ovice landlords or those who have yet to use professional property management services sometimes wonder: what do property managers do to earn the money they are paid? The answer may involve a number of functions: from finding and screening tenants, to collecting rent and keeping rental properties in good condition.
The bottom line is that property managers turn vacant buildings into engines of cash production, and this is something few small landlords have the skills and contacts to do for themselves.
A good property manager uses an expert knowledge of the local real estate market to keep occupancy levels high. The best managers know what properties in all classes rent for in the area of operation, and that can be a good indicator of the amount of rent a tenant will pay for any particular unit. On top of this, management companies know where the best tenants look for rentals and how to advertise a property so as to attract them.
Hand in hand with attracting good tenants comes the necessity of screening out bad ones. Good property managers will take each prospective tenant through a qualification process designed to weed out problems and make sure the renter is willing and able to pay the rent. Management companies will have standard applications for tenants. They will ask for references and call them to check the tenant out, and they will know what questions can and can not be asked to stay out of legal trouble. The company will also run a credit check on prospective tenants.
Encounters with tenants come in three forms. One is the regular collection of rent. A property manager takes care of this as a matter of course, keeping track of any arrears and taking appropriate action to keep rental property producing income at the highest possible level. This may include suggesting periodic rent increases to keep the property in line with the rest of the market.
The second type of interaction with the tenant involves maintenance issues. A management company will schedule periodic inspections of rental property to make sure no issues are arising that will need to be addressed, such as leaks or electrical problems. In addition, the property manager will handle both routine maintenance like painting and emergencies like broken windows.
The third type of encounter occurs when the tenant becomes a problem. If a property’s occupant develops into a public nuisance, or if the property is damaged or laws are violated, the manager will have the local knowledge and contacts to take care of the situation before it develops into a serious issue that might affect other tenants.
A good property manager can also relieve an owner of the burden of running the building on a day to day basis. The manager will make payments out of rental income to cover maintenance issues and agreed upon improvements, and they will pay the salaries of doormen and other staff and contract for services like lawn care and window cleaning.
When the necessity arises, the management team will arrange for maintenance on the property, and if a tenant does happen to leave, the manager’s staff will take steps to get the unit rented again as soon as possible.
What do property managers do? This is a reasonable question, but a fair owner will have to admit that most of a manager’s activities are designed to maximize the return on the owner’s investment.
For more information about the specific services provided by Five Star Property Management, as well as the cost of management services, please see our Property Management Fees page.
If you’ve never lived in a managed community, you may be wondering “what is an HOA?” and “is an HOA community right for me?” Before buying a property in an HOA-controlled development, it is wise to thoroughly understand the rules and restrictions of ownership. Potential buyers should read and understand all CC&Rs to ensure they will feel comfortable following the rules, which can range from fairly loose to highly restrictive. It is a good idea to know if there is a term limit for officers, as entrenchment of controlling members can cause problems.
Buyers should know what the current dues are, as failure to pay can in some cases result in eviction. The cost may range from as little as $20 a month to hundreds of dollars, and should be budgeted into a home purchase just as property taxes would be. It is a good idea to investigate by what means, how often and by how much dues have been raised in previous years, as well as checking on the health of the HOA’s reserves.
Investigating whether any legal action is pending against the HOA and speaking to current association home-owners will give a good picture of the amount of control exerted by the association, as well as whether promised maintenance is actually performed. It is also wise to investigate the HOA management company managing the association to ensure that they are properly licensed and providing the most efficient services possible. Many problems that make HOA-managed communities undesirable — maintenance issues, reporting problems, etc. — can be eliminated by simply changing HOA management companies. By making an informed decision, buyers can reap all the benefits of living within an HOA-controlled development, while avoiding many possible pitfalls.
Five Star Property Management specializes in cost-effective residential property management in the San Francisco area, and our priority is fast and responsive service to single-family & multi-family property owners and real estate investors.
Contact Five Star Property Management
Our experienced property management professionals welcome calls from referring real estate brokers and prospective clients for management of rental properties throughout the California Bay Area, including San Francisco, Novato, Mill Valley, Redwood Shores, Palo Alto, Menlo Park, Redwood City, Foster City, Santa Clara, San Mateo, and Burlingame. Interested in buying or selling real estate? Contact us to get started!