What Does a Property Manager Do?
Property managers do much more than just collect rent. They are also responsible for tasks like advertising available units, keeping up with maintenance, managing financial records for tax purposes, and ensuring compliance with both federal and state housing laws. Below, we’ll take you through all of the tasks that are generally included in a property manager job description.
7 Key Responsibilities of Property Managers
People who invest in property often hire property managers to oversee the day-to-day operations of their real estate assets. Overall, the property manager’s goal is to help property owners turn a profit on these investments, which requires them to take on the following responsibilities:
1. Show and lease available units
While the fee for property management is sometimes calculated as a percentage of the rent that is due each month, many contracts are set up so that this fee is based on the amount of rent that’s actually collected — this makes filling vacant units one of the top priorities for most property managers.
To accomplish this goal, property managers first need to develop marketing strategies and advertise available units to the general public. Once people begin to show interest in the properties, they’ll need to schedule tours and show the units to these potential tenants.
2. Screen potential tenants
A lease agreement goes both ways — potential tenants will want to confirm that a property suits their needs before they rent it, and property managers want to confirm that the tenant will take good care of the property and keep up with their payments. By contacting references, checking credit scores, and running criminal background checks, property managers can screen out tenants who are more likely to give them trouble down the road. Some property management contracts include a separate tenant placement fee that can be refunded if the tenant vacates the unit or breaks the lease, which gives managers additional incentive to screen out tenants who might be a problem.
3. Set, collect, and deposit rent
While their contract may include a fee for vacancies, generating rental income is still a top priority for property managers. They must make sure that rent is collected and then deposited into the appropriate accounts in a timely manner.
Property managers may also be responsible for setting the rental rates for the property. In such a case, they’ll need to analyze the rental market in their area to determine prices that will allow them to earn the most profit while remaining competitive.
4. Maintain property
General wear and tear is inevitable on any kind of property. Appliances will sometimes break, walls will eventually need a fresh coat of paint, pipes will get clogged or start leaking, etc. Landscaping jobs, such as mowing grass, removing leaves, and trimming shrubs, will also need to be performed on a regular basis. Keeping up with all of this maintenance is certainly one of a property manager’s most demanding responsibilities.
To keep costs down, property managers must be proactive. They should inspect units at least every six months so that maintenance issues are identified and fixed before they develop into bigger problems. This is especially important for vacant units — when there aren’t any tenants around, no one but the property manager is going to notice developing problems.
When there are tenants occupying a unit, property managers should respond to their maintenance requests as quickly as possible. Although some issues aren’t that time sensitive, others (major leaks, pest infestations, broken air conditioning systems in the summer, etc.) can be a terrible experience for the tenant until they get fixed. If property managers don’t address such problems right away, the lease renewal rate will drop and ex-tenants will likely leave negative reviews online, which makes it harder to find new tenants in the future.
For simple jobs like collecting trash and cleaning public spaces, property management companies will often use in-house maintenance crews. More complicated jobs, such as electrical or plumbing work, will require outside help from a skilled professional. For these tasks, property managers will need to figure out which local vendors can get the job done right at a fair price — indeed, establishing a network of trusted vendors in the area is one of the most valuable services that a property manager can provide for the property owner.
5. Manage the budget set by property owners
With marketing, staffing, and many other expenses to consider, balancing an investment property’s budget often requires a lot of careful planning.
As for managing the budget for repairs, the property owner will typically put the money that’s needed for maintenance into a repair service fund. The property manager may be authorized to pull from this account at their discretion, or they might be required to notify the owner when repairs cost over a certain amount. The minimum account balance for a repair service fund is typically equal to one month’s rent for each unit.
6. Represent out-of-town property owners
Property managers are especially valuable to property owners who don’t live in the same area as their real estate investments. Property managers with these responsibilities will often work on-site, which means they will be on hand at the property during work hours to deal with any issues that pop up. In fact, if the property manager works at an apartment complex, the property owner may even offer lodging in the compensation package. Whenever the owner wants an update, the manager can provide them with firsthand knowledge of what’s going on with their real estate investments.
7. Ensure compliance with landlord-tenant regulations
Finally, property managers are responsible for ensuring that the property owner’s investments are operated without breaking any housing laws.
The Fair Housing Act, which was originally passed as part of the Civil Rights Act of 1968, prohibits the following actions if they are based on the tenant’s race, religion, national origin, gender, or disability:
- Refusing to rent housing
- Refusing to negotiate for housing
- Making housing unavailable
- Setting different terms, conditions, or privileges for particular tenants
- Providing different housing services or facilities for particular tenants
- Falsely denying that housing is available for rent
While the Fair Housing Act covers most housing situations, there are some exceptions — sometimes this law exempts owner-occupied buildings with no more than four units, single-family housing sold or rented without the use of a broker, and housing operated by organizations or private clubs that limit occupancy to members.
The penalties for violating the Fair Housing Act can be as large as $21,663 for the first offense and up to $54,157 for subsequent offenses (tenants have two years from when the offense occurred to file a discriminatory lawsuit). In addition to these penalties, anyone who is found to violate this law will also need to pay for attorney’s fees and the damages that may be awarded to the victims of housing discrimination.
Also, the Fair Credit Reporting Act requires a property manager to obtain a tenant’s permission before running a credit check on them. This permission must be in writing, signed, and dated — it’s usually included as a clause at the bottom of the rental application, though it may be presented to the tenant as a separate document. If a property manager rejects the potential tenant’s application because of their credit score, then the property manager must disclose this.
In addition to these federal laws, there are likely state-level laws in your area that apply to housing as well. This is another factor that makes property managers quite useful to out-of-town property owners — they provide expertise regarding these local issues that the owner wouldn’t have much experience with.
Pros and Cons of Hiring a Property Manager
Property managers clearly offer a valuable service, but it should also be noted that there are some downsides that property owners must take into account. For one thing, these firms typically take at least 8% of the rental income that’s generated by the properties they’re overseeing as a management fee, and they may charge additional fees as well. Another downside is that owners will have less personal control over the day-to-day operations of their real estate investments.
The table below breaks down the key pros and cons that property owners should consider when deciding whether or not to hire a property manager:
|Saves owners from all the time and effort it takes to manage properties||Generally requires at least 8% of rental income and other fees|
|Allows out-of-town owners to keep their properties operating remotely||If you decide to change property management companies before the contract is up, you may need to pay an early termination fee|
|Provides out-of-town owners with expertise regarding local vendors and state laws||Less control over real estate investments|