What Is a Property Manager?

Definition & Examples of Property Manager

Responsibilities
BY 
ERIN EBERLIN
 

Property managers are hired to handle the operations, maintenance, and

administration of property rentals for an owner. Their work, among many other tasks,
includes marketing rentals and finding renters, ensuring rental rates are competitive
while covering taxes and overhead, collecting rent, and complying with rental laws.

Their exact responsibilities will vary based on the type of property being managed,
the amount they are getting paid, and the terms of the management contract. There
are some important roles a property manager can take on to assist rental property
owners.

What Is a Property Manager?

Property managers are people that specialize in ensuring a rental is being operated
according to the guidance given by the owner—whether the goals be financial or
based on providing attractive living conditions, or both.

Guidance can take different forms—corporate property owners may issue mission
and vision statements for their properties, while individual owners may give verbal
guidance on their goals for the property.

The manager makes sure that responsible tenants occupy the property, payments
are received on time, budgets are followed, and the rental is maintained properly.

Owners of multiple rental properties will more than likely need professional help
managing property. This is where property managers come in.

How Does Property Management Work?

Property managers handle everything that occurs daily in a rental property. They
should have a working knowledge of the real estate industry the rental operates in,
such as industrial property or housing.

The property manager then works to ensure that the owner's goals are met by
managing rent, tenants, maintenance, budgets, and rental property records. They
must also have an in-depth familiarity of state and national laws regarding the legal
methods to screen tenants, handle security deposits, terminate leases, conduct
evictions, and comply with property safety standards.

For these reasons, some states require property managers to be licensed real estate
brokers. If this is the case, a property owner will need to hire a broker to ensure their
property is managed legally.

Other states allow for managers to be licensed in property management instead of

as realtors, while some don't require licensing at all. In addition to licensing, property
managers come with different specialties and experiences.

Setting Rent

Setting rent is a basic responsibility of any landlord. Therefore, it is one of the most
common jobs a landlord will pass on to a property manager. The property
manager sets competitive rent prices to attract tenants to the property. Generally,
this is done by conducting a survey of comparable properties in the area—this
should also be done at least annually to remain attractive for tenants.

Collecting Rent

The property manager also sets up a system for collecting rent from tenants. To
ensure optimal cash flow, they set a collection date to make sure that property
monthly expenses are able to be paid, and strictly enforce late fee policies.

Screening Tenants

Screening and managing tenants is another core responsibility of a property

manager. The property manager may be involved in finding and screening
prospective tenants, managing daily complaints and maintenance issues, and
handing tenant move-outs and evictions.

Property managers are the people that are normally dealt with by tenants. If you
have many properties and tenants, you might need a property management firm.

Property Management

The property manager must keep the property in safe and habitable condition.
Property managers are responsible for the physical management of the property,
including regular maintenance and emergency repairs.

Work done by contractors and other repairmen must be inspected to make sure it is
up to standards and that they are completing their work in a timely manner.

Managing the Budget

Property managers can be responsible for managing the budget for the building and
for maintaining all important records.

The manager must operate within the set budget for the building. In certain
emergency situations when the occupants (tenants) or physical structure (investment
property) are in danger, they may use their judgment to order repairs or likewise
without concern for the budget.

Property managers should be versed in accepted accounting practices to ensure

accurate bookkeeping for income, tax, and investment purposes.

Thorough records regarding the property are important for accounting purposes.
Records should include all income and expenses; a list of inspections, signed
leases, maintenance requests, complaints, records of repairs, costs of repairs,
maintenance costs, and a record of rent collection and insurance costs.

Types of Property Managers

Commercial property managers specialize in real-estate used for business purposes.
These managers may be well versed in industrial buildings or administrative-type
spaces.
Multi-family property managers are accustomed to managing facilities such as
apartment complexes. These specialists need to have good customer service skills
and the ability to de-escalate situations, as well as perform the usual duties of a
property manager.

Single-family home property managers work for real estate investors who hold their
investments and rent them out for additional income. These types of investors
generally purchase homes in areas where there is a high rate of residential turnover,
such as in a military community, where there is a tendency to not purchase homes.

They hire property managers to make sure all of the facets of the property are
handled, and that value is maintained while the property is being lived in.

