The most common type of customer I talk to is somebody thinking about selling their home or renting it out, and they have little to no knowledge of how this is done. On the other hand, sometimes I speak to people that think they know what a property manager does, and it’s something like “you just collect rent and pay me once per month”. Seems like a dream job if all I have to do is open the mail and deposit checks right? In reality, property management isn’t just a lot of work, but it also takes years of experience to successfully navigate challenging tenant situations, and this is where the property manager really earns their fee as the outcome can cost or save thousands or even ten thousand dollars or more for the owner.
Duties of a Property Manager
Setting Accurate Rental Price
Getting the highest rental price isn’t always the most profitable. I consult with owners often about what their home will rent for any worthwhile repairs or upgrades that’ll help fetch more rent. When determining rental price, we have to also consider the time of the year, current state (demand) of the rental market, who pays for utilities, and the condition of the rental home, and comparable recently rented homes. Time is money when the rental unit is vacant, and an experienced property manager also relies on their experience and instinct to set rents that move properties. I’ve seen plenty of rentals go to market a couple hundred dollars too high on rent and then it sits there for two months while the price is dropped every couple weeks and interested parties have already looked and moved on. In this case the owner lost $5000 by having the rental sit empty for two additional months just because it was priced $200/mo too high ($2400/yr).Listing Vacant Properties
Property managers create effective rental listings on popular websites with an informative description of the rental unit and great looking photos. The listing should answer all basic questions the lead may have up front, and follow all local laws. Here in Minnesota the listing must indicate all fees and utilities the tenant must pay, and if listed by a Realtor or broker that must be mentioned. A good property manager will quickly respond to lead inquiries including having phone conversations throughout the day with interested parties, answer questions, and schedule and perform showings as soon as possible while the lead is interested. Most leads come from 3 websites, so don’t get excited when a property manager says your listing will be on 100 websites as most won’t produce any leads.
Tenant Screening
Property managers run background checks, verify income, review rental history, and ensure compliance with Fair Housing laws. A thorough screening process helps reduce turnover and avoid costly evictions. Screening tenants is getting more challenging as up to 15% of applications are fraudulent or untruthful. More recently tenants will create or digitally modify paystubs to show gainful employment with sufficient income, use their friends to act as a previous manager for a good reference, get fake ESA certificates (estimated 59% of ESA and 75% of service animal certs are illegitimate) for their pets to avoid pet fees, pet rent, and pet restrictions. An experienced property manager will be able to navigate these situations and find honest qualified people to live in the rental home.
Rent Collection
It’s not just depositing rents from a variety of methods such as electronic, paper check, and cash, it means enforcing due dates, applying late fees, tracking payment history, chasing tenants for payment and communicating deadlines and evictions, and ensuring accurate accounting records for each tenant.
Maintenance and Repairs
Property managers coordinate routine and regular maintenance like landscaping, HVAC servicing, pest control, failed appliances, door issues, plumbing and electrical issues, missed trash pickups, etc. They also handle emergency repairs such as a failed refrigerator, furnace, or air conditioning, and ensure vendors respond quickly. Preventive maintenance is key to preserving property value and tenant satisfaction.
Primary Contact for Owners and Tenants
This is an area that is often overlooked – being the point of contact for up to 200 tenants and 100 rental owners per full time property manager. There is a lot of general communication, questions, and coordination from all parties that takes time. Dealing with tenant complaints, often times about each other in a multi-family building, takes time and tactfulness.
Confirming Renters Liability Insurance
To reduce risk for owners, a property manager should require all renters to get liability insurance. This is a time consuming task for the property manager as not only do they work with the tenant initially to get coverage for the property they’re renting, but also for the correct amount, and then ensure it’s renewed and always active throughout their tenancy.
Inspections
Inspections are important and they’re one of the most common corners cut by rental owners and some managers. At Freedom Rental Property Management, we take around 100 photos of your home before a tenant moves in and we document all. In addition to pre move in photos or a video, the manager will obtain a move in condition statement from the tenant to confirm the state of the unit and pre existing damages so resolving disputes later is more clear.
Periodic (once or twice per year) inspections are essential to document property condition and to protect both owners and tenants. PMs use checklists, photos, and digital tools to ensure thorough records and reduce disputes. A good property manager will require the tenant to remedy damages found during the inspection or have the work done and require the tenant to pay for it, and pay the correct amount depending on what the issue is and if depreciation of the asset needs to be considered. This is commonly a time of tension between the property manager and tenant, so it needs to be done tactfully and accurately to minimize legal risk here in tenant friendly Minnesota.
Unit Turnover
When a tenant moves out, PMs inspect the unit for damages and assess what is damage, what is normal wear and tear, and how much the tenant needs to pay for. The security deposit needs to be processed quickly and accurately to minimize legal risk. Property managers also coordinate cleaning, repairs, rekeying locks, and any upgrades needed before the next resident arrives. 99.9% of the time the tenant moving out won’t leave the home in an acceptable condition for the tenant moving in, and any move in frustrations from the new tenant falls on the property manager. A smooth turnover process keeps properties profitable and tenants happy.
Minimizing Vacancy
One of the largest expense for a rental property owner is vacancy. A good property manager can minimize vacancy by:
1. Preventing them in the first place by providing tenants with great communication and quick resolutions to maintenance issues.
2. Once the move out notice is received, the manager will access the situation and list and show the home as soon as possible.
3. The property manager will negotiate a move in date, and often times can work with a tenant so they move in a week or more sooner, which is less vacancy the owner has to pay for.
Tenant Lease Enforcement
Managing tenants can take a lot of work. Often times tenants won’t care for the home properly by not changing the furnace filter, removing smoke detectors, being too noisy for neighbors, parking in the yard, not reporting needed maintenance like leaky toilets, and not paying rent. A lease contains a lot of rules and regulations the tenant is to follow to properly care for the home and be a good neighbor, and all aspects of the lease must be followed up / checked upon and enforced with the tenant.
Minimizing Lawsuits and Risk
Property managers and owners are in court often – it’s just part of this business. Managers take tenants to court for missed rent payments and lease violations. Tenants, who can often times get free or discounted legal representation in tenant friendly Minnesota, take landlords to court for a variety of reasons they can think of, but commonly unresolved maintenance issues or other various claims. Professional property managers know the system well and can just drain the owner in legal fees until they get what they want. Navigating professional tenants properly can save the owner thousands or ten thousand dollars. Property managers stay up to date on the latest landlord-tenant laws, rules, and regulations, which can vary by state and city. This protects you from housing discrimination claims, improper deposit handling claims, and rent getting sent to the courts in escrow due to unresolved maintenance issues, etc.
Filing Evictions
This is where experience is key. An experienced manager will know the right time to file an eviction on a tenant based on the situation, and their feeling if a tenant will pay or not. Often times I hear of inexperienced rental owners that are self managing that wait 2-4 months of no rent before finally filing the eviction, and then they realize they didn’t follow rental laws property (must give proper notice) to be able to file the eviction, so this adds additional weeks of delay to the process and thousands of additional dollars lost to the owner. Did you know that by default in Minnesota if the tenant pays you even one dollar of rent in a given month that you can’t evict for the partial rent payment (unless the lease says otherwise)?
Accounting
The property manager will pay vendor invoices on behalf of the owner and deduct the cost from rents collected. The manager will provide a copy of all vendor invoices work maintenance along with a monthly cash-flow statements which offer a detailed breakdown of income and itemized expenses.
Provide Tax Filing Documents
Property managers are required to send an accurate 1099 form to rental owners annually and will send a certificate of rent paid to each adult tenant that rented from them each year, even if they’ve already moved out.