There are plenty of blogs that cover this same topic about how property management works. However, this blog is different. How so?
Because as landlords ourselves, we are giving the absolute transparent insight into property management. All the goods and all the bad.
What is property management?
Property management is the operation and tasks for managing a rental unit. Handling all of the day-to-day operations (if big enough), coordinating with tenants and maintenance. Managing every aspect of rent collection, late fees and security deposits.
Regardless of who does the managing, every rental unit needs property management. Landlords can self-perform property management. Or, they can hire a third party property manager.
For a large portfolio that contains hundreds of units, a full-time property manager is an absolute must. For a small portfolio of only a few units, a property manager is an option that every landlord can decide.
Do I need a property manager?
Legally, no. Technically, no.
Deciding to hire a property manager is part of the landlord’s real estate strategy. There are pros and cons for both deciding to hire a property manager or self-managing.
One of the biggest benefits of hiring a property management company is the ability to delegate.
We’ll be honest and transparent.
Property management companies will advertise they save you hours of your life every month. This is contingent on the number of rental units you have. If you have a few rental units, there aren’t ‘hours’ of work every month for you. However, if you have mid-sized multifamily then perhaps there will be frequent management needs.
For out-of-state landlords, having a property manager near your property is a big benefit. Somebody to inspect the property, view maintenance issues, and even show the property for prospective tenants.
Burbz is changing the game for long-distance landlords. Providing the opportunity for landlords to participate in their management while also hiring a property manager to help with the local task.
So, what exactly will the property manager do?
The property manager’s ultimate responsibility is performing all the tasks to maintain the habitability of the rental unit and keeping the property occupied. Here are the main responsibilities:
Confirm that tenants pay rent and ideally on-time! Property management sends out any notices for Pay or Quit. Property management will hold onto the collected rent until later in the month, typically until the 15th to 25th of the month.
Burbz is the first and only platform that sends all rent payments directly to the landlord, while also simultaneously paying the property manager their fees.
Property Maintenance Coordination
Property management handles maintenance issues so landlords avoid untimely calls. Unfortunately, property management is known for sending a handyman or contractor out for any maintenance issue. Large or small. Critical or non-critical. This leaves the landlord paying for expensive minor repairs that could be addressed later or not having a say in whom the contractor is.
Are any of these important to you: having transparency on maintenance items, selecting the contractor, or deciding which repairs can wait? If so, consider a property management software that gives landlords full access to the maintenance log. With immediate alerts at the same time, property management receives requests so you are up-to-date on the maintenance of your rental units.
Dealing with Defaulters
When tenants are past due on paying rent, property management will communicate with the tenant to track down rent payments. Every state has different regulations. Property management will follow regulations by providing notices.
Screening Tenants and Marketing Rental Unit
Leasing is one of the most important tasks for what property management does. No tenant, no rent. No rent, no money.
Property management will research the market comps to determine a rent rate. Then, list the rental unit on popular sites and even place ‘For Rent’ signs on the property.
Throughout the leasing process, property management companies will handle the tenant application process. Then screen tenants by reviewing at their rental history and credit reports. Unfortunately, due to FCRA property management companies are not allowed to share those screening reports.
Traditional property management almost never allows landlords to be involved in the screening process. However, Burbz allows landlords to decide if they want to lead the leasing process and assign property managers certain duties or have their property manager handle everything.
Bookkeeping for Rental Properties
There are a lot of transactions in rental properties. Every time tenants pay rent. Even more, transactions if you allow roommates to split rent and pay individually. Late fees. Pet rent. Paying for repair work. Property management fees. The list goes on.
Property management will track all your income and expenses. For a small portfolio of rental properties, this isn’t much work. For landlords with many units, this can take more time.
Know the Local Landlord-Tenant Laws and Regulations
As licensed professionals, property management companies are required to know the local real estate laws. Commonly known as Landlord-Tenant Laws, every state has specified processes for interactions between both parties. These laws cover the security deposit, rent collection, when late fees can be assessed, lease termination, evictions, and so on.