Key Takeaways

Property managers handle daily operations of rental properties. Their responsibilities

are to:

 Set and handle rent

 Market for and screen tenants
 Handle tenant issues
 Schedule and track maintenance
 Manage finances and records

6 Basics of a Good Property Management

Contract
When you hire a property manager, you need to carefully review their management
contract. You need to make sure you understand the responsibilities of the property
manager, the responsibilities of the landlord and make sure you are protected if the
manager does not fulfill their obligations.

Services and Fees

The first basic part of the management contract you must understand is what
services the property manager has agreed to perform and how much they will charge
for these services. You need to understand what services are included in the
management fee, what services can be performed for an additional fee and what
services will not be performed under any circumstances.

The management fee is the most common type of fee that a property manager will
charge. Pay close attention to how this fee is broken down. 

Do not immediately rule out a property manager because it seems they are charging
a higher fee. Property managers who charge a lower initial fee may be charging
more for “extra duties” such as filling vacancies, paying bills, maintenance issues,
and eviction procedures. You need to read the management agreement very closely
to determine what services are actually included in the management fee and what
services are considered extra and require additional payment.

For services that are considered extra, the agreement should clearly spell out how
you will be charged for these duties. Is it a flat fee, a percentage fee or will the fee be
determined on a case by case basis before the service is performed?

Also, be aware of the services the property manager will not perform under any
circumstances. This will vary from company to company but common exclusions
include refinancing a property or extensive remodeling. Make sure the manager is
not excluding anything you consider an absolute necessity, such as finding tenants,
collecting rent or handling emergencies.

Responsibilities of the Property Owner

The second part of the contract that you must understand is your responsibilities as
the landlord. This section of the contract will define what you are obligated to do by
signing the agreement and what you are prevented from doing.

Two examples of obligations of the property owner are:

1. Set Up and Maintain a Reserve Fund—The landlord is responsible

for putting a specific amount of money into a reserve fund that the property
manager can use for daily obligations, maintenance issues, and emergencies.
 You are also responsible for making sure that the fund never falls below a
specific amount.
2. Obtain and Maintain the Proper Insurance—The management agreement
should specify the types of insurance and the amount of coverage you must
obtain. It should also note if the property management company must be
included under your coverage.

Two examples of restrictions on the property owner are:

1. Finding Tenants—Most agreements will prevent the property owner from

placing a tenant in the property themselves. This is meant to protect the
property manager from having to manage a tenant that has not been selected
according to their guidelines.
2. Entry—The property owner may not enter the property unless they notify the
tenant beforehand or get approval from the property manager.

Equal Opportunity Housing

You want to make sure the management agreement has a section that says they
support Equal Opportunity Housing. It should say they will follow both the state and
federal fair housing laws.

Liability
This is the part of the contract that limits the property manager’s liability. It is known
as the hold harmless clause. In general, this clause will protect the property
manager, except in cases where they have been negligent.

The property manager is not, however, responsible for the negligence of third parties
they hire. For example, a property manager is not responsible if they hire a
contractor, and the contractor causes damage to the property.

To protect yourself, you should make sure there is a “reasonable care” clause in the
agreement. For example, the manager will not be held liable if “reasonable care” has
been taken when hiring a third party—a.k.a they should do their research and not
hire a contractor with a history of complaints against them.
Contract Duration
You want to try and avoid signing a long agreement until you have proven results
from, and confidence in, the management company. Unfortunately, most
management companies will not sign a contract for less than a year. In this case,
you will want to carefully review the termination clause and make sure you are able
to terminate the contract if you are unhappy with the service.

Termination Clause
Make sure the management agreement has a clear termination or cancellation
clause. It should state why and when the property manager/management company
has the right to terminate the contract and when you, the landlord, have the right to
terminate the contract.

Notice to Terminate:

You must usually give between 30 and 90 days' notice to terminate the contract.
Make sure the agreement also states that the property management company must
give you at least 30 days' notice if they decide to terminate the contract. 

Fee for Early Termination:

You will often have to pay a fee for terminating the contract early. This fee will vary
from a few hundred dollars to having to pay all fees the management company
would have accumulated over the remaining length of the contract. 

