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 Property Management – Who Needs It?

By Jan Leasure, Managing Broker, Monterey Bay Property ManagementFeatured in DCD Home magazine.

Property management deals with the employment of business practices and “people skills” to obtain the greatest net income from a piece of real estate. It also integrates minimizing the negative influence of an assortment of laws and regulations that impact the use of the property. It is the property manager’s job to interact with tenants, vendors, contractors, neighbors, insurance adjusters, city, county, state and/or federal government officials, and anyone else who might influence the day-to-day operation of your property. A good property manager can maximize income, minimize expenses, and help you maintain the highest property value possible while avoiding legal hazards. A good manager can set high standards for tenants and inspire them to meet and sometimes even surpass these ideals. Property management is both a science and an art. A good property management company has the “science” part in place with good policies and procedures that allow them to excel over the long term in the management business. They also have the “art” of good people skills, and they utilize the psychology that is essential to success in this industry. The most challenging aspect of the real estate business is not acquiring property, but in knowing what to do with the property once it is under your supervision! Professional property managers know what to do and how to do it. If your property is an income-producing property, you can count on your property manager to know the rental market and to place a highly qualified tenant with minimal vacancy. Your manager will know the rental value of your property based on the rental values of similar properties in your geographical area. She will also know what vacancy rate you can expect and how long it will take to rent your property successfully. Marketing your property to prospective residents and providing those prospects with courteous service are part of the repertoire of a good manager. A good manager will have the “science” in place to expose your property to a large number of prospects through a web site that is high on widely used search engines and a vacancy hotline that is available to callers 24 hours per day, seven days a week. She also has effective systems in place to insure that your home is shown to as many prospects as possible. The application to rent is an integral part of effective tenant screening. A good property manager has a rental application that is much more sophisticated than the one you will find at the stationery store. She has the expertise to consistently screen applications and select a highly qualified tenant without violating federal and state fair housing laws. In fact, she will know the entire array of city, state, and federal landlord/tenant laws that apply to your property. A manager’s expertise in this area allows her to draft rental agreements that meet your needs while conforming to all applicable regulations. If addendums to the rental agreement are necessary, she has the capability to draft those as well. The manager knows how much security deposit she can legally collect and she knows what disclosures must legally be made to the tenant. A good manager makes it a habit to provide the tenant with a move-in inspection report to verify the condition of your property on the day the tenant takes occupancy. A good manager relieves her clients of the work, time, and stress involved in the general maintenance of the property. The property manager has plumbers, electricians, painters, handypersons, housekeepers, and numerous other vendors at her fingertips to keep the properties she manages in top condition. She will be sure that the vendors hired to work at your property are licensed, affordable, and reliable. Furthermore, the professional property manager not only insures that these vendors are available on short notice, she insures that the vendors are available at night or on weekends, in case of an emergency. So when that supply line to the washing machine breaks in the middle of the night, there will be someone there to deal with the flood! Oh, and one other thing – you won’t have to take that late-night call from the tenant! Many do-it-yourself landlords have had the unfortunate experiences of late rent payments, NSF (non-sufficient funds) checks, damage to their properties, as well as tenants who must be evicted. A good property manager will have few of those experiences. Because she is an expert at tenant selection, she will rarely have a problem with a tenant. However, if a problem does arise, a good manager has the skill to broach the subject with the tenant, negotiate with the tenant if necessary, and take action to enforce the terms of the rental agreement. Property owners don't worry about their properties when they hire professional property managers. Professional property managers are dedicated to selecting quality tenants and keeping their clients’ investments in good repair with minimal cost. They want your real estate investment to be a success, not a failure. And finally, one last benefit - your leasing and management fees are usually a tax deduction. So when the tax deductions, reduced vacancy factor, and time savings are factored into the cost of professional property management, most property owners find good management a real bargain!