Why you should outsource property management

The term “property management” refers to the daily supervision of residential, commercial, or industrial real estate by a third-party contractor. Property managers essentially function as the intermediary between the rental property owners (landlords) and renters, handling the day-to-day operations and ongoing upkeep of real estate investment properties. 

While property managers work in different ways, based on their contract with the property owner, their main role is to manage tasks that preserve the value of the property while also generating income. A landlord can hire a property management firm to help with one task, such as collecting rent, or they can enlist a property manager to handle all business operations for their property.

Basic property management responsibilities include:

• Pricing property to maximize revenue while minimizing vacancy 

• Screening tenants (e.g., running background and credit checks)

• Drafting, signing, and renewing lease agreements on behalf of property owners

• Collecting rents and security deposits

• Managing tenants (e.g., handling complaints, sublease requests, move-outs, and evictions)

• Responding to maintenance requests (e.g., water leaks or exterminations)

• Creating and adhering to budgets for property maintenance costs (e.g., landscaping and addressing wear and tear)

• Marketing rental properties ahead of vacancies to prevent empty units

• Understanding state and national landlord-tenant laws and regulations

Property managers may also be in charge of maintaining important financial records and statements for property owners, taking property taxes and repair costs into consideration.  Some property managers hire a third party—such as a plumber or electrician—to handle maintenance and repairs. Records should include all income and expenses, including a list of property inspections, repair expenses, signed leases, records of rent collection, insurance costs, and more.

Landlords choose to employ a property manager for a variety of reasons. 

1. Landlords who have multiple rental properties in their portfolios and lack the time (or expertise) to maintain the properties and deal with individual tenants may outsource this work to property managers. 

2. Landlords who are solely be interested in acquiring passive income from their investment, may choose to delegate routine operations to a third party. 

3. Absentee landlords (owners who don’t live near their property) might also hire property managers to oversee their investment from a closer proximity.

4. Landlords may also enlist property management services to help with real estate marketing. Hiring a property manager means you won’t have to worry about marketing the property to new tenants, which involves taking high-quality photographs of the property and listing it on housing websites and other platforms. 

5. Property owners who participate in affordable housing programs also tend to use property management services because their rental properties are subject to complicated federal guidelines that require lots of attention and specialized expertise.

Hiring a property manager can be an overwhelming task, especially if you’re a first-time property owner. So what qualifications should you be looking for? 

First and foremost, you want an investment property manager with extensive experience overseeing the type of real estate you’ve invested in. Commercial property managers, for example, specialize in handling real estate used for business purposes, so they’ll likely have the most knowledge regarding renting out industrial buildings or administrative spaces. Meanwhile, multi-family property managers might be the most helpful in dealing with facilities such as apartment buildings and condo complexes.

It’s also vital that your property manager is extremely well-versed in federal, state, and local landlord-tenant laws. Every state has its own regulations, but most require property management licensing through the local real estate board. Hiring a property manager with a real estate broker license will help ensure they know what they’re doing when it comes to important property management processes such as rent control laws, screening or evicting tenants, negotiating leases, and listing rental properties.

Fees. Owners typically pay property management firms a flat fee or a percentage of the rent generated by the property. (The industry standard falls between six and 12 percent.) Take a look at how much the company charges in management fees—there may be additional costs in the form of vacancy fees, set-up fees, or leasing fees. 

Rental pricing. Learn how they determine rental rates. How often will they raise the property rent? How is rent collected, and what’s the protocol for handling late payments? 

Tech. Does the company utilize proptech to streamline property management services? Examine the company’s customer service to see if it’s efficient and technology-forward. 

Marketing capabilities. How does the property manager find tenants, and how quickly do they fill vacancies? You’ll want to make sure a property manager is leveraging all of the modern tools available to market properties.

No matter how you choose to manage your rental properties, all roads lead to the same goal: a hassle-free rental experience for the property owners and tenants alike.

Bungalow’s property management service

Bungalow offers tenant placement and property management services that keep your property fully occupied and well managed—helping you earn more rental income from your investment property. 

• Bungalow’s AI-powered pricing engine uses more than 1,000 data points to optimize property prices in real-time based on market demand.

• Bungalow’s tenants can make online payments and issue maintenance requests through a mobile app. 

• Bungalow offers potential renters guided virtual property tours that include professional-grade photos and digital furniture staging. The easier it is for vetted individuals to fall in love with your property, the sooner you (or your property manager) will be collecting rent. 

With Bungalow, homeowners earn up to 20% more rental income. Learn more about Bungalow.