Essential Guide to Property Management: What You Need to Know

Owning an investment property can be a rewarding experience but also comes with its share of challenges. They range from finding the right tenants to making sure repairs are handled promptly. Good property management is key to the long-term success of any rental. This guide breaks down the essentials of property management and what you need to know as someone with one or more investment properties.

The Role of Property Managers in Maximizing Investment Value

A capable property manager is invaluable when it comes to maximizing your long-term rental property returns. While you can certainly manage properties yourself, professional managers have the time, expertise, and resources to handle all aspects of oversight.

One of the most important skills a property manager brings to the table is knowing how to attract and retain good tenants. By thoroughly screening applicants, they help find tenants who will pay on time and treat the property well. They understand what market rents should be and price units accordingly. Also, they are knowledgeable about local landlord-tenant laws inside and out. This will come in handy if there are problems with a tenant and can handle the situation before it may lead to guided negotiations or evictions. 

Property managers coordinate with vendors to ensure that regular maintenance and needed repairs are performed quickly and cost-effectively. By keeping properties in good shape with happy tenants, they help maintain or grow the market value of your rental properties, which directly impacts long-term investment returns.

They also monitor local market trends and advise whether selling at peak value during upcycles makes more sense than continuing to rent. Ultimately, a property manager serves as an invaluable advisor who looks out for your best interests.

Understanding Property Management Costs

It's important to understand property management costs when budgeting for your rental property expenses. Property management fees vary but often range from 8-12% of monthly rent collected. This covers costs like:

• Advertising vacancies and showing properties
• Processing rental applications
• Collecting security deposits
• Performing income verification and credit checks
• Preparing lease paperwork
• Coordinating maintenance requests
• Managing contractors and repairs
• Ensuring rent collection
• Pursuing delinquent payments
• Handling evictions if necessary

The exact fee depends on the level of service, number of units managed, type of property, and location. Luxury homes often come with higher fees. Management companies in smaller rural towns may also charge less than those in bigger cities. Be sure you understand what's covered in the management agreement.

It's also common for managers to charge a tenant placement fee of 50-100% of the first month's rent to secure a new occupant. An early termination clause may also exist if you want to part ways before an agreement expires. While property managers do add cost, the benefits often far outweigh their fees when it comes to maximizing returns.

Key Services Provided by Professional Property Managers

When you hire a property management company, you're gaining a team of professionals who handle almost everything related to your investment property on your behalf. Typical services include:

Tenant Screening and Selection

Managers thoroughly vet applicants by running background checks, credit reports, employment verification, rental history analysis, and more. This helps identify responsible renters likely to pay on time. They coordinate showings, evaluate applicants, run income-to-rent calculations, negotiate lease terms, and handle paperwork.

Advertising and Marketing Vacancies

When there's a vacancy, property managers market listings through local publications, websites like Zillow, yard signs, multiple listing services, and more. They often have waiting lists of pre-qualified tenants to fill vacancies quickly.

Collecting Rents and Enforcing Payment

Each month managers collect agreed on rents, charging late fees as appropriate. For overdue accounts, they issue timely notifications and pursue collection through payment plans or legal eviction proceedings if needed.

Maintenance Coordination and Emergency Repairs

When tenants report a maintenance issue, managers dispatch technicians for repairs. They have vendor relationships to cost-effectively restore proper functionality. For emergencies that jeopardize safety or property conditions, managers take immediate action. Contact a property manager in Boston today to ensure your properties are well-managed and maintained. 

Accounting, Expense Tracking, and Reporting

Reputable managers handle all the financial tracking that goes with property oversight - collecting rent, paying expenses from a trust account, maintaining documentation, and providing detailed accounting reports for owners. Everything is handled professionally with oversight controls in place.

Handling Legal Proceedings and Regulatory Issues

Managers are familiar with landlord-tenant laws, regulatory compliance, required licensing for rental properties, and documentation like leases. They appropriately handle legal proceedings like evictions or property disputes. Consider a property manager, your administrative assistant, and a legal representative.

How to Choose the Right Property Manager

Not all property management companies are created equal. You want to thoroughly vet teams you're considering entrusting with your rental property - the value they can add makes it worth taking the time. Here's how to choose the right property manager:

Look for Experience

Ask about years in business, the number and types of units under management, staff experience levels, current portfolio occupancy rates, and client retention. Look for demonstrated experience handling properties similar to your own.

Interview Attentively

Much like hiring any professional service provider, conduct thorough interviews before engaging. Ask questions about their specific processes and systems related to areas of concern for you—tenant screening, maintenance, rent collection challenges, etc. Assess their responsiveness to your questions.

Vet Online Reviews Thoroughly

Do your homework by reading third-party online reviews on Google, Facebook, and sites like Yelp. This can uncover potential complaints concerning poor communication, slow response times, lack of transparency, or billing issues.

Request and Check References

Ask for two or three client references, and you can contact them directly about their experience. Verify other important connections as well, such as key contractors used for maintenance and repairs.

Understand Service Guarantees

Many property managers provide written service guarantees covering specific responsibilities they agree to. This helps ensure you're aligned with expectations, gives recourse options if dissatisfied, and indicates reliability.

Clarify Requirements Upfront

Before contracting, clarify specific legal, insurance, security deposit handling, owner disbursement, and billing requirements you expect them to meet depending on local regulations. Detailed expectations regarding handling maintenance requests and communications practices.

Final Words 

Managing rental properties effectively requires time, expertise, and attention to dozens of details. While hands-on landlords devote huge efforts toward protecting their investments, the services of a professional property management company can provide significant value and free up time. If you carefully vet managers, establish clear expectations upfront, and sign a detailed agreement, you’re far more likely to maximize returns on your properties over the long run. The insight in this guide can help you make informed choices.