What Does a Property Manager Do Anyway? Part 2 of 3

In our last article, we reviewed the initial leasing process and what, generally, most property managers go through during the set up, showings, and leasing of a typical home. In this article, we will continue from where we left off and begin covering the day-to-day activities that property managers perform to assist you in easing the burden of owning a rental property.

A tenant moves in, now what?

Rent Collection: Often the most commonly associated task of property managers, rent collection is generally the most frequent action performed by a manager. Each month on the first (or whatever date rent is due as specified by the lease agreement), the manager begins the collection process of rent. In today’s industry, most managers are able to accept credit cards, bank drafts, checks, and other forms of payment from the tenant. When a tenant pays on time, the account ledger is updated and the tenant is given a receipt of the transaction. This is generally all very simple. The trouble occurs when complications arise. When talking about rent collection as a responsibility of the manager to collect, these complications are typically why you want a manager for your property. Once the tenant has exceeded the grace period of the rental due date in the lease agreement, the manager will begin the eviction process against the tenant. If a payment is retuned for insufficient funds, the same process is started. This includes delivery and service of a 3-Day Notice to Pay or Quit, which must be hand delivered to a tenant or placed on the door of the residence. Once served, the tenant must pay the balance owed, plus any applicable late fees by the end of the 3-day period specified in the document. Communication is generally opened with the tenant to work out payment details, and owners are generally notified of the circumstances. If nothing can be worked out or communication is not possible, the eviction process will begin in earnest.

Accounting: A property manager should at all times be keeping an up-to-date record of all income and expenses related to your property. Every month (or on whatever schedule was arranged in the management agreement), a detailed statement of account should be delivered to the owner. This statement should document the income and expenses of the property as well as detailed explanations for any expenses that have occurred. In today’s world, many property managers are able to deposit rental proceeds and funds directly into the bank account of the owner and should have a clear schedule for doing so.

Repair Requests: One of the most common reasons many owners consider hiring a manager is so that they do not have to worry about receiving calls or e-mails at all hours for repairs. Property managers have systems in place to receive maintenance requests and can handle scheduling both standard and emergency calls. Typically, a manager will set a maintenance limit with the owner in the management agreement, allowing the manager to authorize repairs up to that limit without approval from the owner. The manager will coordinate with the contractor and the tenants to arrange for the work to be completed or will arrange for estimates to be complied, depending on the situation. As the work is completed, invoices are entered into the general ledger. If the repairs are determined to be the fault of the tenants, a bill is generated against the tenant’s ledger.

Notice Service: There are several notices that a property manager is responsible for serving against tenants as terms of the lease are violated. Notices, as well as the proper delivery and execution of notices, are vital to protecting the owner and ensuring that the tenant is upholding the lease terms. In the event that the tenant is not able or willing to correct the actions that violated the lease, legal action can be then be taken. An improper notice can cause an eviction to be overruled by a judge, can allow tenants to occupy a home for months without paying rent, or even can allow the tenants to sue the owner for damages. It is important that your property manager has the correct legal forms and the knowledge to implement them correctly. Legal notices include 3-day notices for non-payment of rent, 3- day notices to vacate at the conclusion of the lease, and 7-day notices for resolving general leasing violations (lawn care, smoking inside a home, unauthorized pets, etc.). Each notice has a different purpose, different legal requirements, and all must be executed properly to avoid delays, additional loss of income, and potential headaches.

Inspections: Talk to your property manager or potential property manager about the amount and types of inspections that they perform. During the standard lease term, multiple inspections are conducted of the home in various stages of the lease.

Move-In Inspection: Move-in inspections are conducted prior to each new tenant moving in. They should be a complete house walk-through documenting the cleanliness of the home, the condition of the walls, floors, counters, etc., as well documenting any repairs or cosmetic blemishes that may be present or need addressing.

Drive-By Inspection: Drive-by inspections are usually done at random but can be scheduled or on a fixed rotating schedule. The purpose is to simply drive by the property and check for signs of neglect, improper lawn care, or “red flags” that can be easily observed. If problems are sighted while passing by, a mid-lease inspection may be scheduled or a notice may be prepared and served to the tenants.

Interim or Mid-Lease Inspection: This inspection is conducted during the tenant’s occupancy of the home and will document the overall condition and cleanliness of the property. Problems that are spotted by the manager will again lead to a conversation with the tenant, the owner, and potentially a notice being served to correct major infractions. Every property manager will have different standards regarding the number of inspections done each year, and this should generally be a topic of discussion prior to signing up with a potential manager.

