Are you looking for answers to ‘what do property management companies do?’ Whether you own a rental property or are planning to invest in real estate, you may want to know more about what property management is and what property management firms do.
Owning and maintaining rental properties – whether commercial or residential- can be a stressful, full-time job. Hiring property management companies can offer landlords multiple benefits that go beyond routine maintenance.
What is property management?
As the name suggests, property management involves operations, oversight and control of properties right from rental collection, marketing vacant space to repairs.
A third-party contractor who specializes in property management handles these tasks for different types of real estate including commercial, residential, and industrial properties.
Property managers are responsible for day-to-day supervision, repairs, security and ongoing maintenance of properties. These managers work for property owners such as industrial parks, private home communities, condominium complexes, shopping centers, and vacation homes.
While managing the routine tasks of property maintenance, property management companies ensure the value of these managed properties are preserved. Although property managers handle diverse tasks, the exact responsibilities they have depends on the contract entered into with the real estate owner. For instance, a landlord can engage a property management firm to take care of rent collection only or entrust them with all business operations related to their property.
Why do you need a property management company?
Real estate is the most popular long-term investment instrument for Americans. According to a 2020 survey, 31 percent of people think real estate property is the best method of investing. While owning a rental property is a profitable venture, it involves a considerable amount of time and effort. Some of the challenges landlords face include:
Property maintenance
For most landlords, maintaining their rental property is a challenge. In a survey, 62 percent of owners said property maintenance is the biggest stressors.
Finding and retaining good tenants
In the same survey 58 percent reported that finding and retaining good tenants was the biggest challenge. When your property is vacant, you will need to dedicate time and effort to advertise, screen, run background checks and do all the administrative task to get a new tenant.
High tenant turnover and prolonged vacancies can translate into severe financial trouble. Not only will the property management company employ cutting-edge advertising tactics to fill vacancies, but they will ensure this is done quickly and efficiently. Given their expertise, property management companies are better than traditional landlords in filling vacancies.
Late rental payments
A new analysis shows that close to 20 percent of renters are behind on their monthly payments in the US. The typical renter is four months behind on payment and owes $5,600 that includes late fee and utilities. Dealing with such tenants, particularly repeat offenders can be financially draining and frustrating for landlords.
Legal compliance
In California, property management is a highly regulated sector with multiple laws that indirectly or directly involve property management. Landlords need to stay updated on the federal and state laws and rules that apply to them to avoid legal trouble.
Accounting and bookkeeping
Landlords typically deal with plenty of paperwork which can become disorganized if you do not have the time and resources to manage these. Losing an important document or not keeping track of your revenue and expenses can land you in legal trouble.
There are many other reasons to hire a property management company:
You own or are planning to own multiple rental properties
One of the top answers to the question “what do property management companies do?” is that they specialize in managing multiple rental properties.
You stay far from the rental property
If your rental property is in San Diego and you live in another state, hiring a property manager is the best way to maintain your asset.
The property is a source of passive revenue:
If the intention of buying the property is to earn passive income, it makes no sense to be actively involved in maintaining and managing the property. A property manager handles daily operations and maintenance of the asset to ensure you continue to earn passive income.
You do not have enough time
Hiring a property management company is the ideal choice when you have a full-time job or another business that keeps you busy.
Hiring employees is not feasible
Managing and maintaining a property will involve several tasks that will require you to hire employees. This comes with multiple responsibilities including payroll, taxes and legal requirements. Being independent contractors, property management companies eliminate the burden of being an employer.
Your property relates to the affordable housing program
Owners typically receive tax credits, low interest loans and grants for renting their property to those with low-income. While these are the benefits, landlords need to also adhere to complex rules with affordable housing programs. Working with a property management company that stays updated on regulations helps you ensure compliance with the rules.
Mitigate liability
One of the perks of hiring a third-party firm for property management is the protection from liability for inexperienced investors. At times tenants can make false accusations on negligent maintenance, eviction practice or rent collection tactics. An experienced property management company is able to deflect these false claims and protect the landlord against liabilities.
You want better reviews
The best property management companies are highly responsive and efficient and ensure ongoing communication with tenants. This makes the process of moving in, moving out and staying smoother. As a result, tenants are likely to post good reviews online and recommend your property to others offline. This ensures your property continues to be in demand throughout the year.
You are looking to lower your maintenance costs
Working with the right property management firm gives you access to a wide network of reliable professional contractors. This is because the property management firm already has strengthened the network to help you avoid the hassles.
Now that you know what property management is and why you may need one, it’s time to take a closer look at the answers to “what do property management companies do?”
What do property management companies do?
The right property management company handles all the tasks related to your asset to ensure building upkeep, good reputation, tenant occupancy and profitability. These firms help landlords stay compliant with the local, state and federal codes and regulations. While the exact responsibilities of property management companies can vary, these are the most common duties they handle:
Comprehensive marketing services
Real estate being a huge investment, owners naturally want to ensure their rental property is occupied and that the vacancy rate is low. The lower your property’s vacancy rate, the higher performing it becomes and consequently, more valuable.
