How Do Property Management Companies Work

Property Assessment

The process typically begins with a discovery call to ensure both parties and the property itself are a good fit for property management.

This initial conversation will include topics such as location, rental history, anticipated rent and management fees, among other things.

Moving forward, the property manager and landlord will arrange to meet at the property.

During this meeting, the property manager will inspect the home (indoors and out), ask and answer a variety of questions, including but not limited to fair market value, and elaborate on the tenant selection process.

At the same time, a skilled manager will highlight things about the property that are both positive and that may require attention prior to tenancy.

Management Agreement

When both sides agree to work together, the property manager will prepare a management agreement.

This agreement will (should) spell out all aspects of the owner/manager relationship, including but not limited to fees and the handling of rental payments.

Every property management company has a different version of this agreement, therefore landlords are encouraged to ask questions.

Marketing

With an agreement in hand, the property management company will coordinate any work that may need to be done prior to showings, then begin the quest to find a suitable (and qualified) tenant.

This can be in the form of online marketing, offline marketing, the company’s website and the company’s internal database of tenants.

An effective marketing strategy can yield an ample number of interested tenants assuming the agreed upon rent reflects market value, even if that means the top end of comparisons.

As prospective tenants respond to the marketing, the property manager will collect basic but necessary information and arrange to show them the property.

Tenant Screening

Tenant screening is an extremely important step in the process, it must be conducted without passion or prejudice.

It is the property manager’s responsibility to verify various information including but not limited to income, references and credit history.

The property manager has a responsibility to the owner to choose the most suitable tenant available, and a responsibility to prospective tenants to explain why they may not qualify, or be a good fit.

It often goes beyond the financial health of a tenant, for example, a family of six despite excess income, strong references and excellent credit simply couldn’t reside in a two bedroom condominium.

An experienced property manager takes the time to properly qualify each prospective tenant.

Lease Agreement

When a tenant has been chosen, a legally binding lease agreement is prepared.

In most cases, the initial lease term is one year, after which point the tenancy converts to a month to month obligation.

The lease agreement is typically formed between the property management company and the tenant versus the owner and the tenant.

It is done this way intentionally to ensure the property management company has the ability to deal directly with the tenant on all matters including but not limited to monthly rent collection.

Keep in mind, the property owner has retained the services of a management company because they would prefer to be at arm’s length with their investment.

Property Management

Over the lifetime of a tenancy, a property manager will provide a number of services, such as:

  • Ensure tenants produce renters insurance prior to occupancy
  • Ensure utilities are in the tenants name prior to occupancy
  • Collect first and last month’s rent
  • Collect monthly rent on time and forward it to the owner electronically
  • Issue itemized invoices for the owner’s records
  • Respond to all tenant requests, questions or emergencies
  • Keep detailed files on tenants
  • Issue notices
  • Organize and oversee maintenance
  • And more…

Property Maintenance

Property maintenance is among one of the concerns an owner has when deciding if they should rent their property directly to a tenant. At any time, something can go wrong at a property:

  • A malfunctioning appliance
  • An interior water leak
  • A fallen tree
  • A broken door lock
  • A malfunctioning furnace or air conditioner
  • A problematic water heater
  • A leaking roof
  • Etc.

As an owner, possibly not having experience in these areas, or not being aligned with reliable tradespeople, it can easily result in undue stress for them, and their tenant.

Conversely, an experienced property management company can respond to such matters quickly, professionally, and at a fair price.

Communication

A conscientious manager will take the time to build a rapport with their tenants helping ensure an honest and open relationship, resulting in a healthier and lasting tenancy.

Historically, this has been a challenge for DIY landlords because they have difficulty with professional detachment.