Becoming a Landlord: Hiring a Property Manager
A property manager performs such duties as marketing your rental property, selecting tenants, maintaining the property, creating budgets and collecting rents. You may consider hiring a property manager if you want to delegate these tasks to someone else to limit your day-to-day responsibilities regarding your rental property. You’ll still be responsible for supervising the property manager.
Property Manager's Role
If you decide to hire a property manager, it’s important to identify what their role will be by developing a list of duties and responsibilities. For example, will your property manager's responsibilities be limited to finding tenants? Or will they also deal with day-to-day maintenance and the collecting of rents? 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’s advised that you speak with your tax accountant to determine the most favorable approach and to determine specific obligations that you may have (such as obtaining a federal tax identification number). You’ll also have to make decisions regarding the property manager's compensation. Will they be full-time or part-time, salaried or paid an hourly rate?
Alternatively, you hire a property management company – a firm you contract with to deal directly with all aspects of the rental property. This option tends to be expensive, but it may be ideal if you have multiple rental properties, your time is limited, you’re not interested in hands-on management or you don’t live near the property.
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 whom you are considering meets the appropriate licensing requirements.
Depending on the role you envision for your property manager, you may want to look for one who is experienced in advertising, marketing, tenant relations, collecting rent, budgeting, leasing and maintenance. Ideally, your property manager will also be knowledgeable about local and state laws. Keep in mind: As the property owner, you can 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, set up an interview so you can ask questions that focus on the property manager's qualifications and experience. You might make inquiries such as these:
- Describe your experience in managing rental properties.
- Describe your experience in collecting rents.
What is one problem you've encountered as a property manager, and how did you resolve it?
- Why are you interested in this position?
- Do you have any questions for me?
Even if you think you've 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 candidate's 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 and driving record. Your property manager may have access to your money as well as to your tenants' houses. It’s a good idea to check their criminal history (this information may be included in a credit report).
If you’re contracting with a property management firm, you can research the company's history online and talk to current or former clients to make sure it’s a good fit for your rental property business.
Once you decide on a property manager and the terms of the arrangement, you and the property manager can complete a property manager agreement which identifies the manager's duties, compensation and termination clause.