One of the primary reasons owners hire property management companies is to market their property. These firms help you reach out to your potential tenants by creating listings and spreading the word on popular booking and advertising channels.
For instance, Haustay Vacation Rentals in Del Mar, San Diego handles 360-degree marketing services including:
- Professionally photographed and curated online listings.
- Exposure to over 144 million guests through major booking channels like AirBnB, VRBO, and Haustay.com.
- Dynamic pricing to maximize revenue based on market demand.
- Targeted email marketing to hundreds of previous guests.
- Social media amplification of your property on Instagram, Facebook, Twitter, and more.
Preventative maintenance
Whether it is commercial, residential or vacation rental, property management involves maintenance of electrical, plumbing, landscaping, walls, roof, appliances, and everything else. A seasoned property management company maintains relationships with repair services, contractors and technicians to ensure your property is well-maintained at all times.
Property management companies conduct routine inspections that can help them identify small maintenance issues. This helps resolve these issues before they become major, more expensive issues.
Emergency repairs
Whether you own a vacation rental or a residential property, it is important to ensure your tenants leave positive reviews for your property. Consumers rely on reviews and recommendations from other users before renting a property. Having someone available at all times to handle repair requests is vital. If tenants have to play phone tag or leave messages to get immediate assistance, this can translate into negative reviews, hurting your reputation.
Besides, the last thing landlords want is to handle repair request calls at odd times. One of the most important answers to the query ‘what do property management companies do’ is that they handle emergency repair requests on a 24/7 basis. Some management companies have dedicated after-hours tech to answer these calls.
Meticulous tenant screening
Realizing the maximum value of your investment comes down to having a tenant who is a good fit from the start. For most landlords, finding the right tenant is a major headache. This is where the property management company steps in. They offer thorough tenant screening while checking the tenant’s criminal background, creditworthiness, rental history and income. They check the references from a previous landlord or the workplace of the tenant while talking to the tenant to give you an overall accurate picture of who your tenant is.
Detailed tenant screening is your best defense against potentially problematic tenants. The property management company will also ensure you meet the Fair Housing Laws requirements and avoid unintentionally discriminating against any tenant.
Hassle free moving in experience
Move-in day can be a potentially stressful time for landlords and tenants. With a property management company, you do not need to be physically present to ensure a smooth move-in experience for your tenants. The company will handle all the tasks related to moving in including:
- Drafting a legally compliant lease and obtaining signatures based on the specific needs of the property
- Detailed inspection of the property along with photographs
- Collecting security deposit and the rent for the first month as well as parking or pet fees as applicable
- Giving a welcome kit to the tenant that has the property information, local area information, maintenance responsibilities, and contact numbers
- Handing over the keys to the tenant
Rent collection
You probably already know that one of the important answers to the often-asked question of what property management companies do is rent collection. The property management company handles all aspects of rent collection including sending rent reminders, collecting rent payments, and sending the payments to owners.
Leading property management companies in San Diego will offer tenants multiple ways to make rental payments.
At times, despite following best practices of rent collection, tenants fail to make payments on time. From ensuring diligent communication with clients to initiating eviction proceedings if needed, your property management company can handle delinquent tenants effectively.
Eviction processes will involve filing paperwork, representing landlords in court, sending proper notices, and facilitating eviction of tenants. Having a reputed property management company in these situations can help you mitigate the stress linked to eviction and handling problematic tenants.
Moving out inspections
Property managers not only help during move ins but ensure the moving out process for the tenant and landlords is hassle-free.
When your existing tenant gives notice, the property management company advertises on multiple channels to get a new tenant. They also inspect the property to see if there is any damage caused by the tenant that will then be withheld from their security deposit.
During the move-out, your property management company:
- Provides the tenant a detailed list of damages if any
- Returns the security deposit or the remaining balance if there are damages
- Make any repairs
- Re key the locks
- Clean and sanitize the rental property
- Advertise the property
- Handle all tenant communication and feedback
Accounting and bookkeeping
Property management companies maintain all financial documentation pertaining to your property. Some of the accounting and bookkeeping services they handle include:
- Tracking itemized expenses and payments incurred by the owner such as insurance premiums, HOA and utilities
- Bookkeeping for the property including rental payments and expenses
- Preparation of financial statements
- Monthly income and expense reports
- Work orders, maintenance estimates, and receipts
- Yearly tax information
Leading property management companies such as Haustay offer landlords their own online account that lets them track your earnings, retrieve monthly statements, and block dates for your own use.
The ideal property management firm forms a strong partnership with property owners. Right from local knowledge, hands-on management to ensuring higher occupancy, these firms help investors achieve an optimal return on their real estate investment.
