Manager
- Extra expense – Property management fees cost up to 8% – 12% of the monthly rental income. This expense may be outside the budget for some real estate investors. However, the increased cost is often offset by the ability to purchase new properties or keep current properties filled with tenants
- Lack of control in day-to-day operations – Investors must delegate tasks to their property managers, so they don’t always have the final say in day-to-day operations
- Potential lax screening procedures – Some property managers are under pressure to fill units and may not be as diligent in screening applicants as an investor would prefer
- Deferred maintenance – 80% of property managers are involved in the coordination or performance of maintenance/repairs as well as rent and fee collections but too few property managers cite maintenance as a primary concern to form a statistic. This statistic points to deferred maintenance of properties and can lead to major issues down the road.
These drawbacks don’t necessarily mean you shouldn’t hire a property manager. Many of these drawbacks can be resolved by hiring the right property manager.
Be sure to conduct a few interviews with property managers or management companies to determine if they are the right fit. Knowing which interview questions to ask can ensure you find a locally experienced and organized property manager with great communication skills.
When is it Smart to Hire a Property Manager?
Some investors may wonder whether it’s smart to hire a property manager now or later down the road. Alternatively, some real estate investors don’t know whether a property manager is a worthwhile investment given their other expenses.
In truth, there are many different circumstances in which it’s smart to add a skilled property manager or management company to the team. These circumstances include:
- Investing Away From Their Hometown
- Owning Many Investment Properties
- Lack of Maintenance and Repair Skills
- A Large Number of Maintenance Requests
- Not Wanting to Handle Bad Tenants or Tenant Issues
- Wanting More Free Time and Less Stress
Investing Away From Their Hometown
One of the best times to hire a property manager is when you want to expand your portfolio and invest in a property elsewhere than your home city or state.
Property managers let owners invest in and manage properties far from each other. That’s because the property manager can oversee one property while the owner sees another, or while they drive between them.
Owning Many Investment Properties
A property manager may also be a wise investment if an investor has dozens of different investment properties to juggle. Even a handful of investment properties, like an apartment complex, can take tons of time and effort.
If the workload becomes too heavy, a property manager can make things much more manageable. It might be wise to hire a property management company as soon as an investor has more than five rental units (apartments or homes).
Lack of Maintenance and Repair Skills
If a property owner isn’t the best at maintenance tasks and doesn’t want to deal with hiring contractors, they should look into a property management company ASAP. Tenants need attentiveness when issues arise.
Deferred maintenance and repairs can lead to problems with the warranty of habitability and open the investor up to potential lawsuits.
The right management company can tackle many maintenance requests in a day.
A Large Number of Maintenance Requests
Property managers are useful if the investor has lots of properties with recurring maintenance needs, like broken appliances. The more maintenance requests an owner has, the more valuable a property management company becomes.
Not Wanting to Handle Bad Tenants or Tenant Issues
Every landlord has to deal with bad tenants, but no one likes to do so. Investors should consider hiring a property manager to interact with those problematic tenants who refuse to pay rent, who always complain, or who are generally rude.
In addition, if it becomes necessary a property manager can deal with evictions. The eviction process can be complicated and messy. An experienced professional can help keep the process as painless as possible.
Wanting More Free Time and Less Stress
Investors should hire property managers when they want to spend time elsewhere, like with their family or working another job. The primary reason to build up a rental property portfolio is to make money and enjoy life. Property managers let investors do just that.
Are There Educational Requirements to Be a Property Manager?
There are educational requirements for being a property manager. The requirements vary by state but typically include:
- Age (18 – 21 depending on the state)
- High school diploma or GED
- Legal U.S. citizen or permanent resident status
Licensing for Property Managers
Most states also require property managers to obtain a real estate broker’s license or a property management license. Check the table below for the requirements in your state:
| State | License requirements |
| Alabama | Real estate broker license |
| Alaska | Real estate broker license |
| Arizona | Real estate broker license |
| Arkansas | Real estate broker license |
| California | Real estate broker license |
| Colorado | Real estate broker license |
| Connecticut | Real estate broker license |
| Delaware | Real estate broker license |
| Florida | Real estate broker license |
| Georgia | Real estate broker license |
| Hawaii | Real estate broker license |
| Idaho | No requirement |
| Illinois | Real estate broker license |
| Indiana | Real estate broker license |
| Iowa | Real estate broker license |
| Kansas | No requirement |
| Kentucky | Real estate broker license |
| Louisiana | Real estate broker license |
| Maine | No requirement |
| Maryland | No requirement |
| Massachusetts | No requirement |
| Michigan | Real estate broker license |
| Minnesota | Real estate broker license |
| Mississippi | Real estate broker license |
| Missouri | Real estate broker license |
| Montana | Property management license |
| Nebraska | Real estate broker license |
| Nevada | Real estate broker license |
| New Hampshire | Real estate broker license |
| New Jersey | Real estate broker license |
| New Mexico | Real estate broker license |
| New York | Real estate broker license |
| North Carolina | Real estate broker license |
| North Dakota | Real estate broker license |
| Ohio | Real estate broker license |
| Oklahoma | Real estate broker license |
| Oregon | Real estate broker license OR Property management license |
| Pennsylvania | Real estate broker license |
| Rhode Island | Real estate broker license |
| South Carolina | Property management license |
| South Dakota | Property management license |
| Tennessee | Real estate broker license |
| Texas | Real estate broker license |
| Utah | Real estate broker license |
| Vermont | No requirement |
| Virginia | Real estate broker license |
| Washington | Real estate broker license |
| West Virginia | Real estate broker license |
| Wisconsin | Real estate broker license |
| Wyoming | Real estate broker license |
Continuing Education for Property Managers
Many property managers look for opportunities to continue their education to prove their mastery and experience in the industry. This can increase career opportunities and help property managers appeal to higher-level clients.
There are several professional property management organizations and most offer special certifications including:
- Certified Property Manager (CPM)
- Residential Management Professional (RMP)
- Master Property Manager (MPM)
- Accredited Residental Manager (ARM)
- Accredited Commerical Manager (ACoM)
- Property Administrator Certificate (PAC)
- Facilities Management Certificate (FMC)
- Building Systems Maintenance Certificate (SMC)
- Real Property Administrator (RPA)
- Certified Apartment Manager (CAM)
- Vacation Rental Management Certificate Program
Property Manager FAQs
Do Property Managers Own Rental Properties?
They can. For example, a duplex owner who lives in the first unit and rents out the second unit is technically both a landlord and a property manager. That’s because they own the property and are responsible for maintaining it or fixing it up in the event of wear and tear.
However, full property management companies do not own rental properties. Rather, they work for investors or property owners on their behalf.
Can Property Owners Manage Their Own Properties?
There is no requirement to hire a property manager. However, many property owners opt to hire a property manager when they have too many units or don’t want to deal with the day-to-day.
Who Do Property Managers Work For?
Property managers work for real estate investors, apartment building owners, single-family homeowners, and more. They can work for anyone who owns property and rents that property out to tenants for whatever purpose.
