What does a property manager do?

A property manager is an individual or company that oversees the day-to-day operations of a rental property on behalf of the owner. Common responsibilities include maintaining the property, screening tenants, and collecting rent. The choice to hire a property manager is an investment decision. The typical cost is 8% to 12% of gross monthly rent.

Read on to learn more about what property managers do and whether to work with one.

Key takeaways:

• Property managers handle day-to-day rental operations, including tenant management, maintenance, and legal compliance, so owners can take a more hands-off approach.
• Property management fees typically run 8% to 12% of gross monthly rent, though flat-fee structures also exist.
• Whether you should hire a property manager depends on how many properties you own, your proximity to them, how much control you want to retain, and other factors.

What is a property manager?

A property manager is someone whom a property owner tasks with managing their rental property investment(s). The scope of that responsibility depends on the management agreement, property, and location, but generally, property managers maintain the property and manage tenants, allowing the owner to have a more or less passive investment.

What do property managers do?

Let’s dive into what property managers do in more detail.

Manage tenants and lease agreements

One of property managers’ core responsibilities is to manage tenants and their lease agreements. This includes:

• Accepting rental applications
• Running credit and background checks
• Managing lease agreements and renewals
• Handling move-ins and move-outs
• Communicating with tenants
• And processing evictions when necessary

Of course, not every property manager performs all the above. It depends on their agreement with the property owner.

Market and lease vacant units

Many property managers also market and lease vacant rental units. This can involve:

• Setting competitive rental rates
• Advertising vacant units on rental sites
• Scheduling and hosting showings
• Processing rental applications
• And preparing units for re-letting

Collect rent and manage property finances

Property managers can take on rent collection and managing property finances. This includes:

• Collecting rent payments
• Enforcing late-payment policies
• Keeping payment records
• Managing operating budgets
• Tracking property-related expenses
• And preparing regular financial reports

Coordinate maintenance, vendors, and inspections

Property owners can also leave it to property managers to:

• Coordinate routine property maintenance
• Address emergency repairs
• Manage contractor or vendor relationships
• And conduct regular property inspections

After all, regular preventative maintenance can help prevent costly repairs, saving owners money in the long run.

Support owners and maintain legal compliance

Property managers can be owners’ boots on the ground, especially for absentee owners. Because they’re local, they can help owners stay compliant with:

• Landlord-tenant laws
• Fair housing guidelines
• Local housing rules
• And municipal safety codes

Keep in mind that landlord and rental regulations vary by location.

How is a property manager different from other real estate roles?

Property managers work closely with those in other real estate roles, but it’s important to distinguish them from each other to avoid confusion.

Property manager vs. landlord

A landlord owns or leases out a property, while a property manager is hired to perform designated operational responsibilities on the landlord’s behalf.

Property manager vs. real estate agent

Property managers focus on ongoing rental operations, while real estate agents generally help clients buy, sell, or rent real estate.

Individual property manager vs. property management company

Landlords may weigh hiring an individual property manager vs. a property management company. There may be pros and cons to both options.

For example, an individual property manager may have less overhead and be able to offer lower management fees, while a property management company may have more capacity to take on new properties. Ultimately, the best option depends on your investment property needs.

How much does it cost to work with a property manager?

The cost of working with a property manager or management company varies by the company and location. The average cost is usually 8% – 12% of the property’s overall monthly rental income.

Common management fee structures

That said, different property managers offer different fee structures. Here are some common ones:

• Flat or fixed fee: This is a specific dollar amount you pay per month. For example, it could be $100 per month per single-family property.
• Percentage-of-rent: This is a percentage of the monthly rent collected. For example, it could be 10%, which yields $100 on a property leased for $1,000 per month.

Additional property management fees

Other potential property management fees to consider include:

• Maintenance fees
• Leasing fees
• Tenant placement fees
• Move-in fees
• Lease renewal fees

Confirm what a property manager’s base fee does and doesn’t include before signing an agreement.

When should you hire a property manager?

A property manager isn’t right for everyone. Here’s how to decide when to hire one:

When property management may make sense

Hiring a property manager may make sense for real estate investors if:

• You own multiple properties and can’t manage them all by yourself
• You live far away from your property and can’t manage it personally
• You want less direct responsibility for tenants, repairs, rent collection, and compliance-related tasks

When self-management may make sense

By contrast, self-managing your rental properties may make more sense when you have the time, skills, proximity, and desire to retain direct control over your property and you want to save on management fees and increase your cash flow.

How to choose a property manager

When shopping for a property manager, follow these best practices:

Compare fees and services

Carefully review property management contract terms, including the fee structure and services provided. Read the fine print to avoid surprises later. You may also want to ask about the property manager’s experience with similar rental properties to yours.

Review screening and leasing procedures

Ask the property manager how they handle applications, tenant screening, lease preparation, rent policies, move-ins, renewals, and evictions. You want to make sure their approach matches your preferences and needs.

Ask about maintenance, communication, and reporting

Other areas to ask your prospective property manager about include emergency procedures, vendor selection, repair authorization, tenant communication, owner updates, inspections, and financial reporting. Make sure you’re on the same page across all of these areas.

Check licensing and certification requirements

Property manager licensing and certification requirements vary by location. Some states require a property manager to be a licensed real estate broker. Verify the requirements in your market and that your property manager has the necessary credentials.

Pros and cons of hiring a property manager

Still not sure whether hiring a property manager is the right choice for you? Consider the pros and cons:

Pros of hiring a property manager

On the one hand, hiring a property manager offers:

• Convenience and less day-to-day involvement
• A local presence if you’re not near the property
• Support for multiple properties
• Established operational processes and vendor relationships
• Allows you to invest in properties far away without managing them yourself

Cons of hiring a property manager

On the other hand, hiring a property manager means:

• Management fees that cut into your profit margins
• Less direct control over the property
• Less personal involvement in tenant screening and relationships

FAQ

Here are answers to some frequently asked questions regarding property managers:

What are the five key responsibilities of a property manager?

Property managers are generally responsible for tenant management, rent collection and finances, maintenance and repairs, leasing and turnover, and legal compliance.

What does a property manager do for Airbnb?

Property management for an Airbnb may involve guest communication, bookings, turnover, cleaning coordination, maintenance, and other property operations.

Do you need a license to be a property manager?

Licensing requirements for property managers vary by location. Check your local requirements to learn more.

The bottom line

Property managers can take on many rental operations, from finding and screening tenants to maintaining and repairing the property. Whether hiring one makes sense for you depends on your property’s needs, how much control you want to retain, and the services and costs a given manager offers. Carefully weigh these factors before signing a management agreement.

If you’re ready to purchase your next investment property, you can get started today with Rocket Mortgage.