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You are here: Home / Real Estate Investing / Is a Property Manager Right for Your Investment?

January 26, 2010 by Peter Maclennan Leave a Comment

Is a Property Manager Right for Your Investment?

Property managers are very important to passive investment property owners, to out of town property owners, and property owners with multiple real estate investments.

Passive owners, as opposed to active owners, generally don’t want to deal with the three “T”s of real estate investment ownership; toilets, tenants, and trash. Passive real estate owners are not the “hands on” investor. They allow others to manage the day to day activities while there investment produces income for them.Condominiums or Apartments

What do property managers do?

A property manager, manages property. They provide oversight and administration so that a property meets the investment objectives of the owner.

A good manager will find and screen tenants, maintain an investment property, collect rents, evict non-paying tenants, and pay bills related to the real estate under management. They perform almost all of the tasks that an owner would normally handle.

How are property managers paid?

Most property managers receive a percentage of the gross income from a rental property. This can range from 2% to 10% of gross operating income depending on the standards for a geographic area. In some cases a property management company may charge a flat fee for individual rental homes.

How does a property manager help a real estate investor?

Daily Management Issues

Property managers can add value to owners that are unable or unwilling to handle the day-to-day activities of a property personally.

Thanks to the Second Law of Thermodynamics we know that things break down. Pipes and water heaters break, toilets and drains clog, and roofs can leak. A property management company takes these calls rather than the landlord. This leaves the landlord free to pursue other interests and invest in other projects.

Local Management

An owner with real estate in a another city or state will find it valuable to have a local management company collect the rents, screen tenants, and perform routine property maintenance. A real estate manager can help establish competitive lease rates from their local market knowledge.

Efficiency

Investment property owners with multiple properties may benefit from the efficiency a real estate manager can offer. An investor could continue working a 9-5 job while still reaping the benefits of owning multiple real estate investments, without having to deal with management responsibilities.

Legal  Knowledge

The legalities of being a landlord vary from city to city. Rent control and tenant rights, if mishandled, can open a property owner to risk of a lawsuit. A knowledgeable property manger will keep a property in compliance with local, state, and federal laws.

Caveat Emptor: Buyer Beware!

Not all property managers are equal.

Unfortunately, property managers are tempted by greed like the rest of us. Some real estate managers may have unscrupulous arrangements with outside contractors that charge property owners above market rates for repairs, then pay a kickback to the real estate manager for using their service. Investors should “trust their gut” and go with managers that they feel are honest and trustworthy.

An investor should make sure that a property management company adequately maintains properties. Checking a few of their properties to see how well they maintain properties is a good idea.

When selecting a property management company ask for references or client testimonials.

The Institute of Real Estate Management (IREM) is a source for education, resources, and membership for real estate management professionals. IREM allows owners to search for IREM members.

(Photo: Front_Corner_Perspective_Landscape by Chad Jones)

has been the source for education, resources, information, and membership for real estate management professionals for more than 75 years.

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Filed Under: Real Estate Investing Tagged With: Investment Property, Property Managers, Real Estate Investor, Rental Property

About Peter Maclennan

Peter Maclennan is a Real Estate Broker at Maclennan Investment Group, Inc. a real estate brokerage and advisory firm. From novice investors to institutional property owners Peter provides tailored service to his client's needs. Call him today to discuss your real estate need at (925) 385-8798 or visit him on the web at https://www.maclennaninvestments.com. CA DRE License#01801793

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