You may find yourself asking what a property manager is and what role they play in handling your rental dwelling. The short answer is a property manager is an individual or company that is hired to oversee the day-to-day operations of a unit of real estate.
A property manager’s responsibilities involve the management of rent, tenants, property maintenance and repairs, owners, landlord-tenant laws, property records, and accounting.
Here is an in-depth explanation of the role a property manager plays in the overall welfare of your investment property.
Property managers assist in all aspects of tenant placement including setting rental rates, marketing the property, showing the property to prospective tenants, screening tenants, executing leases, and all tenant interactions after placing.
- Setting rental rates: Property managers will use their market experience as well as multiple online references to determine the best price for your property that will maximize your profit while minimizing your vacancy rate.
- Marketing properties: A property manager will use many avenues to advertise your property including online advertising, letting tenants know about upcoming vacancies and property signs. The more exposure your property gets, the more likely it will rent sooner.
- Property showings: A property manager will field inquiries via calls and email and schedule showings to prospective tenants.
- Screening tenants: Property managers do in-depth screening including credit checks, previous eviction searches, income and employment verification, checking previous rental references, and criminal background checks.
- Lease execution: Property managers are required to have their leases drafted by attorneys in the state of Colorado. This ensures you have a detailed lease that is aligned with Colorado tenant/landlord laws and gives you the best protection possible. Your property manager will handle the lease signing with the tenant.
- Tenant interactions: Property managers will field all communications from tenants including any complaints or maintenance requests. They will ensure that the tenant is compliant with the lease agreement and enforce repercussions for lease violations. These may include imposing late fees, handling HOA violations, and other lease violations including failure to maintain the property and landscaping as per their lease agreement.
A property manager will be involved in all aspects of maintaining the property including handling tenant maintenance requests, routinely inspecting the property, and handling move in and move-outs.
- Maintenance requests: Your tenant is the best defense to keeping your property in optimum condition. Being that they are living at the property on a day-to-day basis, they should notice items that have broken or may need maintenance to prevent breakage. A property manager will field requests from tenants and determine if the repair/damage was due to negligence on a tenant’s part. An example of this would be a sewer stoppage caused by a foreign object placed by the tenant. In this case, the repair would be charged to the tenant.
- Inspections: A property manager is in charge of inspecting the property. Inspections would be performed routinely, as needed if a concern came up and with property move-in and move-outs. Also, a property manager may do a drive-by inspection periodically to determine landscaping conditions.
- Move-in and move-outs: Property managers will handle move-ins and move-outs. A move-in inspection would include walking the property with the new tenant and documenting the move-in condition with pictures or videos. A move-out would include a detailed inspection determining what repairs would need to be performed before listing the home for rent and any repairs that would be charged to the tenant’s security deposit, if necessary.
It is the property manager’s responsibility to keep the owner informed of all aspects of the property including maintenance and repair requests, any issues with tenants, rent increases or decreases in the area, and providing detailed monthly and annual accounting to the owner.
- Maintenance and repair requests: Property managers will notify an owner of any repairs or maintenance needed on their property. They will solicit bids and perform the work with an owner’s approval.
- Tenant issues: You can still get a dud even with the most rigorous screening. A property manager will notify the owner of any issues with the tenants including non-payment or late payment of rent, damages caused by the tenant, or any communication received such as a 30-day notice to vacate.
- Rental rates: A property manager will perform a market analysis before lease renewals to determine how the current market trends may affect the rental amount you choose. You may choose to raise, lower, or keep the rent the same depending on what is currently available on the market and how well the tenant performed during their lease period.
- Accounting: A property manager will provide you detailed accounting with income and expenses every month with receipts of any work performed. They will also provide an annual statement and 1099 for tax purposes.
Federal and Local Tenant-Landlord Laws
One of the benefits of working with a property manager is their experience and knowledge of landlord-tenant laws. Many states require property managers to acquire proper licenses to legally manage rental properties which include education on landlord-tenant laws. A property manager will also assume responsibility for ensuring compliance with the legal terms of a landlord-tenant relationship. Working with a property manager allows an owner to let the “landlord” role of the landlord-tenant relationship fall on the manager. Although a lot of legal issues will be deferred to the management company, the owner will not avoid all legal responsibilities and should review the risks with their property manager and attorney.
- Federal and State discrimination laws: A property manager will be familiar with the laws that affect rental housing which is mainly the Fair Housing Act and the Fair Credit Reporting Act. The Fair Housing Act prohibits discrimination due to race, color, national origin, religion, sex familial status, or disability. The state of Colorado goes even further with protections with Colorado Fair Housing Laws that add creed, sexual orientation (including transgender status), marital status, ancestry, and source of income. The Fair Credit Reporting Act dictates how a property manager may use a tenant’s credit history for screening purposes.
- State regulations: State laws regarding rental properties and tenant rights typically concern practical matters. These include things like the rights and responsibilities of tenants and managers, what terms and conditions can be set as part of a lease, lease termination guidelines, and how evictions must be handled. State laws can also dictate how much can be charged for security deposits, how those funds can legally be handled, and how property managers must use trust accounts for owners’ proceeds.
As you can see, there are many moving parts to the successful management of a rental home. It will be up to you to decide if you will take this role on yourself or hire a property manager.
If you choose to hire a property manager like Secretary of Estates in Castle Rock, make sure you read online reviews, interview potential property managers in person, and ask for references.
Your rental home may be your largest investment and needs to be guided with competent hands.