Reason to Terminate:

You will want to look for a contract that does not require cause to terminate the
agreement. You will also want a clause that allows you to terminate the contract
without penalty if the management company fails to find a tenant within a specified
amount of time.

Obligations Upon Termination:

There should also be a list of duties that must take place upon termination and the
time window they must be completed within. For example, the property management
company must provide the property owner with copies of all tenants' leases within 14
days of contract termination; or that all money owed to either party must be paid
within 30 days of contract termination.

4 Types of Interview Questions for

Property Managers

Many real estate investors will hire property managers to handle the regular
maintenance and rental responsibilities for the investment property they own. Finding
a great property manager involves asking the right questions when you interview for
the position. You want a property manager who has the experience and education
necessary to protect your investment.

Property managers also need to understand the landlord-tenant laws for the state
where the property is located. This can help the property owner avoid costly legal
mistakes.

Property owners can be investors or they can be absentee owners. Such absentee
owners include members of the military who are temporally stationed on overseas
duty bases.

Property Manager Experience

Managing rental property involves more than just receiving the rent payment and
finding renters. They need to understand the local rental market and the landlord-
tenant laws for the state. Property managers can oversee both residential and
commercial properties and some may specialize in one over the other. If you
own commercial property, you need a manager who has experience with these
specialized leases.

The first thing you'll want to determine is whether the prospective manager has ever
actually managed rental property before. This area of questioning should give you an
understanding of the property manager's background. You'll decide from their
answers if they have the experience that is the right fit for your needs as an investor
or property owner.

Find out how long the applicant has worked in property management. Ask about the
number of client properties they are currently handling and the types of
properties they are overseeing. Some managers will handle dozens of accounts and
you don't want your investment to get lost in the shuffle. You may also shy away
from someone who has never managed property before.

Some managers work as part of a larger group or company. In this case, you will be
looking at the history of the company as well as the individual manager. Discuss how
available they will be when you need to discuss the property. You will probably want
a manager who is working full-time as a property manager.

Ask for references from other clients, both current and past.

If you own a 10 unit building and the manager has only had experience with single-
family homes, they might be too inexperienced for your specific needs. Also, if you
have a commercial property and the manager has only handled residential needs,
they may not be the best fit.

Education Questions
This next area of questioning involves a prospective manager's education. Questions
about college degrees and higher education are important, but your focus here is to
learn about their education specifically as a property manager. You want to know if
they have acquired the knowledge and training necessary to obtain proper
certification.

Ask if the manager has a real estate broker or property management license in the
state. Most states require property managers to be licensed before they can show
apartments.

Property managers may have various certifications as well. These can include:

 Institute of Real Estate Management (IREM)

  National Apartment Association (NAA)
 National Association of Residential Property Managers (NARPM)
 Community Associations Institute (CAI)

These organizations offer education and training courses and provide certification.

Knowledge of State Landlord-Tenant Law

Property managers need extensive knowledge of state landlord-tenant laws—
especially when it comes to rental residential properties. This item is non-negotiable.
This individual is representing you, and any missteps on their part could result in
lawsuits against you and your property.

Make sure the manager understands the city, state, and federal laws for property
management and dealing with tenants. Ask about their experience with federal fair
housing laws. You may want to ask if they have ever had occasion to evict a
tenant and see how they handled that situation. See if they have ever been involved
in any lawsuits against property owners.

Property managers need to know about safety codes as well. They must know the
type and number of exits and smoke or fire detectors required for a property. In
some portions of the country, they may also need an understanding of radon
detectors and requirements for safety window bars.

Insurance Requirements
Property managers also need insurance to cover liability. Ask your candidate for a
copy of their liability coverage showing effective dates and coverage.

Keep in mind that yes-and-no questions are easy to answer dishonestly. You might
start with them, but be sure to press on and ask for more specific, detailed
information. And be sure you know the answers as well so you know whether the
applicant is correct.

Filling Vacancies and Retaining Tenants

Your manager will be interviewing possible tenants or working to maintain current
tenants. They must understand state requirements for securing security deposit fees
and how to return those fees when a tenant moves out.

You want a manager who can find tenants and get an empty property filled as
quickly as possible with another suitable renter and while abiding by all laws. If the
property manager has a high tenant turnover rate or a tough time filling vacancies,
they are probably not the right person for the position. Ask about their process
for screening tenants.

