A property manager for apartments focuses on making sure that a rental unit is being operated per the directions given by the owner. They make sure that only reliable renters live in the apartment. Additionally, they ensure rents are collected on time, budgets are followed, and the property is maintained appropriately.
Read on to find out what a property management company does and whether you should hire a property manager for your rentals.
What Does a Property Management Company Do?
A property management company manages the operations, upkeep, and administration of rental properties for a landlord. Its main purpose, among many other responsibilities, is to assist with:
- Marketing rentals
- Finding and screening tenants
- Executing lease
- Collecting deposits and rent
- Managing maintenance/repairs
- Communicating with tenants
- Reporting to owners
A property manager for apartments also ensures that rental rates are competitive while covering taxes and overhead, and conforming to rental regulations. Their exact duties will differ depending on the kind of property they’re handling, the fee they’re charging, and the terms of the management agreement.
How Much Does a Property Manager Cost?
With so many factors, the answer is “it depends.”
Property management companies differ extensively, and much of the answer depends on the scope of the engagement. Do you want to delegate specific tasks and responsibilities to a property manager while remaining ‘hands-on’ in other domains? Or, do you wish to have an almost complete ‘hands-off’ approach?
If there’s no ongoing maintenance activity on the part of the property manager– for instance, you hire them just for tenant screening and recruiting – you may only pay a one-time commission (often 50-100% of one-month rent) for anyone they bring in who signs a lease.
Other factors that affect property manager cost is the location, the kind of property, and the projected work hours involved in delivering services. However, basic fees usually include 4% to 12% of monthly rent and may include several other charges such as:
- Vacancy fee – Some property managers may charge a flat fee or the standard fee even while the property is vacant.
- Setup fee – It includes the cost of opening a new account.
- Leasing fee – It’s a standard fee that covers the cost of getting a new tenant for a rental property.
- Miscellaneous fees – It can include advertising, repairs, inspections, and even lease renewal charges. You may also have to pay a percentage of construction fees if hiring an outside contractor.
3 Reasons to Hire a Property Manager
Here are the top 3 reasons you should consider hiring a property manager for apartments.
1. Setting the Rental Rates
One way to determine what other property owners are charging for their rentals is to go through the classifieds sections in your local newspapers or real estate websites. However, that’s a time-consuming process.
An experienced property manager for apartments will carry out a comprehensive market study, helping you determine the rates being charged for properties in your local area. That’s how they strike a balance between maintaining low vacancy rates and maximizing on the monthly rental income.
2. Finding the Best Renters
When you hire a property manager, you leave the responsibilities to them to find the right renters for your properties. They’ll also manage all the other details that come with renting out an apartment, for instance, performing security and criminal background checks, gathering references from previous landlords, authenticating employment details, and carrying out credit report checks.
Moreover, they can also help you with listing and advertising the apartment, showing the unit or hosting an open house, writing and executing leases, performing move-in/move-out inspections, and handling security deposits. As they should be more familiar with the local laws, a property manager ensures everything is done in a fair and legal manner.
3. Dealing with Day-to-Day Issues
An expert property manager for apartments will also handle all aspects of the landlord-tenant relationship. They’ll handle all emergency and routine maintenance work, manage any situation needing conflict resolution, as well as make sure that routine inspections are performed on time.
When you hire a property manager, you get to hand over all the everyday management chores to them. This means that you get more time to look for new investment opportunities, grow your portfolio, or progress in your chosen career.
5 Reasons Not to Hire a Property Manager
Engaging a property manager for apartments seems like a good idea. However, there are a few drawbacks that you must keep in mind before making any decision.
1. No or Limited Control
When you hire a property manager, you pay them to make decisions, but those may not be the same decisions that you’d make.
Moreover, a property manager may manage dozens or even hundreds of properties. This means your rental unit may not get the same amount of attention as it might under you directly.
