A property manager is usually employed by a landlord or a management company to handle the day-to-day operations of a rental property. A property manager is in charge of all elements of the property they manage, including marketing, leasing, and upkeep, as well as vendor and tenant interactions. When landlords don’t reside near their rental property or just want to offload the needs of property management to a qualified specialist, they frequently hire property managers.
Whether you’re seeking for a property manager to employ or want to become one yourself, there are a few property management basics that any excellent property manager should possess. Each of the following property management basics is critical for various reasons.
The Importance of Good Property Management
Many buy-and-hold investors quickly realize that maintaining their own rental properties isn’t worth the time and effort. This is especially true for investors who own properties in areas other than their own. While managing your own properties has advantages and disadvantages, it ultimately comes down to personal preference and capacity. Some people would prefer to be more hands-on and save a few dollars, while others would gladly pay a tiny proportion of their income to have the property managed by someone else.
Knowing what questions to ask and what charges to expect is a key part of making a successful hiring decision for those investors who choose to outsource management to a property management firm. Property managers come in many kinds, sizes, and colors, and may be found in practically any market. So, here’s advice for property managers. The following property management guidelines, property management rules, and regulations will be the skills needed for property management.
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Communication
Every property manager’s job requires effective communication. It’s one of the fundamental property management skills. It will be easier for a property manager to react to tenant emails and inform suppliers exactly what needs to be done in a property if they have strong written and vocal communication skills. A property manager must also be able to explain the leasing procedure to tenants and keep the property owner informed of any concerns that emerge.
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Organization
A good property manager is well-organized. Organization is also one of the 18 property management basics. Property managers must maintain track of each property they manage, as well as each tenant, potential tenant, property showing, security deposit, and maintenance issue. Because property managers must remain on top of so many shifting details, organizational skills are an undeniable value.
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Basic Technical Knowledge
Any property manager skills should incorporate technical knowledge. A property manager who is familiar with computers and internet tools (such as Apartments.com) will find it easier to stay organized and communicate effectively. Property managers that are digital savvy will have an advantage in getting units leased faster and safer as more of the leasing process moves online.
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Marketing Expertise
Getting a unit filled is an important part of property management. Every property manager’s toolset should include basic marketing methods such as creating a mind-blowing property description and producing a standout video tour. To engage with new and existing renters, it also helps to have some knowledge of email marketing and social media platforms.
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Management of the Budget
Finances play a significant role in property management. Negotiating lease agreements, collecting rent and utility payments, and keeping track of daily spending are all responsibilities of a property manager. Finally, a property manager must ensure that the property they are responsible for remains profitable.
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Management of Vendors
A property manager is in charge of vendor relations, which includes everything from setting clear expectations to ensuring that all work is performed. They are also in charge of vendor payment coordination.
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Service to Customers
Every property manager needs to be able to provide excellent customer service. Customer service is a part of every property manager’s day-to-day contacts, from defusing stressful situations to empathizing with tenant complaints. When a property manager interacts with a renter, a potential tenant, or a property owner, these abilities come into play.
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Real Estate Expertise
A good understanding of real estate is expected of a property manager. Some states need real estate licenses from property managers, while others want separate or extra certificates and licensure. Even though your state does not need specific certificates, many effective property managers receive a variety of credentials to demonstrate their professionalism and overall competency.
A property manager with substantial real estate experience is well-versed in the rental market. They’re also knowledgeable about frequent rental property difficulties, so they know how to prioritize and deal with any problems that emerge.
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Continual Learning Commitment
Many of the important credentials held by property managers require regular renewal (every two years or so), thus a commitment to lifelong learning is a must for any property manager. Many property managers are also kept on their toes by technological advancements, with the most flexible and inquiring property managers reaping the benefits.
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Prior Work Experience
Of course, everyone wants to engage a property manager who has a track record of success. With such a wide range of responsibilities and talents, finding people that match the majority, if not all, of the requirements can be difficult. Property managers, on the other hand, come from a variety of backgrounds. Some started off as leasing assistants and worked their way up, while others came from customer service or building maintenance. Property managers can come from a wide range of backgrounds and have a lot of success.
