At Luxury Property Care, one of the things that property owners ask us is, “Why do I need to hire an investment property manager when I’m doing great on my own?” Even though you may have learned the ropes of property management, a property management agent can put your real estate investment on autopilot. In short, their task is to cut the amount of work that you put into your property.
To appreciate the role of a property manager, it’s important to examine their exact duties in comparison to your role as a landlord. Before we dive in, however, it’s worth mentioning that a property management agent’s duties, as well as their dues, vary depending on the type of real estate investment. Others concentrate on certain services (e.g. tenant screening), while others provide full-service property management – an example of the latter is Luxury Property Care.
What is a landlord?
The landlord is the person that owns the rental property. They can either self-manage their property, which entails interacting with tenants one-on-one, coordinating repairs, and so on. On the other hand, they can hire a property manager to handle the day-to-day demands of the property for them. Whether a landlord hires a property manager or manages by himself, there are some crucial things a landlord should always be aware of.
What is a property manager?
A property manager or management agent is the third-party contractor that oversees the property owner’s real estate investment. They do not own the property or properties that they manage. However, they do assume most – if not all – of the duties of the landlord, including conducting inspections, coordinating repairs, screening rental applicants, and more.
A property manager may be a sole practitioner or part of a property management company. At Luxury Property Care, we are a property management firm that has its own team of in-house property management professionals with backgrounds in real estate brokerage and investing.
What’s the difference between the two?
The main difference between a landlord and a property management agent lies within the ownership. A former owns the rental property, while a latter manages the rental property on the owner’s behalf.
They also vary in terms of their involvement. When an owner self-manages the property, they need to be as hands-on as possible. In the property manager’s case, they have to be hands-on so that the real estate investor can be hands-off. Although the property owner may have to approve certain activities, they are generally not involved when they hire a property management agent.
In terms of pay, the real estate investor keeps the passive income that they make. Property managers are either paid by their property management company or by the property owner that employs them. Their fees are typically ten percent of one month’s rent.
While they’re distinct in terms of ownership, they also have their similarities. For instance, owners and property management agents can manage a variety of investments, such as single-family homes (SFHs), multiple multi-unit properties, commercial properties, and more. However, it’s worth mentioning that the more properties a landlord owns, the more likely they are to work with a property management firm.
How do they differ in terms of their duties?
In general, they perform similar functions, including:
- Screening potential tenants
- Collecting rent
- Conducting property repairs
- Scheduling regular inspections
- Addressing tenant complaints
- Preparing rental agreements
- …and more
What sets the property manager apart, though, is that they’re more experienced than a property owner. A property management agent undergoes training to ensure they’re well aware of the real estate market trends and forecasts, marketing tips, and more. As a result, they’re able to manage the rental property more effectively than a self-managing real estate investor.
Here’s a breakdown of how property managers get their work done, in comparison to a typical property owner:
#1 Tenant screening
One of the areas that an expert property management company excels at is tenant screening. If you were to self-manage your property, you’d likely overlook key details that put your property at risk. You may fail to see that your prospective tenant was once convicted for a violent crime. A property manager would make sure not to overlook this by conducting various background checks.
A property manager would also be aware of the laws that apply to applicant screening, such as the Fair Housing Act (FHA). This can prevent you from mishandling a situation that could get you in legal trouble.
#2 Tenant communication
If you were to self-manage your real estate investment, you’d have to constantly communicate with your tenants. This includes receiving their complaints, handling their disputes, addressing their concerns, and so on. If you own multiple rental properties, there’s a good chance that you won’t get enough sleep as tenants tend to raise issues at any time.
If you don’t want your tenants waking you up in the middle of the night, work with a property management agent. They’ll take your place and become your tenant’s point of contact, allowing you to keep them happy while you get some sleep. A property manager is also trained to deal with issues professionally as they know that their work is a reflection of you, the owner.
#3 Rental agreements
Property owners typically use pre-made templates of lease agreements. This is risky as they may not know the law well enough to create a lease agreement that covers everything, including pet policies, rent collection, and garbage segregation, among others. When a tenant commits an act that would typically be considered a violation, they may be able to get away with it since the lease is silent about the issue.
A property management company, on the other hand, is familiar with all of the laws, so there’s no way that they’d fail to include pertinent policies and disclosures in the contract. Furthermore, they know what is and what isn’t lawful, so they can save you from facing legal charges for including an unlawful clause.
The bottom line
To sum it up, a property owner and a property manager have very similar responsibilities, but the difference is that the latter can perform their functions more effectively than the former. When you hire a property management agent, you’ll be able to run your rental business better.
At Luxury Property Care, our experts can help you with the day-to-day operations of your rental property. We’ll protect you from the headaches and legal charges that come with property management.