After exhaustive research and a rigorous interview process, you’ve finally found a property management company that meets your needs as an owner. You’re ready to sit down, sign the agreement, and let them take on the day-to-day tasks as well as the long-term financial goals of your investment properties.
But there’s still one more step to take before you make the agreement final. You need to set expectations for your property manager and listen to their expectations of you, the owner, as well. Like any working relationship, when everyone is on the same page and responsibilities are clear, everyone benefits—and that includes your tenants.
It all begins with a kick-off meeting to hash out expectations and walk through processes for handling rent collection, taxes, maintenance, and emergencies, among other tasks. Only when everyone is absolutely clear on which parties will take care of which aspects of your property investments do you then sign your agreement.
In this article, we’ll discuss the roles and responsibilities of a property management company, as well as your own responsibilities as an owner. Come to the kick-off meeting with all of this in mind so you can begin a productive discussion.
#1: Come to the Kick-Off Meeting With Expectations and Questions
Like we said, your relationship with your property management company should start with a kickoff meeting -- and it should happen before you sign a contract. It’s an opportunity to clarify every part of the owner-property manager relationship and make any changes to the agreement to reflect the outcome of your discussion.
In the kick-off meeting, walk through the typical duties and responsibilities of a property management company, what’s expected of you as an owner, and any other expectation you have outside of normal responsibilities. You should come prepared with a list of questions, and make sure you get all of them answered before you sign the agreement.
If you or the property management company wish to amend the agreement, you should set a timeline for that to happen, and then reconvene to approve changes and sign the contract.
#2: Be Clear on the Roles and Responsibilities of Your Property Manager
Before you go into your kick-off meeting (be it in-person or virtually), get familiar with the typical roles and responsibilities of a property management company. Make a list of those tasks and walk through each one with your management company to understand how they manage each aspect of the process.
Here’s what the duties and responsibilities of your property manager should include:
Filling Vacant Properties
The entire lead-to-lease process typically falls under the purview of a property management company. They will handle listings, showing, and other marketing strategies for your properties, including posting on social media.
They will also handle rental applications, resident screening, and lease signing.
Of course, a good property management company will also have strategies in place for resident retention to keep vacancy rates down in the first place.
Rent and Fee Collection
Your property manager is responsible for collecting rent and other fees and depositing them on a schedule. They are also responsible for following up with residents who are late with their payments, posting warning notices for repeated late or missed payments, and starting eviction procedures for delinquent residents.
Your property management company may also set rental and fee rates for you, based on their own research, to help you stay competitive with the local rental market.
Budgeting and Investment Goals
In addition to your monthly owner draws (a monthly payout statement with all of your rent income and expenses), your property management company should prepare an annual budget for your properties that includes rent and fees coming in, as well as estimated repair and maintenance costs. A good property management company can put together a budget that reflects your investment goals.
For example, if you want to upgrade current properties or expand to new properties, your property management company should help you set a budget that helps you realize those goals.
Resident Communications
To make things easier for all parties, all resident communications should go through the property manager. If there’s anything that needs your attention, such as a major repair or resident grievance, your property management company should bring it up with you immediately, but all communications about the matter should still go through them.
Likewise, if a resident reaches out to you with an issue that your property manager is supposed to handle, you should direct them to the property management company immediately and refrain from answering their question or solving their problem yourself.
Inspections
When a resident moves out, the property management company will handle the inspection process, repair any damages, and return deposits when appropriate.
They will also handle regular inspections of your properties for repairs and upgrades. That includes looking for issues with plumbing, the heating, or roofing, for instance.
They will also conduct inspections to make sure your properties comply with local, state, and federal regulations.
Compliance
Speaking of compliance, your property management firm should handle that, too. They will make sure your properties are in compliance with the Americans with Disabilities Act (ADA), the Fair Housing Act (FHA), Section 8 regulations, as well as other state and local requirements.
#3: Talk Through Expectations Outside of Typical Property Manager Responsibilities
We’ve covered the basic responsibilities of a property management firm. If there’s anything else you’d like your property management company to take care of, now is the time to ask.
Here are a few examples of things you’d like them to handle.
Providing and Managing Amenities
If you own properties with more than just the basic laundry and mailbox facilities, make sure they’re listed out in the contract along with the expectations for each. If you have a pool, function room, gym, roof deck, grilling space, or other amenities, set expectations on how they should be managed.
You may wish your property management company to stay on top of trends in amenities and create plans for integrating new features for your properties, or eliminating outdated ones, as well.
And as social distancing and increased sanitizing become the “new normal,” it’s important to talk through plans and processes for keeping residents safe while providing them with the kinds of amenities that keep them happy with your properties.
Emergency Plans
Emergency plans should be in place for natural disasters, as well as future epidemics. How will they communicate with residents, provide emergency services, sanitize contact areas, and evacuate if necessary?
If this is something you want them to handle, make sure they have documented plans in place already.
#4: Understand Your Responsibilities as an Owner
It’s important to know which responsibilities are still on your plate as an owner, as well. You don’t want anything to slip through the cracks because you thought your property management firm was handling it, when in fact, it was on you to get it done.
Here is a list of the tasks you will still have to take care of.
Maintenance and Repair Approval
Of course, your property management company doesn’t have to come to you for every squeaky hinge or broken faucet. But you will have to approve major repairs and upgrades. You and your management company may want to set a cost benchmark, where repairs over a certain dollar amount have to be approved by you. It’s critical that you align on the types of repairs that will be 100% necessary (and required by law immediately) versus improvements that are nice-to-haves.
Payments to Property Managers
Property managers can’t pay themselves. That will still be your territory. Keeping reserve funds plentiful to cover emergency repairs will also be up to you.
Taxes, Utilities, and Other Fees
You will also be responsible for property taxes, utilities such as water and sewer, and other town or residential community fees.
Insurance
Property managers will have their own insurance related to their work, and you can encourage your residents to consider renter’s insurance. Homeowner’s and liability insurance, however, is your responsibility.
#5: Set Up Communication Channels
Both regular and emergency communication channels should be clear to everyone. How will they get in touch with you for day-to-day issues? Will it be via email, phone, text? Do they have a property management portal through which they do all their communicating?
Determine how often you’d like to be updated on your properties and how. A monthly Zoom call may be enough to get you up to speed, while a weekly status update via email could be effective, as well. After you’ve thought about your communication preferences, be upfront about them with your new property manager.
Give them more than one number for emergency situations and clarify when they should use them. For emergency repairs, for example, perhaps they would try you first and then an associate or business partner. For more catastrophic emergencies, they may have your number and that of a close family member.
On the flip side, how will you communicate with them? Who will be your point person and how will you get a hold of them? Email may be more effective for non-urgent matters, rather than a phone call.
Setting expectations is how every good business relationship should—and it’s especially needed to set the tone with your property manager.
This could be the beginning of a beautiful friendship, or at least a very productive working relationship. The key is to communicate everything up front and always remember that your success is a two-way street.