2. Lack of Visibility
Implementing a rigorous screening process is essential to finding and retaining good tenants. However, when a property manager handles all the arrangements, you may not get a chance to meet the tenant. Moreover, as they oversee day-to-day operations, you could lose visibility into the property’s condition, paperwork, compliance with regulations, etc.
3. Delay in Receiving Income
When hiring a property manager for apartments, you give them the authority to collect rent and then send it to you later. Sometimes this may take several weeks before you receive funds into your bank account.
4. Hefty Property Management Costs
This might be the single biggest factor in deciding whether or not to hire a property manager. As discussed, basic property manager costs can vary between 4% and 12% of the gross monthly rent, or more.
5. Misaligned Incentives
Often property managers are less concerned about finding long-term tenants if they can get lease-up fees every year. Moreover, you may have to pay a management fee even if the unit is vacant so they’re still making money.
At the end of the day, it’s your property. Even if you have a good property manager who might go that extra mile, they still might not manage or care for the property in the same way you do.
Alternatives to a Property Manager
Let’s take a look at some of the ways you can handle your own property without hiring a property management company.
1. Do-It-Yourself (DIY)
Self-managing your rental property will help you get rid of the costly management fees. However, it’s vital to go into it with eyes wide open.
You must treat DIY property management as a job, not a hobby. This involves conducting yourself professionally when communicating with renters, advertising your property, coordinating maintenance and repairs, performing property assessments, bookkeeping, and pursuing non-payment of rent.
If you live close to your rental property and can respond within a reasonable timeframe to tenant queries and concerns, DIY property management can save you thousands of dollars annually.
Even if your property is located in another state, it’s possible to manage your unit remotely. The obvious drawback is you won’t be nearby to do any quick and easy upkeeps as and when required.
2. Property Management Software
Property management software simplifies and automates the daily responsibilities of landlords. Its core functionality revolves around managing properties, either in terms of physical space, renters, leasing, or bookkeeping. Moreover, today’s software solutions are designed to be easily used by out-of-state property owners.
As a mobile-friendly platform, property management software enables you to work from anywhere at any time. It updates data automatically and stores it online, allowing both you and your renters to access all the necessary features right from the smartphone. Moreover, many software platforms provide access to a tenant portal so that your renters can report a maintenance requests any time of the day and track every update.
Tenants can also pay their rent right from their phone and you can receive it within minutes. It is easier to track payments from each renter when you keep records online, which also facilitates you to run financial reports automatically.
Below are some of our favorites. Read reviews or sign up below:
- Advertise your property, find and screen tenants, sign leases, collect rent, and e-sign custom local leases, with tools built specifically for DIY landlords.
- Strength: Complete Solution
- Whether you manage five doors or five thousand, Buildium provides a simple but sophisticated property management platform to help you grow and improve your business.
- Strength: Complete Solution
- RentRedi is an all-inclusive landlord-tenant app. Manage vacancies, screening, and rent collection from wherever you are, on any device.
- Strength: Complete Solution
- End-to-end property management solution. Receive payments online, advertise properties and screen potential tenants. Robust accounting and maintenance features.
- Strength: Complete Solution
- Accounting and property management tools to save time and money while managing your rentals. Track income and expenses, screen tenants, collect rent, and more.
- Strength: Accounting and Financial Tracking
Owning a rental property is a smart investment decision, however, it also comes with it’s fair share of responsibilities. These responsibilities can easily get overwhelming if you don’t manage them properly.
To avoid this situation, you could hire a property manager to help you with managing the day-to-day matters of your property. While there are many benefits of engaging a property manager for apartments, there are a few drawbacks as well.
We believe the best alternative is to self-manage your property by leveraging innovative property management software. We’ve highlighted some of our favorite such tools that we strongly recommend you to try out, based on the functionality you’re most interested in. To get a more detailed overview of these tools or other product suggestions, please read our Property Management Software Overview article.
Disclosure: Some of the links in this post are affiliate links and Landlord Gurus may earn a commission. Our mission remains to provide valuable resources and information that helps landlords manage their rental properties efficiently and profitably. We link to these companies and their products because of their quality, not because of the commission.