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Leasing
What is the cost of a new tenant being placed in the property by the property management company? I’ve discovered that paying half a month’s rent to a full month’s rent is pretty common. Make a point of learning how the property manager advertises for tenants. A property manager who charges a smaller lease fee might not advertise as much or offer a co-op for other agents representing possible renters. Saving a few dollars on leasing could end up costing you more in vacancy if the property management takes longer to find a renter. It’s also crucial to comprehend how the property manager selects applications. A property manager should, at the very least, be able to:
- Verify your earnings
- Request a credit report (look for prior judgments, eviction history, credit history).
- Conduct a criminal background investigation.
- Have a clear debt-to-income ratio (ie. rent amount cannot represent more than 33 percent of tenants gross income).
- Check rental references to learn more about the history of your rental.
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Fee for Management
For managing the property, all property managers charge a monthly percentage. This is normally between 8% and 10% of the gross monthly rent. The property management should be asked whether this fee is solely levied against real rent received or if it is charged monthly regardless of whether a tenant is present. It’s also crucial to know what services are included by this management charge. Some of the fees listed below may be included in the management fee rather than being charged separately.
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Fee for Renewal
Most property managers charge this fee to handle the paperwork required with renewing a tenant’s contract for another year (or more). This charge can range from a few hundred dollars to half a month’s rent. While this may appear to be a superfluous expenditure, I’ve discovered that a skilled property manager may save you thousands of dollars in vacancy and turnover costs if they can retain tenants in the property for numerous years.
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Fee for eviction
These are the costs of filing the eviction and dealing with the subsequent court proceedings. This, I’ve discovered, varies greatly from one property management to the next. Some property managers simply pass on the filing fees, but they also handle the eviction as part of their overall management services. Most, on the other hand, charge a few hundred dollars to handle the eviction and court appearances (on top of the filing expenses).
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Repair Escrow
Most property managers will ask the investor for a maximum dollar limit for maintenance/repairs without requiring particular consent. This is mostly done to protect the investor from having to make minor judgments that the property manager may easily make. Most property managers do this by keeping between $200 and $400 in a repair escrow account dedicated to these types of requests.
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Repairs
This is, in my opinion, one of the most crucial components of property management. You might find property management who outperforms the competition in practically every other category, but if they don’t have a decent, cost-effective solution for maintenance and turn-over charges, you might end up paying more. Some property managers simply outsource maintenance to third-party contractors, who may charge exorbitant handyman fees, whilst others have handymen on staff who can do repairs and handle turn-overs at a low cost. When interviewing property management companies, it’s critical to know and grasp the difference.
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Inspections/Travel Fee
Many investors believe that someone should visit the property at least twice or three times a year to confirm that the renter is taking care of it and that there are no big issues. Most property managers include drive-by inspections in their management fees, but they may charge a separate inspection or trip fee (of $50 to $100) to go within the property and assess its condition.
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Insurance
While most investors don’t associate homeowners insurance with property management, a few firms now do. The premiums are competitive with other landlord plans, and because the policy is owned by the property management firm, any claims against it do not affect the investor personally (i.e higher rates on personal insurance because of claim history). In addition, I’ve discovered that many of the master policies available through the property management business do not include vacancy exclusions. Unlike other landlord policies, which terminate coverage after 30 days of vacancy, a master policy continues to cover the property regardless of vacancy.
Conclusion
While each market will have distinct intricacies when it comes to property management basics, knowing the essentials (above) is crucial when choosing a property management company. Whether you hire a single real estate agent with a portfolio of 30 properties or a large firm with over 1000, you must feel comfortable with whom you hire and believe that they will do the right thing. The beautiful thing about a free market and competition in this field is that you can always change companies if the first one you choose doesn’t turn out as well as you had hoped.
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