While this information is public and landlords can easily read up, property management companies have this knowledge already and process in place that accommodates the law.
Benefits of hiring a property management company?
We’ll be honest. With the wrong property management company, it is often more of a headache than a benefit.
That is why hiring the right property management company is critical. When you do find that good fit, you will feel the benefits.
With a good property manager, landlords benefit from avoiding with tenant issues, saving time looking for a new tenant, handling maintenance issues, and dealing with the inspection process. Good property management companies will have a network of high-quality handyman and contractors.
When you find a property management company that respects your investment and doesn’t take the expensive easy route, the joys of owning investment properties are much better. Allowing you the freedom to chase more investment deals, spend time with family, or work more on whatever generates more income.
To truly gain benefits, the key is hiring the right property management company. Here are 8 great questions to ask when interviewing a property management company.
What is the cost of property management?
Property management costs vary from market to market. Generally, your total management cost will be 16-20% of your gross income (total rent revenue). That’s 8-10% for monthly management plus one month’s rent for leasing (another 8%). We have created a property management calculator for you to enter different rates.
Where landlords get frustrated are all the miscellaneous fees. Before hiring a property manager, make sure you ask the right questions. It is better to know before entering a contract how, why, and when a manager will earn a fee.
What frustrates landlords the most are the maintenance costs. Certain property management firms will get landlords into a contract based on their low fees. Remember that this is a business and they need to profit somewhere, we all do. It is common for property management firms to charge a maintenance fee or get a kickback from a contractor, which leaves no motivation to find the best value repair. Before a landlord realizes, their maintenance expenses can significantly reduce their profit!
And when landlords have finally had enough and decide to terminate the management agreement, there is a clause that requires the landlords to pay all the remaining ‘owed’ fees and dues.
What if I only want a property manager for some of the tasks?
Property management companies traditionally want to control the entire process. This is understandable because they potentially have hundreds of landlord clients. Allowing for a hundred different management services and tasks is how something falls through the cracks.
As a landlord, if being able to self-perform some of the management is important then consider smaller management firms. This is usually more achievable with individual property managers, for example, realtors who run a small 20-unit management business.
These individual property managers typically have fewer clients. Making it easier to accommodate individual needs. Plus it is easier to negotiate property management fees with an individual. That is why they prefer a property management platform like Burbz. The only software that allows both property managers and landlords to co-manage a rental unit.
How to find the right property manager for you?
We mentioned earlier that the key to hiring a property management company is finding the right one that meets your needs. With a bad property management company, there are major headaches and your job becomes managing the manager.
During the interview process, your property manager should be able to clearly explain when and how they ever earn a fee. Complete transparency is important.
Burbz provides a marketplace for landlords to meet property managers and go through the interview process. In a few easy steps, landlords can Request For Proposals through Burbz and receive proposals back from those interested managers.
Consider hiring a property manager through Burbz
If you haven’t picked up on it yet, Burbz is a landlord-friendly solution for property management. Our founder is a landlord himself and knew there had to be a better solution! Which is why Burbz provides a completely transparent process for landlords. No more hidden secrets about maintenance costs. No more having the property manager run away with your money. Our software always directs rent to the landlord and pays the manager their earnings simultaneously. Landlords can see every maintenance request that the tenants enter.
Hiring a property manager on Burbz is completely different than the traditional management system. Month-to-month contracts. No termination fees. If you decide to switch managers, the rental property data stays with your account!
Property managers on Burbz are individuals who are trying to build their own brand. Focused on providing great quality customer service. Because if a manager cannot perform well, they lose the opportunity for earning more business through our platform. These individuals joined the Burbz ecosystem because they too believe there is a better solution to property management. They believe in modern tools to be more efficient with their time and your assets.
Learn more about hiring a property manager through Burbz. And see how easy it is to request a property today and start talking to interested managers. Discover how property management works, finally in a landlord-friend way.