What Are Property Management Companies?
Hiring a property management company is probably one of the most effective ways to manage your real estate rental business. Property management companies are businesses that manage rental properties on behalf of real estate owners. They’re often simply referred to as property managers.
What Does a Property Manager Do?
- Advertising and showing the property to potential tenants
- Screening tenants and processing applications
- Handling lease agreements and paperwork
- Collecting rent and security deposits
- Handling maintenance and repair requests
- Responding to tenant complaints and concerns
- Conducting regular property inspections
- Handling evictions
- Keeping track of financial records and preparing reports
Note that even though a property manager handles these tasks, the property owner is still ultimately responsible for the property and must budget for property management expenses.
How Much Does a Property Manager Charge?
Property managers typically charge between 5% to 12% of collected rent each month. For example, at 8% on $1,500/month rent, the fee would be $120/month.
Additional Fees May Include:
- Tenant placement fee: For finding and placing new tenants.
- Lease preparation fee: For drafting lease agreements.
- Eviction proceedings fee: For handling the legal eviction process.
- Marketing and advertising fee: For advertising the property to potential tenants.
Best Property Management Companies by Property Type
Single-family homes: Real Property Management, Lincoln Property Company, Bozzuto, Renters Warehouse
Multi-family homes: Lincoln Property Company, JLL
Apartments: Greystar, Bell Partners, Equity Residential
Condos: FirstService Residential
Commercial/Industrial: CBRE, JLL, Cushman & Wakefield, Hines
When Should You Hire a Property Manager?
The best time is when you start acquiring more rental properties and managing them becomes too much to handle. If you’re just starting out, it’s generally a good idea to manage your properties yourself to gain hands-on experience.
Consider how much time you want to spend on management. If you’re focused on finding tenants, handling maintenance, and collecting rent but would rather be finding your next deal, it might be time to hire a manager. This is especially true if you’re scaling with the BRRRR method and need to focus on finding your next property.
