What you Need to Know Before Hiring a Property Manager
If you decide to hire a property manager, it is important to identify his or her role. You can develop a list of duties for which the property manager will be responsible.
A property manager can assist you to market your rental property, select tenants, maintain the property, create budgets and collect rent. You may consider hiring a property manager if you wish to delegate these tasks to someone else to limit your day-to-day responsibilities regarding your rental property. You will simply supervise the property manager.
Property manager’s role
If you decide to hire a property manager, it is important to identify his or her role. You can develop a list of duties for which the property manager will be responsible. For example, will your property manager’s responsibilities be limited to finding tenants? Or will he or she also deal with day–to–day maintenance and the collecting of rent? Your agreement with the property manager should clearly state your expectations.
You must decide if the property manager will be an independent contractor or an employee.
Depending on your situation, there may be advantages and disadvantages to both. It is advised that you speak with your tax accountant to determine specific obligations that you may have such as obtaining a federal tax identification number.
You will also have to make decisions regarding the property manager’s compensation. Will they be full-time or part-time, salaried?
Selecting a property manager
In certain areas, anyone who engages in the renting of property must hold an active real estate license. If you are in one of these areas, make sure a property manager that you are considering meets the appropriate licensing requirements though in Uganda the property industry is not regulated and property managers don’t have professional licenses. You don’t have to have a license to manage the property and some of them operate without licenses and companies, although it’s vital for one to have a qualification.
Depending on the role you envision for your property manager, you may want to look for a property manager who is experienced in advertising, marketing, tenant relations collecting rent, budgeting, leasing, and maintenance.
Ideally, your property manager should also be knowledgeable of local and state laws: as a property owner, you may be held liable for the acts of your manager. For example, you can be sued if your manager violates any fair housing laws. If you find someone you feel may be a good fit, you can set up an interview where you can ask questions that focus on the property manager’s qualifications and experience. You might make inquiries on his/her experience in managing rental properties
Even if you think you have found the perfect property manager, you should check the candidate’s references in the following areas:
- Employment- call and speak with former employers to inquire about the candidates’ job responsibilities, strengths, and weaknesses.
- Credit history and background report- If your property manager will be responsible for handling money, a history of tidy personal finances may be important. Make sure you get the applicant’s written consent before performing a credit or background check.
- Criminal record- Your property manager may have access to your money as well as to your tenant’s houses. It may be a good idea to check their criminal history.
If you are contracting with an established property management company, you can research the company’s history online or talk to current or former clients. Once you have decided on a property manager and the terms of engagement, you and the property manager can identify the manager’s duties, compensation and termination clause.
Property management companies can be a huge asset to your business, but they don’t come cheap. And there are other reasons why you might not want or need one. Carefully review the factors discussed below to determine if hiring a property management company is the right move for your business.
What does a property management company do?
Management companies deal directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions. Plus, a good management company brings its know-how and experience to your property, giving you the peace of mind that comes with knowing your investment is in good hands. Finally, a management company eases the hassles of being an employer.
When should you hire a property management company?
You have lots of properties or rental units. The more rental properties you own and the more units they contain the more you are likely to benefit from a management company.
You don’t live near your rental property. If your rental property is located far from where you live, hiring a property management company can be valuable in dealing with the many issues that you will not be able to handle from afar.
You are not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own.
But if you view rental property ownership strictly as an investment and want title or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.
Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote to your businesses, especially if land-lording isn’t your day job. And if you prefer to spend your time growing your business, including searching for new properties, arranging to finance for renovations, or changing your business structure, then a management company may be a good way to spend your money.
You can afford the cost. Hiring a property management property company is an attractive option if you can afford the fees. When interviewing companies, expect to hear quotes ranging between 5% and 10% of what you collect in rent revenue.
If it’s a down market and you are able to manage things yourself (or with the help of a resident manager or other employees), you may want to keep doing so until the market turns around. You are suddenly inundated with management tasks. If your business is growing at some point you may find that you need a substantial amount of help to manage everything properly.
At that point, it might make sense to hire a management company. You don’t want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You will have to handle payroll and deal with a host of other legal requirements and considerations.
But, because a property company isn’t your employee and neither are the people who work for the company, by using one you avoid the hassles of being an employer.
Your property is part of an affordable housing program. If you participate in an affordable housing program, things can get complicated. Usually, in these programs, the landlord receives financial assistance, which may be in the form of a grant, low-interest loans, or tax credits, in return for agreeing to rent at least part of the property to tenants earning below a certain income level. In order to continue receiving the assistance, the landlord must at stake, it’s often worth hiring a property management company that has expertise and experience with the particular housing program in question.
In conclusion, the decision of hiring a manager lies in the hands of the landlord and what he or she expects from the manager but it’s the safest way to go to avoid day-to-day hustles and operations.