It’s a pretty safe bet that the number one goal for any landlord is to turn a profit with their investment properties. After all, real estate is one of the most reliable and consistent ways to build wealth over time. And while every deal isn’t a guaranteed win, how each property is managed is the most hands-on way a landlord can be active in the success (or failure) of their investment.
Like any other new entrepreneur in most fields, the most primary roles will likely fall on your shoulders. And being a good property manager — at least one who runs business smoothly and helps earn more than he or she costs — entails more than just collecting rent checks on the first of each month. For example, as property manager, you’ll be in charge of locating and approving new tenants. You’ll be in charge of screening those you consider renting to. And you’ll be in charge of marketing your rental to the public to attract the best possible candidates. After all this work, the misfortune of picking an unreliable tenant that results in eviction could cost an average of $3,500.
Now, keep in mind this is just one aspect of a property manager’s responsibilities and how their duties affect the bottom line. So let’s review the things you need to know before managing your own rental property.
- What is a Property Manager?
- Landlord Responsibilities
- Pros of Self-Managing Your Rental Property
- Cons of Self-Managing Your Rental Property
- When Should You Definitely Hire a Property Manager?
Separate from the landlord, a property manager is the person tasked with overseeing the day-to-day operations of maintaining a rental property. The exact roles and responsibilities can vary by property size and the number of tenants, and some may even oversee multiple properties, but there are a handful of tasks most property managers have in common. They are:
As mentioned, the type of renters you attract through marketing your property and just whom you choose to rent to has a major impact on your bottom line. Basic tenant screening typically includes background checks into renter history, being aware of red flags like past evictions or unfavorable job history, while also conducting a credit check in order to gauge an applicant’s financial worthiness.
Once that’s all said and done, a property manager will need to exercise good judgment of how all these factors contribute to a reliable tenant or if an applicant may be too risky to sign a lease with. And of course, these decisions must be made within the boundaries of Fair Housing Laws.
Late-night plumbing issues. Power outages on the weekends. Basic repairs and home emergencies don’t wait for 9-to-5 business hours, so a property manager must be available to oversee maintenance of the property. Some properties employ a manager who can execute most repairs themselves, which can be a big cost-saving plus. But most likely, a property manager will be making phone calls to repair service providers and ensuring they’re completed safely and professionally.
Making sure rent is paid on time and in full is exactly what it takes to turn a profit, along with managing any monthly costs for the property — from repairs to utilities — under budget.
While the property manager is tasked with executing the above duties, the landlord is ultimately responsible for making sure those duties are carried out properly. He or she will be the one cutting the check for emergency repairs and so on because above all else, a landlord’s responsibility to their tenant is to provide a safe and clean environment. This applies to everything from making sure local safety and health codes are met to providing basic utilities like warm, running water.
While it is the right of every tenant to have a clean and safe rental no matter where they are, specific occupancy standards or building codes can vary by state. Therefore, as the landlord, it’s important to be up to date on any and all codes where you own property.
So, as the owner of an investment property, should you personally take on the role of property manager, or should you hire a professional? There’s no right or wrong answer to this question, but there are pros and cons to either option that can help you decide which route is best for your business.
”If you want something done right, do it yourself,” as the saying goes. DIY property management will afford you oversight of some important factors like selecting tenants, choosing businesses to hire for repairs, and managing your budget firsthand. This is your money, after all, which means you’re more likely to make business decisions that affect your bottom line differently from that of a third party manager.
In fact, DIY property management will save a great deal by not having to hire a professional for the task. With many property managers living on-site — although not mandatory — the job is frequently subsidized with free rent and a stipend. This annual cost to a landlord can turn into a hefty price tag, which means cutting it out altogether can be a valuable investment of your time spent filling the role yourself.
While doing the job yourself can save you money upfront, a professional property manager can be viewed as an investment in your investment over the long run. Experienced property managers will understand the job better as well as ways to maximize opportunities in the market like pinpointing the best rates on rent. Wearing the property manager hat yourself could mean missing out on some useful guidance and professional expertise.
As you’ve gathered here, managing a property is a big commitment. It requires great attention to the needs of tenants as well as the condition of the property. These things can be stressful and time-consuming, and if you aren’t walking into a new investment property with a wealth of knowledge about the role, you’re likely to make the occasional uninformed and sometimes costly management decision. If you’re fortunate, you’ll be able to learn these ins and outs on the job. But if you don’t have the time or enough wiggle room in your investment to afford some mistakes at the onset, seeking a professional property manager could be a smart long-term decision.