The Two Sides of Property Management
Are you considering renting your current home and wondering how to get started? Perhaps you’re even thinking of buying a house and getting into the property management business. Either way, this article’s got you covered.
Property management covers many areas. Beyond the renting and upkeep of properties, landlords and property managers are concerned with marketing, bookkeeping and accounting, and complying with local and state regulations.
In this article, we’ll look at your options for property management, and what’s involved in becoming a property manager or starting your own property management company.
Working With a Property Manager
Just because you want to rent out a property you own, doesn’t mean you’ll want someone to manage it for you. Some homeowners prefer to spare the expense and manage the rental of their property directly. If the hands-on approach is not for you, there are plenty of benefits to giving some or all of these responsibilities over to a professional:
- You’ll save yourself time and hassle.
- You won’t need to worry about living far away from your rental.
- You can balance multiple properties more easily.
- You won’t have to handle marketing, tenants, and legal concerns alone.
To meet the needs of the variety of situations and landlords in the rental world, property management is available in various forms. Some landlords prefer to hire an independent contractor or company to handle everything. Others want some level of involvement and assign the remaining responsibilities to the property manager. For best results, determine what your needs are first, then begin your search.
Hiring a Manager for Your Property
When it comes to starting your search, these three resources will set you off in the right direction:
- The Institute of Real Estate Managers (IREM) is a professional organization for property managers and management companies. A research division publishes industry analyses for property owners, and a directory lets you search for certified individual members or companies working with all types of property. IREM is affiliated with the National Association of Realtors (NAR).
- The National Association of Residential Property Managers (NARPM) is another professional organization for property managers and companies. NARPM differs from IREM in that it focuses exclusively on residential property management companies and individuals. Like IREM members, NARPM members can obtain a number of professional certifications.
- All Property Management is a commercial business directory that helps owners find property managers in their area that match their specific property needs. The site includes a service to receive quotes from prospective managers and a blog with content geared toward property owners and landlords.
Between these organizations’ resources, you can find the answers to many initial questions, such as average rental rates, management fees, and vacancy rates for your region. Once you connect with a few prospective property managers, make sure you do your due diligence before finalizing your choice.
Reviewing References and Accreditations
Ask upfront for a list of references and call each one. Ask about the landlord’s history working with the manager, how the business is run, and why they would recommend their services.
As you do your search, you’ll encounter many different types of professional certifications, from IREM’s Accredited Residential Manager designation (ARM) to NARPM’s Master Property Manager (MPM). Accreditation meanings differ, so consult IREM and NARPM for more information.
Reading Online Reviews
While it’s true that tenant complaints aren’t always a reliable gauge, online reviews can help you identify certain red flags. On a site like ApartmentRatings.com, scan for tenant reviews for your potential management firm that indicates managerial negligence or legal liability. Beyond tenant reviews, look for property owner reviews on sites like Yelp. Since these are reviews by your rental community peers, ask the management firm to explain any troubling reports you find here. If you aren’t satisfied with the answer, choose another company.
Becoming a Property Manager
For many, managing the rental of your own property can be a gateway into the property management business. The opportunities are varied, ranging from managing single-family homes, multi-family properties, and commercial properties, to large community associations for condos or homeowner associations (HOAs).
Reviewing Licensing Requirements
Yet just as the opportunities are varied, the path to starting out in the property management business also varies quite a bit from state to state. In Delaware, for example, most property management activities are considered real estate activities, necessitating a real estate broker license. Getting a license requires:
- Completing 99 hours of broker’s education courses.
- Passing a real estate salesperson licensing exam.
- Five years of experience in real estate sales.
To contrast, in Idaho, a real estate broker license is not required to conduct most property management business, with the exception of leases that include options or language about the sale of the property. Some states’ requirements may also be waived for licensed attorneys and brokers with an active license from another state. A complete list of state-by-state requirements can be found online here.
Pursuing Property Management Certifications
Beyond licensing, many property management professionals obtain professional certifications to further their career prospects. NAR’s Realtor certification is popular for many involved in the real estate profession. A Certified Manager of Community Associations (CMCA) designation or Certified Apartment Manager designation is also recommended. NARPM’s Residential Management Professional and IREM’s Certified Property Manager designations are higher level credentials which denote significant experience and expertise in the industry.
Renting out your home can be a smart decision if you’re not ready to sell. A seasoned, accredited property manager can make the experience easier for busy landlords who don’t want to sweat the details. For those property owners who want to become more involved in the property management business, the opportunities are many. Just make sure you learn the requirements and certifications needed to open up shop in your state.