Property management is a highly regulated business; before undertaking management of rental property, whether you own it or someone else does, you should at least do the following:
- Consult an attorney
- Become familiar with state laws, local ordinances, and licensing requirements
- Study all related forms for management and leasing
- Read a book on the subject
Managing rental properties as a real estate broker was a part of the business that gave us the most difficulty. My firm managed condominiums owned by others as well as units we owned ourselves. We were located in a resort area, and our rentals were mostly short-term, although we had longer-term rentals to workers or visitors for the season.
By way of introduction, here are some things you should know about managing rental property.
Managing Property Owned by Others
In most states, a property manager must be a licensed real estate broker or must be an employee of a broker. The property manager will have separate contractual relationships with both the owner and the tenant.
First, written agreements between the manager and the property owner may cover the following rights and responsibilities:
- Advertising, showing, leasing, terminating leases, evicting tenants
- Establishing a trust account
- Collecting rents
- Paying taxes, salaries, insurance
- Providing for maintenance, repairs, and replacements
Next, leases with tenants may be executed by the manager as agent for the owner, are generally prepared on forms approved by local or state associations of realtors, and may include provisions covering the following:
- Term of lease
- Rent, late payment, penalties
- Security deposit
- Access by landlord
- Maintenance and repairs
- Default, termination, vacating
Managing Your Own Property
Tenant screening is an important element in property management, but it may become much more personal if the property you manage is your own. There will be more emotion involved in how your property is treated. In the event your screening wasn’t so successful, you’ll have to learn to be callous enough to deal with holes in the walls and doors, burns and stains on the tile and carpet, broken knobs and handles, and damaged appliances.
You’ll still have a contractual relationship in the form of a lease with the tenant, with terms previously described above. And, that lease may contain provisions and clauses many persons might not be familiar with, the interpretation of which can be difficult in the event of a disagreement.
Managing to Care
In spite of all of the apparent legal mumbo-jumbo that seems to be necessary in this business, I’d like to think there is a way to make the whole landlord/tenant experience better. After all, what we are dealing with is a situation in which someone is in need of a home and someone else has a home he is willing to share on some terms. Respect for the role of the other person in these transactions would go a long way toward avoiding unnecessary complications.