A Landlord’s Guide to Rental Property Management
Most landlords will ask this question at some point in their rental career: Should I hire a rental property manager?
The answer depends. Although many landlords prefer to take full ownership of managing their rental business, it takes a lot of time and effort to keep up consistently — especially if you have multiple rental units.
Whether you start looking at rental property management options right from the start or wait until you decide to start adding additional properties, we’ll break down the pros, cons and everything in between to help you answer this key renting question.
What is rental property management?
Real estate property management acts as a third-party contractor that oversees the daily operations of a residential, commercial or industrial property. This relieves pressure for landlords that want to ensure each rental unit is properly maintained and kept to ideal standards.
Once a rental property management company has been chosen, the property managers take full responsibility of caring for the rental unit. This includes regular maintenance, on-call security and general upkeep. The owner can delegate tasks and to-do items for the property manager to consistently maintain the property’s value.
Why do landlords choose to hire a property manager?
There is a broad range of reasons to hire a property
manager. The main reason is that a property management company will take over many responsibilities and time-consuming
tasks that would otherwise have to be completed by the landlord.
There is a broad range of reasons to hire a property manager. The main reason is that a property management
company will take over many responsibilities and time-consuming
tasks that would otherwise have to be completed by the landlord.
A property manager can:
- Screen tenants to find ideal applicants for your property.
- Create, sign and renew lease agreements.
- Conduct routine inspections.
- Provide ongoing property maintenance and repairs.
- Collect rent and fees from tenants.
- Ensure you’re in compliance with local and state housing laws and regulations.
Additional reasons include if a landlord:
- Prefers passive rental income. Delegating these responsibilities to an expert real estate professional can help ease the burden and help landlords who prefer to use their rental properties for passive rental income.
- Has multiple rental units. A property manager is extraordinarily handy if you own multiple units that can’t feasibly be managed by yourself.
- Wants to focus on different areas of renting. A landlord may want to stay in control of other parts of the business (e.g. tenant screening), but prefer to have the property management company be the go-to middleman for day-to-day operations.
- Rents out properties that aren’t nearby. There are also landlords and property owners who have rental units that are outside of their main city, state or country. In this case, a rental property management company can manage the day-to-day needs so those units don’t remain vacant or become neglected.
If you’re looking to hire a property manager for your rental properties, take a look at AAOA’s property management agreement template. This will help prepare landlords to work with a property manager efficiently and effectively.
Advantages of hiring a property manager
Hiring a property manager with years of experience can relieve many of the headaches that surround thereal estate industry. Below are a few top reasons why a landlord may choose to use a rental property management company. They can:
Determine accurate rental rates
As a solo landlord, it’s up to you to make all decisions regarding rent rates — which can be a daunting task. However, a good rental property management company will have additional resources and experience to calculate the right rent estimate for your property based on the current, local rental market. They’ll be able to figure out a rent rate that both attracts tenants and maximizes your monthly income to improve your bottom line.
Secure ideal tenants
As a landlord, you need tenants that will pay rent consistently on time and respect your property. This means being able to screen tenants to determine if they can afford your rent and do a tenant background check to ensure they have a good rental history. A property manager can take these duties off your hands and thoroughly vet for the best renters in your area.
Find and manage renters and contractors
Part of successfully renting your units is being able to advertise your property to potential renters — a skilled property management company will do that for you. They’ll know the best ways to share your unit(s) and attract tenants. Similarly, they may be able to recommend preferred vendors and contractors for maintenance and repairs. If they regularly work with these professionals for other properties, they may also have better rates, which will save you money!
Ensure you’re complying with laws and regulations
When you manage the property yourself, you may not be fully aware of state and local landlord-tenant laws and regulations that need to be followed. A rental property manager will make sure you’re up to date with any changes or ongoing rules that your property must comply with.
Disadvantages of hiring a property manager
Although there are many benefits to professional property management, it still has its costs — literally. Below are a few disadvantages to choosing to work with a property management company. They can:
Reduce your control over your property
By delegating responsibilities to a property manager, a landlord is relinquishing day-to-day control over many decisions that occur on the property. Even if the management company has experience, they may not make the same decisions that the landlord would have made in each situation. Every property owner will have to build trust to successfully work with a property manager, especially if they’re turning over the tenant screening process to them.
A great management company can help you maximize profits in the long run, but they do still cost you more than if you were working alone. Property owners need to pay property managers from their ROI. Typical property management fees can range from 4% to 12% of the rental unit’s monthly gross income. Depending on the company, there may also be additional fees, including vacancy, setup, leasing, advertising, repairs and lease renewal fees.
Be less thorough
Most property management companies are in charge of maintaining multiple rental properties — not just your own. They may oversee dozens to hundreds of units. This means your property may receive less attention than if you oversaw it by yourself.
Not be a good fit for your property
Sometimes the professional relationship between a landlord and property management company doesn’t work out. The landlord may need things the property manager can’t meet. In this case, the landlord will need to decide whether to try again with a new company or continue renting units by themself.
Resources and tools for rental property management
Looking for tools and services to optimize rental property management? Look no further than AAOA’s industry-leading rental property management software directory.
Property management software helps you optimize the rental process in one convenient portal — fuss and hassle-free. From single-family homes to multi-family housing units, AAOA’s directory has the software to remove unnecessary stress.
Join AAOA today
A membership with American Apartment Owners Association gives you access to late rent notice templates, tenant screening, tenant background checks and rental documents to help you manage your business better. Sign up for your account today!