Move-Out Inspection: Conducted at the end of each lease, the move-out inspection is used to document repairs and damages present in the house upon move-out and are compared against the move-in inspection to determine charges that will be claimed against the tenant’s deposit.

Emergency Preparedness: Property managers must be at all times ready to jump into action when emergencies arise. Whether that is working to secure homes and check on tenants during hurricanes and other bad weather situations; handling emergency calls from tenants regarding issues such as fires, flooding, gas leaks; responding to criminal activity; or any other event that could threaten the property or tenants. Property managers have the resources and knowledge to help navigate these types of situations. Mangers can coordinate with insurance companies and adjusters, schedule contractors to act 24 hours a day, work through the repairs and ensure that the tenants are secure. Many times if major damage has occurred, negotiations must be made with the tenants to either have them pay for the damages or deductibles if they caused the problem or to work out living arrangements if they will be displaced due to natural causes.

Conflict Resolution: One of the most important and common obligations of a property manager is the daily interaction with tenants, contractors, and owners. It must be recognized that everyone is different and has different expectations of the leasing experience. Tenants want a home that is clean and that has no mechanical defects, which to a certain extent is very subjective. When tenants feel that the expectations have not been met, the property manager must delicately navigate to appease the tenant and secure a response from an owner, while keeping the bottom line and unreasonable expectations in check. Ultimately, the owner employs the manger, and when the expectations of the owner and tenant do not align, a manager must see to it that the tenant is not left bitter (as much as possible) so that additional complications do not arise. Managers are also the front line for complaints and gripes, which happen for multiple reasons. Nearly every time a contractor is late to an appointment, the A/C breaks, or some other issue occurs, the manager is not only tasked with securing the repairs but also in calming tenants and turning their negative experience into a positive one. The balance between managing the property on behalf of the owner and keeping a tenant happy can sometimes be a tense and difficult ordeal, but a good property manager is prepared and has the experience to resolve these issues and disputes with minimal fuss.

IMPORTANT CONSIDERATIONS FOR AN OWNER DURING THE LEASING PHASE:

1. COMMUNICATE – Every property manager has a different policy in place regarding what and how often they communicate issues with you. Many times, the manager handles issues and problems without an owner ever knowing the problem existed in the first place. Major issues should always be communicated to an owner, and if this is not being done, you should address this with your manager. However, make sure your communication expectations are clear prior to signing an agreement to ensure that problems do not arise later.
2. TENANT REPAIRS – Many owners feel like the repairs needed in a home should fall under the responsibility of the tenants. In some leases, there are clauses that dictate certain expectations regarding this; however, in most cases the tenant can only be held liable for a repair if it can be reasonably proved that the tenant caused the damage. For example, pennies inside a garbage disposal can easily be attributed to a tenant, but a garbage disposal that has burnt out and shows no sign of misuse may be a result of normal wear-and-tear.
3. TIME MANAGEMENT – One of the largest considerations to make when deciding on whether or not to hire a property manager is to try to keep in mind that tenants and contractors do not always have the same schedule as you. Major problems can arise early in the morning, in the middle of the night, or in the middle of work or a vacation. Property managers are equipped to take the burden of time and irritation off of your back. While they can’t always stop problems from occurring, they can ensure that the problem is not a burden you have to bear alone.

RE/MAX Infinity Property Management is a full service property management firm serving Santa Rosa and Escambia Counties in Northwest Florida. We service homeowners, investors, and military personnel that have a need for professional and hands-on management services.

Written by RE/MAX Infinity

Jason has been involved in Real Estate since 2005 where he quickly became a multi-million dollar producer within his first full year. He graduated from the Realtor Institute a few years later and then went on to achieve his Broker’s License in 2009. In 2008 he was asked to start up and lead the Property Management Department. He served on the Board of Directors as President for the local chapter of the National Association of Residential Property Managers for 2014 and is readily available to meet and speak with clients.

Written by RE/MAX Infinity

Jason has been involved in Real Estate since 2005 where he quickly became a multi-million dollar producer within his first full year. He graduated from the Realtor Institute a few years later and then went on to achieve his Broker’s License in 2009. In 2008 he was asked to start up and lead the Property Management Department. He served on the Board of Directors as President for the local chapter of the National Association of Residential Property Managers for 2014 and is readily available to meet and speak with clients.