First, ask yourself these questions to see if you may be a candidate for a property manager:
- Do I have time to manage my properties?
- Can I evict my tenants if needed?
- Can I follow the rules I have set for my tenants according to the lease I have them sign?
- Can I make repairs if necessary? If not, can I find people that can?
- Do I have trouble making boundaries? Can you treat your tenants as a business and not a “friend”?
- Am I willing to study, know and stay on top of legalities of state and local laws for landlord/tenants?
Management Duties
Here is a list of responsibilities property managers typically oversee:
- Know the local market. Good, bad, and ugly neighborhoods, average rent, normal vacancies, renter demographics.
- Marketing for, screening, and maintaining long term rental leases
- Ensure that the assets are well maintained. Have a strategy for ongoing upkeep and maintenance and a strong team of individuals capable of quickly and efficiently fixing issues.
- Maintain a safe and happy environment for any tenants or clients. Control what is controllable, cleanliness, maintenance, visual appeal.
- Enforce and control the collection of rent. Handle any late fees or issues. Know how to start and follow the eviction process to completion with local authorities.
- Maintain accounting for the asset as necessary
- Set, enforce, and follow policies and procedures with the tenants
- Create a positive environment and work with all tenants to find the best solution to any problems that may arise.
Fair Housing
The Fair Housing Act protects people from discrimination when renting or buying a home, getting a mortgage, seeking housing assistance, or engaging in other housing-related activities. Additional protections apply to federally assisted housing.
Property managers also assume some liabilities. Depending on the state, the management individual or company may be required to have a specific license or broker affiliation to practice. They may have to provide insurance to cover loss due to negligence of the management company. Further, they are responsible for knowing all the fair housing rules and regulations to ensure that you won’t be accused of profiling or discriminating against a specific tenant.
The FHA prohibits discrimination based on
- Race
- Color
- National Origin
- Religion
- Sex
- Familial Status
- Disability
Lease Agreements
The management of any property will also be held to the standard of the contract upon which it is written. Meaning the lease is our leverage and our legal ability to control the occupancy of a property. Having a state-approved, lawyer-reviewed lease is extremely important in setting up successful management. A great lease will prepare for the worst but hope for the best.
Within the lease. It should include:
- Complete and legal name and signature (s) of the tenant (s)
- Description of property
- Term of the lease
- Consideration or amount of rent
- Time and method of payment
- Use of premises
- Rights and obligations of both parties – this gets lengthy, and you can typically get one online that works for your state.
- Possessions of the premises (contents)
- A clause that allows you to increase rent upon renewal
- Photocopy of each applicant’s lease on file
Other possible provisions:
- Late fees, chargebacks, and consequences
- Partial payment policy, if applicable
- Renewal provisions and termination requirements
- Maintenance requests and process
- Holdover tenancy
- Utilities – landlord or tenant
- Security deposit and requirements for its return
- Duty to keep premises clean along with their visitors
- Pet policies and pet rents, if applicable
- Notices and how they are to be given and received
- Landlord right of entry
- Drugs and domestic violence (animal abuse included)
- Alterations to a unit, what is permitted and what is not
- Legal fees and prosecuting county
- Cleaning fee if not returned as received
- Renters insurance
Knowing the numerous responsibilities and possible legal ramifications, outsourcing a property manager, or a professional property management company should be a no-brainer for the savvy investor.