Managing multifamily rental properties, also called residential property management, requires prompt and consistent attention. The difference in management lies in the fact that these are people’s homes. If a water main bursts, that means potentially tens or hundreds of families are without water for cooking, toilet flushing, and showers for an extended period of time. Properly dealing with upset tenants in situations like this requires a skilled property manager who can quickly coordinate the repair and remain calm while addressing tenant frustrations.
Residential Property Management Definition
Residential property management is a specialized type of real estate management that deals with the comprehensive oversight of income-producing residential properties leased to tenants, on behalf of the property’s owners. Properties commonly designated as residential include single family, condominiums, townhomes, and multifamily apartments.
Residential Property Management Services
Residential property management companies provide many different types of services to ease the load of management on rental property owners. Managing multifamily rental real estate can be very demanding due the increased number of tenants and their respective needs. Smaller sized property landlords may opt for “Partial Service Property Management”, (i.e. the company will help with one or a few aspects of management) with additional services being optional. However, larger sized multifamily apartment owners almost exclusively choose “Full Service Property Management”, which entails the property manager taking care of every action that would normally be done by a self-managing landlord. Below we take a look at some of the most common services likely to be offered by a residential property management company:
Maintenance
Residential property management companies almost always handle the maintenance on properties under their management (unless the owner requests otherwise). Residential property managers field all maintenance requests directly from tenants and then coordinate repairs with respective property maintenance technicians. In addition to handling maintenance jobs, management companies handle “unit turnovers” which becomes a more frequent occurrence as the number of units grows larger. Unit turnover can range from a simple paint, cleaning, and change out of flooring, to a full-fledged remodel if the unit is older and due for an upgrade. Furthermore, residential property managers monitor maintenance cost reporting and plan for preventative maintenance as needed; among also overseeing contracted work such as building improvements jobs.
Rent Collection
Collecting rent and keeping record of all deposits, is an essential yet fundamental service provided by residential property management firms. Pursuing late rent and imposing late fees are other more tedious tasks tied to rent collection by property managers. A majority of larger property management companies are turning to real estate software solutions for rent collection and tenant account management. Many of these programs allow for tenants to pay online via ACH, view account charges (such as RUBS or late fees), and monitor their ledgers to track account balances.
Financial Reporting & Budgets
Keeping record of income and expenses (i.e. receivables and payables), and generating ongoing financial reports such as Profit and Loss reports (i.e. P&L) for property owners are a cornerstone service provided by property management firms. Management companies also provide value by performing financial planning such as budgets to ensure that properties remain maintained and profitable. Part of this planning requires performing market rent analyses, which are analyses of comparable market rents, changes in area demographics, and anticipated vacancy rates.
Leasing & Marketing
How many times have you driven by a large apartment complex and seen balloons with a sign reading “Move in Special!”. A residential property management company’s main value proposition is their ability to successfully market and lease up properties under management to minimize vacancies. A comprehensive marketing program may include listing the vacancy online on a website such as Apartments.com, Zillow, or other residential property management leasing website, offering move-in incentives such as free rent or a discounted security deposit, hosting open houses and tours, and installing prominent leasing signage to catch drive by prospects. Along with the aforementioned marketing efforts, property managers or leasing agents will handle application processing, ordering credit reports and checking references, and ultimately facilitating a signed lease agreement.
Tenant Relations
Professional residential property management companies are attentive to tenants’ needs and provide prompt responses to their concerns. In residential property management, settling tenant disputes or enforcing property rules are tasks that require experienced mediators such as a property manager. Manager and tenant communication mediums can include phone calls, text messages, emails, letters, or direct-messages via a property management software system. Various personnel in the company are trained to help tenants with different types of requests, such as a property manager, a leasing agent, accounting department, maintenance technician, or legal counsel.
Legal & Compliance
Handling tenant evictions or filing for debt collections are tasks that professional property management companies can easily take care of for a property owner. Furthermore, the likelihood of getting hit with a lawsuit for any myriad of reasons (e.g. slip-and-fall, personal property damage, etc) increases as the number of units increases. For compliance, large residential complexes are prone to similar compliance requirements as commercial properties for things such as elevators, fire & life safety systems, and common area or amenity safety inspections. Some counties or jurisdictions even require annual physical property inspections, in which a public employed inspector walks every unit to inspect for any safety violations. Residential property management companies have the experience to ensure successful legal handling and compliance with all respective agencies to ensure a safe and compliant residential rental property.
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Residential Tenant Screening
Residential tenant screening is something that most people are familiar with, especially if you have been on the tenant side of the transaction to rent an apartment or home. Since residential rental property leases are typically in the name of an individual, the primary focus in the residential tenant screening process is to qualify the person’s credit worthiness through applicant-supplied documents, as well as through third-party supplied softwares such as running a credit check.
Residential Property Management Fees
The fee to manage a residential rental property can range between 4% and 8% of the gross rental income, depending on the property size and scope of services included (i.e. full service vs. partial service). Contracts to manage residential rental properties can be structured as a fixed fee, percentage of rent, or cost plus, where the property management company is paid base fee and additional services are billed a la carte. You will want to ensure that the company offers full expense reporting with professional staff to ensure you’re able to maximize the value you get from your residential rental property.
Residential Property Management Jobs
The world of residential property management is very vast and so are the job opportunities for those interested in pursuing a career in the field. Below is a few of the most common residential property management jobs:
- Leasing Agent
- Assistant Property Manager
- Property Manager
- Resident Manager
- Senior/Regional/Director of Asset Management
- Vice President of Asset Management
Residential Property Management Software
Residential property management software helps property owners, property managers, and tenants handle various aspects of administration such as rent payment, scheduling property maintenance, and owner reporting. Rather it be a single-family rental, multi-family complex, condos, or townhouse, a residential property management software can help streamline management.