In short, a property manager takes over the entire rental process end-to-end. They start from the moment that your unit, as a landlord, is about to become vacant and they assist you with finding a tenant, servicing the apartment and collecting rent. Between these steps, a good property manager will bring in a top-rate professional photographer for the listing, coordinate the open houses, perform background checks on interested tenants, and bring in and arrange for home improvements contractors. After a tenant has moved in, monthly rent collection, weekly maintenance issues, and tenant communications are taken care of. Property owners and landlords are left with a truly passive source of income on their investment property.
Your property manager’s involvement with rent is threefold:
Think back to your worst ever tenant and now imagine that hassle being handled by someone else. A good property manager navigates these choppy waters and effectively mediates on your behalf. Beyond conflict resolution and representation, your property manager also takes care of finding tenants.
Property maintenance is about the scheduled upkeep and on-the-spot repairs that come up from time to time. Handing over your apartment to a property manager should be a ‘value-add’ in terms of a better-maintained property but also freeing up your time from tedious repair requests. Any landlord who has had to answer late night emergency calls knows that having someone else in their place to address the problem is worth the extra expense.
An experienced property manager has seen a fair share of leases and agreements. A larger property management company may even have their own legal department that is competent in local and state rental law. By hiring outside help, you will have a professional who knows how to write a rock-solid lease, deal with tenant evictions and keep you on the right side of the law.
An informed property manager can advise you on your property tax and income tax questions. At the end of the fiscal year, you’ll have all the documents needed for your accountant. In some cases, they may even file your taxes on your behalf.
A landlord, landlady or property owner are all obligated to provide “a safe and clean living space”, but once a property manager comes into the picture, some of those small tasks are effectively outsourced. The landlord is still the legal owner of the apartment unit and has the final say when setting monthly rent, occupancy rules, security deposits and the like. They will also still be implicated with any issues between the apartment and the entire apartment building.
While many see renting out a home as passive income, the time and energy spent on a weekly basis amounts to more than a part-time job. Apartment rentals require a large allocation of time when sourcing tenants (and for some apartments in student areas, this can be a twice-yearly process) on top of week-by-week maintenance. In the longer term, units require upgrades as well, whether that be new furnishings, appliances, or a complete renovation.
Questions to ask yourself when debating between handling a rental yourself or handing it off to a property manager are:
Every property manager-landlord relationship is different. When soliciting a new property management company, use the following points to guide the conversation and your research.
Holistically, a property manager’s experience level should match your needs. If you are looking to hand over a portfolio of twenty properties spread across your city, look into a property management company with industry contacts and years of know-how. If it’s a boutique operation, perhaps a young property manager in the early stages of their career will have the energy and patience to provide individual care to you and your tenants.
But beware of real rookies jumping over low barriers to enter the profession. Asking questions like how many years of experience, the types of apartments they manage and in which kinds of buildings they operate will give you a better impression of the property manager. When in doubt, client testimonials and references should be made available.
The ideal property manager is a maintenance expert. They should be able to handle ad-hoc repairs promptly and effectively, while also doing scheduled maintenance to prevent any bigger expenditures down the road. A property manager with strong local contacts will know exactly who to hire to replace the locks on a Sunday and who to call when the clogged tub needs freeing.
The property manager (or their company) should have a clear checklist of seasonal, annual and between-renter checks and repairs from air filter changes to a damage report. They should also handle cleaning services so your property and its common areas continue to look their best.
Property managers have a clearly defined process for collecting rent that makes sense for the landlord and for their tenants. The lease should explain when (frequency, recurring date) and how to receive rent (post-dated checks, online bank transfer). It is also worth asking what their course of action would be, on your behalf, when a tenant doesn’t make rent on-time.
The ideal property manager has all the property marketing know-how down to how to stage a home, which photo angles open up the space, and which listing titles trigger more inquiries. Furthermore, they know which marketing channels your dream tenant visits when apartment hunting (classifieds over Facebook groups, perhaps).
An informed property manager also has creative strategies to fill vacant apartments between renters. Property managers may have the connections to relocation specialists, film production companies or short-term vacation rental specialists who can provide an alternate source of rental income. A property manager can also offer value-added services like signing a lease online.
Property managers can also act as matchmakers. The ideal property management company has a database of high-quality tenants and connections to real estate agents who can efficiently filter the best tenants for your property.
Property managers may ask you what your perfect tenant resembles in terms of length of the lease, employment profile or income, any adversity to pets, etc. Once they start sourcing potential tenants, they ought to have a complete tenant screening procedure in place. A tenant background check should include a credit check, landlord reference, and employment reference, as a minimum. Your hands should be freed of this burden if a property manager efficiently moves through screening and signing a tenant.
Property owners could be underselling themselves -- or at least their apartments. A knowledgeable property manager should know the going rate for your property and how to price it competitively. They should be able to strike a balance between what maximizes your return while minimizing the time on the rental market. As a landlord, you can ask your property management company how they would calculate the monthly rent for your apartment and what they would expect as a commission or annual fee.
Property owners, whether they work with a property manager or not, should review their monthly rent on an annual basis. The rent should be reviewed regularly to follow market trends, inflation, and competition. A good property manager knows off the top of their head what the legal limitations are when it comes to a rent increase and how to ask existing tenants for their approval.
Your rental's value on the market is also a factor when considering renting to a long term tenant vs. Airbnb
Every landlord dreams of a near-zero vacancy rate and, in theory, a property manager should be able to get you to this goal. Before signing with a property manager, inquire about the actual vacancy rates for their current rentals. You can also ask for the average number of days it takes for them to fill a vacant apartment.
As a real estate tech company, Blueground effectively offers a 100% occupancy rate for the length of their partnership with landlords. As the primary tenant of your apartment unit, Blueground takes care of all property management duties while subletting the furnished apartment to senior executives and other high-earning tenants. Rather than a guaranteed occupancy rate, Blueground promises its landlords and property owners a steady monthly income.
Luckily, this one you can feel out from the beginning. The way the property manager communicates with you is a good indication of how they will handle your tenants. Keep a close eye on how they persuade you, how they listen to your inquiries, their punctuality with replies and their follow-through with requests.
Landlords should not overlook their property manager’s communication style and demeanor. To your future tenants, this person or agency will be your public face. You can test this out before signing with a property management company by seeing how proactive they are with your demands, and how often they speak with you.
No property, market, or target tenant is the same -- and as such, the property manager should be able to point out which upgrades are best suited to raise the value of your unit. To start, the property manager should know whether it is worth your while to lease out the apartment as an unfurnished unit, furnished with basic appliances or fully-furnished. While an apartment with complete decor and amenities requires a large initial investment, depending on the average furnished apartment rent in your area, you may get your investment back in less than two years.
Companies, like Blueground, specialize in appraising and outfitting apartments in major US cities with comfortable and eye-catching furniture, linens and electronics. The result is move-in ready turnkey homes that appeal to a corporate housing audience and renters willing to pay a premium for a luxury apartment.
Should it come down to an eviction, how will your property manager handle a difficult tenant? A seasoned property management company is aware of the local and state laws governing evictions. As such, they will know their boundaries and your rights as a landlord. You can request to see their standard lease agreements ahead of time to see what their eviction process resembles. The contract should spell out the steps taken for overdue payments and conditions for breaking the lease.
If a property manager delivers on all of these strengths, it could be worth your while to partner up with them for one or more apartments. Smart landlords will calculate the incremental weekly time savings, the reduction in time between renters and perhaps a marginal increase in monthly rent.