So let’s look deeper into this question, maybe the better question is would my realtor make a good property manager or do realtors in general make good property managers.
I had a condo unit that I owned and a good friend of mine helped me with the rental and management of the property. I was lucky in several regards, my friend was a good realtor and a very good property manager. He had experience in both disciplines, he helped me find tenants and then managed the property by keeping in touch with the tenants and helped out if a problem came up (which was minor). This lasted 2 years and in that time I only came back to the unit once for a minor issue that he pretty much handled for me.
For a deal like this, a monthly fee that comes off the top would be standard. If the rent was $1,000 US then the property manager would be in the range of $100 to $150 a month for their fee of management. Getting the rental would be an added bonus or fee.
So, I can see in some cases it is a natural fit. Your realtor knows real estate and may have sold you the property. So this may make sense but read below and do your due diligence on this, it can save you a lot of money and headache.
The answer truly is…. It depends.
1. License/ Certification requirements. In a few cases, some states have requirements for Property Managers to be licensed.
2. What are your needs? Depending on the level of care or work, you want to deal with will dictate whether it makes sense to engage a realtor to manage your property. Here are some of the duties needed when renting a unit:
Managing the collection of timely payments
Handling late or delinquent payments
Managing repairs and maintenance with contractors, finding good ones, and then making sure there is communication with the tenant and providing access when needed.
Managing the books of the property and filing of the necessary paperwork
Responding to any emergencies issues that may arise – Plumbing not working, Appliances on the fritz, leaks from the roof or HVAC temperature complaints, too hot or too cold.
These are just a few.
3. Budget How much can you afford? If you have one residential property, money can be tight. So, the idea of hiring an individual that you can work out a deal on the percentage of the rent for their work may be the lowest cost alternative to doing it solely by yourself. You may want to inquire with some local smaller firms to understand what your options are. Sometimes if the firm manages properties in the same community or location, the cost may not be that much more and could offer a better value.
4. How much risk are you ok with? There are numerous details and concerns when it comes to renting out your property to people you don’t know. If you are simply renting to friends and family, that does make it easier but not simple since money is involved. Also, since you’re dealing with contracts and laws of landlord issues that you may not even be aware of, you could find yourself in a lawsuit.
First off, we need to define what a property manager is to answer that check out our article.
Property Management job description, an Art or Science?
Once we have established the role of the Property Manager, then it comes down to needs and budget. You can hire a firm to professionally manage your property or properties.
You need to perform a self-evaluation and define what you are willing and able to handle and clearly define what your realtor now property manager will and won’t due for you.
With that established, you can then vet the person you are considering to see if you feel that they can handle all that you need.
Even if you have a relationship with this person, the two jobs are very different and, in most cases, don’t overlap as much as you might think.
- Get a list of properties they may be managing now
- If possible one or two referrals from their management side
- Get in writing all of what will be handled and what won’t
- Ask the right questions of what if? (a shortlist is below to help get you started)
- Establish a transparent payment structure and what happens if the unit is vacant
Like all good relationships in life or in business, the more you can have defined, the better it is for both of you.
A shortlist of what-if questions to consider:
What if:
- Rent is late, what happens – What do you do? What will I do?
- Rent is not paid – Does the Property Manager still get paid by you?
- An emergency happens – Who is going to the property? Are there limits on when the property manager will go?
- Does your property manager carry insurance for their work?
- What authority are they comfortable with? In what situation can they authorize work to be done?
- If your property manager is sick or away with work or vacation, what happens then?
- Can they run background checks for you or if for a business do a search on the company?
So, in conclusion, as stated above, it depends. In my experience, it worked well. My friend did a great job, and I was fortunate to have him help me with my unit until I was ready to sell it and move on from being a landlord. While I had a good experience, you need to really evaluate your situation and see what is right for you. If this is going to be a long term situation, it might change your perspective.
Pro and cons
Pros:
- Lower cost
- Relationship already established
- Possibly excellent service if they don’t have more than a few properties
Cons
- Possibly limited service
- Limited resources
- May not be up to date on laws and regulations
These are just a few to consider.
Now if you are a realtor, being a proeprty manager is a great profession. Working with hundreds of professionals in the industry, this career can be demanding but rewarding. Since there are so many aspects to Property Management, it will countinue to psuh you to grow your knowledge.
So, if yopu have questions, feel free to contact us at editor@facilityvip.com