A property manager can perform such duties as marketing your rental property, selecting tenants, maintaining the property, creating budgets and collecting rent. You may consider hiring a property manager if you wish to delegate these tasks to someone else to limit your day-to-day responsibilities regarding your rental property. You will still be responsible for supervising the property manager.
Property Manager's Role
If you decide to hire a property manager, it is important to identify his or her role. You can develop a list of duties for which the property manager will be responsible. For example, will your property manager's responsibilities be limited to finding tenants? Or will he or she also deal with day-to-day maintenance and the collecting of rent? Your agreement with the property manager should clearly state your expectations.
You must decide if the property manager will be an independent contractor or an employee. Depending on your situation, there may be advantages and disadvantages to both. It is advised that you speak with your tax accountant to determine the most favorable approach and to determine specific obligations that you may have (such as obtaining a federal tax identification number). You will also have to make decisions regarding the property manager's compensation. Will they be full-time or part-time, salaried.
Selecting a Property Manager
In certain areas, anyone who engages in the renting of property must hold an active real estate license. If you are in one of these areas, make sure a property manager that you are considering meets the appropriate licensing requirements though in Uganda the property industry is not regulated and property managers don’t have license and you don’t have to have a license to manage property, as long as you have a company that manages property and some operate with no license and no company but it’s vital one to have qualification.
Depending on the role you envision for your property manager, you may want to look for a property manager who is experienced in advertising, marketing, tenant relations, collecting rent, budgeting, leasing and maintenance. Ideally, your property manager will also be knowledgeable about local and state laws: as the property owner, you can be held liable for the acts of your manager. For example, you can be sued if your manager violates any fair housing laws.
If you find someone you feel may be a good fit, you can set up an interview where you can ask questions that focus on the property manager's qualifications and experience. You might make inquiries such as these:
Describe your experience in managing rental properties.
Describe your experience in collecting rents.
What is one problem you've encountered as a property manager, and how did you resolve it?
Why are you interested in this position?
Do you have any questions for me?
Even if you think you've found the perfect property manager, you should check the candidate's references in the following areas:
-Employment - Call and speak with former employers to inquire about the candidate's job responsibilities, strengths and weaknesses.
-Credit history and background report - If your property manager will be responsible for handling money, a history of tidy personal finances may be important. Make sure you get the applicant's written consent before performing a credit or background check.
Criminal and driving record - Your property manager may have access to your money as well as to your tenants' houses. It may be a good idea to check their criminal history.
If you are contracting with an established property management company, you can research the company's history online or talk to current or former clients.
Once you have decided on a property manager and the terms of the arrangement, you and the property manager can complete a property manager agreement which identifies the manager's duties, compensation and termination clause.
This is when you’re dealing with a management company.
Property management companies can be a huge asset to your business, but they don't come cheap. And there are other reasons why you might not want or need one. Carefully review the factors discussed below to determine if hiring a property management company is the right move for your business.
What Does a Property Management Company Do?
Management companies deal directly with prospects and tenants, saving you time and worry over marketing your rentals, collecting rent, handling maintenance and repair issues, responding to tenant complaints, and even pursuing evictions. Plus, a good management company brings its know-how and experience to your property, giving you the peace of mind that comes with knowing your investment is in good hands. Finally, a management company is an independent contractor, so you avoid the hassles of being an employer.
When Should You Hire a Property Management Company?
Although hiring a property management company has many advantages, using one can be expensive. And, even apart from the cost, relying on a property management company is not for everyone. Consider the following factors to determine if hiring a property management company would be a good decision for your business.
You should consider hiring a property management company if:
You have lots of properties or rental units. The more rental properties you own and the more units they contain, the more you're likely to benefit from a management company.
You don't live near your rental property. If your rental property is located far from where you live, hiring a property management company can be invaluable in dealing with the many issues that you will not be able to handle from afar.
You're not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring help to manage your property.
Your time is limited. Even if you enjoy hands-on management, you may not have much time to devote to your business, especially if land lording isn't your day job. And if you prefer to spend your time growing your business, including searching for new properties, arranging financing for renovations, or changing your business structure, then a management company may be a good way to spend your money.
You can afford the cost. Hiring a property management company is an attractive option if you can afford the fees. When interviewing companies, expect to hear quotes ranging between 5% and 10% of what you collect in rent revenue. If it's a down market and you're able to manage things yourself (or with the help of a resident manager or other employees), you may want to keep doing so until the market turns around.
You're suddenly inundated with management tasks. If your business is growing, at some point you may find that you need a substantial amount of help to manage everything properly. At that point, it might make sense to hire a management company.
You don't want to be an employer. If you hire a resident manager or other employees to help with your property, you become an employer. You'll have to handle payroll and deal with a host of other legal requirements and considerations. But, because a property management company isn't your employee (it's an independent contractor), and neither are the people who work for the company, by using one you avoid the hassles of being an employer.
Your property is part of an affordable housing program. If you participate in an affordable housing program, things can get complicated. Usually, in these programs the landlord receives financial assistance, which may be in the form of a grant, low-interest loan, or tax credits, in return for agreeing to rent at least part of the property to tenants earning below a certain income level. In order to continue receiving the assistance, the landlord must comply with a complicated set of rules. With so much at stake, it's often worth hiring a property management company that has expertise and experience with the particular housing program in question.
Jayson D Matsiko
Real Estate Specialist.