Successful real estate investors rely on a team of professionals to help run their business.
One of the core members of this team is the property manager. They take care of your tenants, oversee repairs, handle all administrative/operational tasks, and provide expert advice so you can make smarter decisions regarding your rental property. In short, they play a major role in helping you separate investing from operations.
Given the importance of this partnership, it’s critical to understand how to manage your property manager—and understand what's expected on your end. This article includes the most common questions investors have about rental property management, plus tips to create the best relationship possible.
The Role of Your Property Manager: Commonly Asked Questions
For the majority of questions regarding your property manager (PM), always refer to your Property Management Agreement. This mutually signed contract contains all of the details describing the business relationship between the owner and the property manager.
Typically, a property management agreement includes:
- Services provided and fees
- Manager responsibilities
- Owner responsibilities
- Contract duration
- Termination clauses
Review this document carefully and make any necessary amendments with your property manager before signing off.
While most of the topics below should be covered in your Property Management Agreement, here’s a roundup of some common questions about managing your property manager:
Should my property manager get approval for all repair work?
It depends on how big the repair is and what’s written in your agreement. Do you want your PM to call you over broken toilet levers or jammed garbage disposals? The fact is, some repairs are no-brainers and should be fixed upfront to avoid bigger bills down the road.
If you’re a first-time rental property investor and feel a little uneasy about footing bills for repairs you have no say in, our advice is to find the middle ground. Go through the process once with your PM to educate yourself so you feel comfortable letting go in the future.
You can also ask your property manager if it’s possible to establish a threshold for authorization. For example: Do you want to approve repairs that cost more than $100? $200? Define a cost threshold that prompts this kind of teamwork, and ask if it can be included in your agreement to avoid any confusion.
For big-ticket items, your property manager will respond to your tenant’s call, diagnose the problem, and come up with a couple solutions to help you make an informed decision.
When do I get paid and how does it come through?
This will differ for everyone since it depends on what you set up from the outset.
- To find out when rent is due, refer to your Tenant Lease Agreement
- To find out when you can expect to see the money in your account, refer to your Property Management Agreement
Your property manager will have a system in place to make sure the payment process is easy for everyone. Typically this is a direct deposit, but if you want the money another way, discuss it with your PM and have it stipulated in your Property Management Agreement.
What if I'm having issues with my property manager?
If you’re a Roofstock customer working with one of our certified property management partners, contact your Customer Success Manager for immediate support. If there’s a dispute or disagreement, Roofstock is always there to step in. This is extremely rare, but it gives our buyers added peace of mind.
If you’re not a Roofstock customer or went with your own property manager, it’s important to surface your concerns as soon as possible. While most problems can be solved with effective communication, keep the following tips in mind if you feel it’s time to part ways:
- Start researching a replacement company first
- Check for ‘breach of contract rules’ and ‘termination fees’ in your agreement
- Notify your current property manager of the change
- Your new property manager will work with your former PM to manage the transition
Can I contact my tenant directly?
It is standard practice to always go through your property manager if you need to contact your tenant for any reason. Just remember: Communicating with tenants is something you’re paying the PM to handle. Let them be your advocate and work on your behalf!
Now that I own it, can I visit it?
If you want to visit the property, get in touch with your property manager first and they will set up a time. Landlord-tenant laws vary from state to state, and some states have specific laws on how much notice a landlord must provide before coming over (typically it’s 24 hours). Your PM will coordinate visits in accordance with these regulations.
What if something is a tenant’s responsibility and they refuse to pay?
A standard lease will explicitly stipulate tenant responsibilities vs. landlord responsibilities, and should be treated as the governing document. If a tenant fails to execute a responsibility outlined in the lease, it’s the property manager’s job to address this. Even if the situation escalates, your property manager should be equipped to navigate the situation and find a solution.
Your Tenant Lease Agreement can also stipulate whether fees will be incurred if a tenant breaches any part of the lease. Feel free to review and discuss this topic further with your property manager.
Your Role as the Rental Property Owner
This is not an exhaustive list, but it should give you a pretty good idea of what you’ll be responsible for. Keep in mind, a full outline of your responsibilities will be documented in the Property Management Agreement. Some of these items might include:
- Insurance: Types of insurance, and the amount of coverage you’ll need.
- Property & city taxes: These vary by state and municipality. If you purchase your home through Roofstock, these will already be factored into your financial pro forma. A financial pro forma is a cash flow projection that includes forecasted expenditures and returns.
- Reserve fund: In some cases, property managers prefer to work with a reserve fund for routine maintenance and emergency repairs. If a reserve fund is included in your agreement, it’s your responsibility to keep it from dipping below a specific amount.
- Compensation for services rendered: These are any fees you are responsible for paying to your property manager. In addition to the monthly management fee (typically a percentage of monthly collected rent), additional fees could include ongoing inspections, repairs and maintenance, or any leasing or renewal fees.
- Utilities: The landlord’s utility responsibilities will be itemized in the lease, and typically include trash, sewer, and sometimes water. Tenants are generally responsible for power, gas, phone, Internet, and sometimes water and/or lawn care.
- HOA fees (if applicable): These are typically levied on condominium owners, but sometimes apply in neighborhoods of single-family homes.
The following may not be included in your agreement, but you’ll want to be clear on these as well:
- Repair approvals: What do you need to make an informed decision? How many contractor quotes do you need? How detailed do they need to be?
- Payment of invoices: Once the work is done, what will you require before approving and issuing a payment? Do you need pictures of completed work? Do invoices need to be itemized or broken down by parts and labor?
Final Tip on Fostering a Great Relationship with Your Property Manager
Come prepared for your kick-off meeting!
Go ahead and print this article for reference. Do some more research to figure out other questions to ask. Your property manager is there to help you succeed, so don't hesitate to initiate dialogue. Let them know what your goals are, where you are in your investment journey, and what they can do to help you get to where you want to be. It might seem like a lot of work upfront, but it will pay off in the long run!
At the end of the day, working with a property manager who is responsive and transparent plays an integral role in your success as a rental home investor.
For more tips on choosing the best rental property management company—and insight on how Roofstock vets its partner property managers—listen to our guest episode on the Listen Money Matters podcast or check out the highlights here:
The above is for informational purposes only and is not intended to be investment or real estate advice. You should always consult with your professional financial advisor prior to purchasing an investment property.