The type of investment property you own will determine the type of renters you will
be seeking. Commercial properties typically lease for longer terms than do
residential properties. You may ask the manager how long it typically takes them to
fill an empty unit. Find out where they advertise the property or if they keep an
updated list of possible tenants.

These questions should give you a clear and accurate picture of an applicant, even if
you ask just a portion of them, tailoring them to your needs, your property, and your
concerns.

Essential Questions Before Hiring a

Property Manager
Services Provided, Fees Charged and How Money Is
Managed

Hiring someone else to manage your investment property is a huge decision. You
want to make sure you are choosing the right person for the job. While it is important
to understand the manager’s personal experience and education, you also need to
know about how the actual property will be run. Here are the essential questions to
ask before hiring a property manager.

These questions will target:

  Fees Charged
 Services Provided
 How Money Is Managed
 Property Maintenance

3 Questions About Fees Charged:

1. What types of fees do you charge?
1. Most companies will charge a management fee.
2. Ask how much their management fee is.
1. It will typically be between 4 and 10% of the gross monthly income.
2. Make sure the fee is based on rent collected rather than rent due. This
will protect you from having to pay the property manager in the event of
a vacancy.
3. Ask if there are additional fees for services such as:
1. Tenant placement
2. Maintenance
3. Advertising
4. Evictions
5. Anything else they consider extra services.
6. For example: Tenant placement fee/Leasing fee:
1. Some management companies will charge a fee for filling
vacancies. This fee averages about 50% of the first month’s
rent.
2. You should make sure there are stipulations in the management
contract that protect you. For example, the leasing fee will be
given back if the tenant is evicted or breaks a lease or, if it takes
the manager longer than x amount of days to find a tenant, the
leasing fee is waived.

1 Question About Services Provided

Do your homework and don’t be fooled by a low management fee. You want to know
what services the property manager is including in the management fee.
Are they just going to collect rent and call it a day or will they provide a full range of
services from tenant placement to handling maintenance requests, or even
assistance with taxes? If things like tenant placement, handling maintenance
requests, and assistance with taxes involve extra fees, the low management fee isn’t
such a bargain.

1. You will want to see a detailed list of the exact services provided. Examples of
services provided:
1. Rent Collection
2. Tenant Placement
3. Tenant Disputes
4. Repairs
5. Tenant Evictions
6. Bill Paying
7. Tax Management

6 Questions About How Money Is Handled/Where

Funds are Held:
1. Where will the building's funds be held?
1. Will all income immediately be put into a separate account for your
property?
2. Who will have access to this account?
2. When and how will you, the property manager, be paid?
3. When and how will I receive my money?
1. Ask for a specific day of the month and if you will be paid by direct
deposit or by check etc.
4. Where do you keep tenants’ security deposits?
1. How much of a security deposit do you require?
2. Laws will vary by state. Some states require that you keep a
tenant’s security deposit in an interest-bearing account, notify the
tenant annually of how much interest has been earned, and pay the
interest earned to the tenant. A property manager should know
your state laws.
5. What are your practices for returning security deposits?
 1. For example: if they keep part of the security deposit for damages to
the property, what do they consider to be damages and what is the
corresponding amount they would keep?
2. Are they aware of your state’s law about how to properly withhold a
portion of the tenant’s security deposit, for what legal reasons they are
allowed to do so, and how to properly notify the tenant?
6. Will I receive monthly income and expense reports?

6 Questions About Property Maintenance:

1. Do you perform preventative maintenance/property inspections?
1. What kind and how often?
2. What is your standard practice for dealing with maintenance issues?
1. Is there a certain amount of money I must provide up front to put into a
maintenance/repair fund?
2. Will you call me for all maintenance requests?
3. Will you only call for maintenance requests over a certain amount, say
$500?
3. Do you provide an itemized list of all expenses?
4. Do you have free range to make repairs in the event of an emergency?
1. What constitutes an emergency?
5. How long does it take you to respond to tenant complaints/repair requests?
6. What type or resources do you have in terms of contractors or other
repairmen?
1. Are they on call to handle emergencies?
2. Do you rely solely on this group or do you get other estimates as well?