A Few Aspets of Property Management

[Benjamin Riehle]

I am going to discuss a few aspects of property management. What property managers should do for you,how much they should cost, important reasons why you should hire a PM, and how to find reliable one.

A crucial aspect of PM is Communication. Communication to you, the owner if there are any issues, and communication to a tenant on how the issues will be addressed. The PMs main job is to act as the middleman between the tenant and Owner. Maintenance requests, issues with rent payments, or tenant complaints all run through the PM who has to be able to calm any tenant concerns and ensure that the owners best interests are kept at the front.

Another important reason to have a property manager is their understanding of the law in regards to rental homes. Different states have different laws and timelines on different issues and an owner can be left with a judgement against them if they misunderstood or were not aware of the law governing their rental property. For example, in the state of Arizona, if a landlord enters a home without proper notice to the tenants, the tenant could be awarded up to a full months rent for the disturbance of their quiet enjoyment of the home.

Property managers will also look at your property in an unbiased way and provide legitimate market analysis for the home to ensure the property is rented at the top of the market without sitting vacant for several months. Over the course of a year, a $100.00 reduction in the rent is $1,200.00 in rent coming in to the home, and potentially the home staying vacant for another month. A property manager will be able to constantly analyze the interest in the home and adjust as needed.

If after looking at your property it seems the best step is to manage the home yourself, be sure to have any documents you use reviewed by a lawyer to ensure you are protected and read through and understand the local and federal laws that cover Real Estate Rental Properties.

If you have made the decision to move forward with a Professional management company, always make sure to compare different companies.

Read the agreements and speak with the property managers. Be sure to ask questions about any fees that are charged or what their procedure is for terminating management if you are not happy or if you sell the home. I had one prospective client come into my office asking if I would be able to take over management of their property. They did not feel their current property manager was looking out for their best interest and the home had been vacant for several months. After looking over their management agreement, we found that if the owner decided to terminate, they were locked in to continue paying the management fees for any rent collected to the previous company until the agreement was up. The agreement was for 5 years. In the end they moved back into the home and will not be able to sell the home or have it rented for several years. If the owner had been aware of the termination clause, he would not have signed the agreement. Always remember to have an attorney review any documents before signing.

Do your due diligence, read reviews online, speak with people who have property being managed by the company. Another issue you should consider is how often the PM is inspecting the property. Although tenants are required to report issues to the PM, the PM should be getting eyes on your property at least 4 times a year.

Price can depend on how much work the property management team does. I have seen companies charge as little as 6% of the rent, but all that they did was collect rent. This would work if you are an owner that can handle the day to day maintenance and placement of the tenants. On the other hand, a full-service property management company can charge 12-15% on rent. At that price point, they should be handling the collection of rent, the maintenance, placement of tenants, and the eviction of delinquent tenants. So, in short, if you are an owner who can handle the day to day operations maybe property management is not for you. But if you are an out of state investor, an owner working full time, or if you simply do not want to deal with the headache of working with tenants, partnering with a property manager will grant you more freedom, while still allowing you to collect your passive income.