If you’re been wanting to get into the real estate market, you may have considered buying a property to rent out. With renters making up 36% of the nation’s households, you have ample opportunities to make a profit with a property.
But when it comes time to manage the property, who should bear the responsibilities? Should you take them on as an independent landlord, or would you be better off with a property manager?
Below we’ve created the following guide explaining what it means to be a landlord vs a property manager.
Landlord vs. Property Manager
In the most general terms, property managers act as on-site caretakers of buildings, while landlords will own the properties that they rent out.
Property owners and landowners usually don’t play as much of a role in tenants’ needs, while property managers take on a more “hands-on” approach. Property managers will do everything from screenings tenants to handling tenant complaints.
Landlords will typically be more focused on their properties and real estate investments than they will be on the tenants. This is not surprising, as the average landlord owns three properties. This is not to say that landlords won’t be involved in the daily operations of their properties, but they will definitely have their hands full.
Landlords are both the owner of a property and the manager. Meanwhile, property managers will be third-party sources that are hired by the landlord.
Because of this, many of the responsibilities of landlords and property owners overlap. The main difference is that landlord responsibilities include owning the property, while property managers deal with its everyday operations.
Landlords typically perform these responsibilities:
- Lease management
- Lease enforcement
- Legal compliance
- Providing the furniture
- Ensuring the building is up to code
- Conduct structurally sound renovations
Property manager responsibilities usually look like the following:
- Vet, screen, and approve tenants
- Advertise the property
- Prepare vacant units
- Manage employees
- Create and store records for property owners
- Collect rent
- Handle tenant issues
- Act as a groundskeeper of the property
Without a property manager, a landlord will have to be responsible for all of the day-to-day operations mentioned above as well as all of the big picture property management and legal responsibilities. It’s for this reason that many landlords do hire a property manager.
Different Renting Experiences
Your experience with renters will be different if you decide to manage your properties as an independent landlord vs if you choose to hire ap property manager.
When you meet with renters directly, you’ll likely establish a one-on-one connection with them. This will typically result in you being more flexible with property terms. You’ll probably be more open in your lease agreements.
When you hire a property management firm, they’ll be responsible for screening tenants and fulfilling a lease. They will be strict about finding someone who can meet the terms of the lease and they will use their ample resources to do so.
The same goes for costs. Late fees and other costs happen as a tenant. They may ask you for exceptions or special circumstances, like paying late or waiving certain costs.
Managing different tenants’ needs and requests is difficult, but property managers are experienced in making sure that all tenants will pay in full and on time. This process will begin when they screen tenants and only choose residents who are reliable.
As an independent landlord, you will be responsible for fulfilling maintenance requests. You will need to have a variety of specialists on call, including plumbers, electricians, contractors, and movers.
Property managers typically have connections with numerous experts in the area and are able to quickly fix maintenance problems for tenants.
Renting out properties as a landlord will result in different relationships with your tenants than if you use a property manager.
As a landlord, your tenants will ask you for favors as your connections strengthen. They may want special favors or certain upgrades. Some will feel entitled to ask you for more as they get to know you.
Property managers will be the neutral third party. They will take care of tenants while keeping a stricter relationship so all rules are followed.
That being said, property managers can still be forgiving if necessary. Landlords can work with property managers to determine the rules that they want tenants to follow and how strictly rules will be enforced.
Both landlords and property managers should have a good relationship with both each other and the tenants. Good communication will ensure prompt rentals and timely payments.
Should You Choose a Property Manager?
Whether you own multiple properties or you’ve just made your first investment, it’s always worth considering choosing a property manager.
Your decision will ultimately depend on personal preference, but thinking about your wants and needs will help you make the right call.
Read the following statements and count each time you agree with each one:
- I need the resources to manage multiple properties
- I own one property but don’t know how to get started
- I don’t have enough time in the day
- I have difficulty finding tenants
- I would like a stronger network of service workers (contractors, plumbers, etc.)
- I am too forgiving with tenants
- I would like the help of a staff
- I would like to purchase more rental properties in the near future
- I don’t know how to advertise my properties
- I wish tenants would rent for longer periods of time
If you agree with the majority of these statements, you would probably benefit from a property manager.
Our Unrivaled Memphis-based Property Management Services
Don’t take a chance when renting out your properties – understand the difference between a landlord vs a property manager.
Founded in Memphis in 2002, Reedy & Company is one of the area’s leading property management companies. We manage over 3,500 properties, and we’d love to work with you, too.
Contact us to learn more.