What is Property Management?

According to Legaldictionary.net, “Property management is the control and operation of real estate, personal property, equipment, or physical assets. It is most often referred to in relation to the lease or rental of the property, in which a property manager handles the maintenance and day-to-day activities surrounding the property. In rental houses and apartments, this would include seeking occupants, and collecting rent payments on a regular basis.”

In other words, property management companies deal directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions. A good management company brings its know-how and experience to your property, giving you the peace of mind that comes with knowing your investment is in good hands. It is also nice to note that a management company is an independent contractor, so you avoid the hassles of being an employer.

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Do I Need to Hire a Property Manger?

​Like the answer to most great questions, it depends. Hiring a great property management company can make owning real estate a lot easier, but it does come at a price. This info-graphic produced by Appfolio (a property management software company) may help you realize if you need to hire a property manager. Of course, even if you answer “yes” to each question, you may simply just not want to deal with managing your own property.

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Additional Things to Consider

Still unsure? Here are some additional considerations experts recommend taking into account. If any of these apply to you, you should probably hire a property management company:
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• You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you're likely to benefit from a management company.

• You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar.

 

• You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.

 

• Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote to your business, especially if landlording isn't your day job. And if you prefer to spend your time growing your business, including searching for new properties, arranging financing for renovations, or changing your business structure, then a management company may be a good way to spend your money.

 

• You can afford the cost. Hiring a property management company is an attractive option if you can afford the fees. When interviewing companies, expect to hear quotes ranging between 7% and 15% of what you collect in rent revenue. If it's a down market and you're able to manage things yourself (or with the help of a resident manager or other employees), you may want to keep doing so until the market turns around.

 

• You're suddenly inundated with management tasks. If your business is growing, at some point you may find that you need a substantial amount of help to manage everything properly. At that point, it might make sense to hire a management company.

 

• You don't want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You'll have to handle payroll and deal with a host of other legal requirements and considerations. But, because a property management company isn't your employee (it's an independent contractor), and neither are the people who work for the company, by using one you avoid the hassles of being an employer.

 

• Your property is part of an affordable housing program. If you participate in an affordable housing program, things can get complicated. Usually, in these programs the landlord receives financial assistance, which may be in the form of a grant, low-interest loan, or tax credits, in return for agreeing to rent at least part of the property to tenants earning below a certain income level. To continue receiving the assistance, the landlord must comply with a complicated set of rules. With so much at stake, it's often worth hiring a property management company that has expertise and experience with the housing program in question.

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