Property managers are hired by real estate investors to maintain and oversee their rental properties. They handle the day-to-day management of the property, allowing the owner to take a more hands-off approach, or even live far away from the property.
Property Manager Responsibilities
Common property manager responsibilities include:
- Performing Maintenance Tasks
- Maintaining Properties
- Collecting Rent and Paperwork
- Handling Tenant Turnover
- Managing Tenant Complaints
- Ensuring Owners Follow Laws and Regulations
- Assisting with Taxes
Let’s look closer at these responsibilities individually.
Performing Maintenance Tasks
Every apartment building or other rental property occasionally needs some maintenance work done. For example, maybe a fence has to be repaired, or an apartment building needs someone to look at the plumbing.
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.
Property managers spent a lot of time maintaining their properties by:
- Doing lawn or garden work, such as watering plants, fertilizing plants, trimming trees, and so on
- Picking up garbage 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 apartment buildings or single-family homes
- 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 their employers request, as well as the type of property. A large apartment complex has different needs than a single family home.
Collecting Rent and Paperwork
Property managers are also often responsible for collecting rent checks or cash. They then deposit that money into a bank account for the owner.
Property managers can further collect other paperwork from tenants like:
- Apartment or other rental applications
- Maintenance requests
- Official complaint forms
- Rental renewal forms or leases
This paperwork must be collected, organized, and stored for future use. Property managers frequently maintain in-depth records for all the tenants at the buildings or properties they oversee.
Handling Tenant Turnover
In many cases, the property management company will handle finding and filling any vacancies. This process includes:
- Inspecting the property after the first tenant leaves
- Handling the return of the security deposit
- Advertising the opening
- Showing the unit
- Handling resumes and tenant screening
- Picking a new tenant
- Drawing up a lease for the new tenant.
This is a time-consuming and stressful process that property managers can handle for the owner.
Managing Tenant Complaints
In addition to other tasks, property managers typically handle tenant complaints, 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.
Complaints can quickly pile up over time. Property owners often hand it off to their property managers instead.
Property managers can answer these complaints by:
- Fixing whatever is broken or sending someone out to do the job.
- Solving interpersonal disputes or sending 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.
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.
- 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.
Investors employ property managers to make sure that they follow the landlord laws and regulations of their state and local city or municipality. For instance, they can make sure that:
- Leases and other official paperwork have all the parts it needs to be legally binding.
- They screen tenants fairly and accurately without compromising properties or revenue.
- An investor isn’t accused of discrimination or unfair hiring or application practices.
All of this is highly valuable, especially if an investor wants to avoid getting in trouble with the law in the future. Property management companies protect property owners by sharing liability in some cases.
Property managers can also ensure things like:
- A rental building has enough parking spaces to follow local city rules.
- Apartments adhere to federal and state safety standards.
- Rental properties are not at risk of catching fire or succumbing to other environmental hazards.
Bottom line: property managers are crucial for ensuring investors stay legally protected as property owners.
Assisting with Taxes
Last but not least, property managers also sometimes assist their employers with taxes. While they can file taxes on behalf of a property owner, this isn’t always the case.
However, they do make sure that property owners know how to file taxes for a given investment property. They are also often responsible for filing certain tax documents.
One example is 1099-MISC tax forms. The IRS requires property managers to file these tax forms whenever:
- They work with an unincorporated vendor
- They pay them more than $600 in a single 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 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:
- Saved time – 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.
- Opportunity for rest and relaxation – With a property manager working for them, investors can take time off and relax on the weekends rather than constantly having to oversee or maintain their portfolio properties.
- Make handling tenants easier – Some tenants can be difficult to work with or resist rent collection. Investors can hand these tasks off the property managers and avoid some of the unsavory or frustrating parts of property ownership.
- Tenant screening – Finding the right tenants to fill an investment property can be time-consuming and difficult. Property managers can handle this and do their best to bring in great tenants.
- Evict delinquent tenants – Many property owners don’t want to handle the messy business of evicting tenants who are behind on their rent.
- Outsource/complete specialized tasks – Some maintenance or expansion projects require specialized contractors to come to a property. Property managers can oversee these projects or maintenance tasks, as well as higher specialists, so investors don’t have to.
- Remove geographic restrictions on investments – 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.
Are There Downsides to Hiring a Property Manager?
Although hiring a property manager is oftentimes smart and beneficial, there are some possible downsides investors should keep in mind. These might help an investor determine whether it’s a good or bad time to hire a management company for their properties.
- Higher operational costs – Property managers fees are often around 8% – 12% of the rental income. However, the increased cost is often offset by the ability to purchase new properties or keep current properties filled with tenants.
- Loss of complete control – Investors must delegate tasks to their property managers, so they don’t always have final say in day-to-day operations.
In general, however, property owners usually find property managers to be more beneficial than not.
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
- Not Being Handy
- Having Many Maintenance Requests
- Not Wanting to Deal With Bad Tenants
- 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
However, 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).
Not Being Handy
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.
The right management company can tackle many maintenance requests in a day.
Having Many 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 Deal With Bad Tenants
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.
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.
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?
They can, but they often hire property managers 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.