What Landlords Need to Know

Managing a rental property comes with a long list of responsibilities. You have tenants to communicate with, rent to collect, maintenance requests to handle, and, of course, the property itself to look after. If you’re a hands-on landlord, you can handle all of this yourself. But as your responsibilities grow, managing everything can take up more of your time.

If you’re considering hiring a property manager, there are a few things worth knowing first. What will they actually do for you? How much will it cost? And how do you choose the right company? These are important questions to ask when you’re trusting someone else with your rental. So, let’s answer them in this guide.

Main Takeaways

• Hiring a property manager means you don’t have to handle every part of your rental on your own. They can step in to help with tenants, rent, maintenance, leasing, and other day-to-day work.
• You may want to hire a property manager if you don’t have enough time, live far from your rental, own several properties, or simply want to be less involved in the day-to-day work.
• Property management costs vary, so don’t look at the monthly management fee alone. Ask what’s included and what may cost extra.
• Before choosing a company, compare its experience, services, fees, communication, maintenance process, and reputation.
• Ask plenty of questions and read the management agreement before you sign. You should understand exactly what you’re paying for and what the company will handle.

What Does a Property Management Company Do?

So, what does a property management company, like the team at Bay Property Management Group, actually do? In a nutshell, a property management company handles the day-to-day responsibilities of managing a rental property on behalf of the owner.

Now, what that looks like can be a little different depending on the company and the type of management you choose. But generally, you can expect a property management company to take care of things like:

Rental Marketing and Showings

Most property managers help you market your property to potential tenants. They may take photos and videos of the rental and post the listing on platforms where tenants are looking. They can also respond to inquiries and schedule showings. Some companies may even give you an idea of how long it could take to find a tenant based on the local rental market.

Tenant Screening and Leasing

Property managers can also help you screen potential tenants. They may review applications, verify income and rental history, request screening reports where allowed, and evaluate applicants using consistent screening criteria in accordance with applicable federal, state, and local laws. Once you approve a tenant, they can prepare the lease and handle the move-in process.

At Bay Property Management Group, fewer than 1% of tenants placed through our screening process result in eviction, and qualifying placements are backed by a six-month placement warranty.

Rent Collection

You can also expect your property manager to handle rent collection. They can collect rent from your tenants, keep track of payments, and follow up when rent is late. This means you don’t have to chase down payments or keep track of everything yourself.

Tenant Communication

Your property manager can also be the main point of contact for your tenants. If a tenant has a question, concern, or maintenance request, they can contact the property manager instead of coming directly to you. The manager can then handle the issue or let you know when your input is needed.

Maintenance and Inspections

When something needs to be fixed, your property manager can coordinate the repair for you. They can receive maintenance requests, contact vendors or contractors, and follow up to make sure the work is completed. Many property managers also conduct inspections to check the condition of the rental and identify problems that may need your attention.

These are some of the property management services you can expect when you hire someone to manage your rental. Bay Property Management Group also provides access to 24/7 emergency maintenance support and coordinates repairs through an established vendor network across its service areas.

So, does having all this help mean every landlord needs a property manager? Not necessarily. It really comes down to how much you want to handle yourself. Let’s look at a few situations where hiring one may be worth considering.

When Should You Hire a Property Management Company?

If managing your rental property is your main focus, you may not need a property manager. You may have the time and experience to handle everything yourself, and that can work just fine.

But if you’re considering getting help from a property manager, let’s look at a few situations where hiring one can make sense.

You Don’t Have Enough Time to Manage the Property

Managing a rental takes time, even when things are going well. There are tenant questions to answer, rent payments to keep track of, maintenance requests to coordinate, and paperwork to stay on top of.

If you’re already balancing a full-time job, family, or other responsibilities, it can become difficult to give your rental the attention it needs. In that case, handing over the day-to-day work may be worth considering.

You Live Far From Your Rental

Managing a property from a distance comes with its own challenges. You can answer calls and collect rent online, but what happens when the property needs an inspection or a tenant reports a repair that needs someone there?

Having a property manager close to your rental gives you someone who can handle those situations locally. This can be especially helpful if you’ve moved to another city or state but decided to keep your property as a rental.

You’re Managing Multiple Properties

One rental may be manageable on your own. Add a second, third, or fourth property, though, and suddenly you’re dealing with several tenants, leases, maintenance schedules, and sets of financial records.

At some point, managing your portfolio can start taking up more of your time than investing in it. A property management company can take over much of that everyday work while you continue owning the properties.

You’re New to Being a Landlord

There’s a lot to learn when you become a landlord for the first time. You have to figure out how to market the property, screen applicants, prepare for move-in, collect rent, handle maintenance, and understand the rental requirements that apply where your property is located.

You can certainly learn these things as you go. However, if you’d rather not figure everything out through trial and error, working with an experienced property manager can give you some extra support from the beginning.

Tenant and Maintenance Issues Are Taking Over Your Time

Maybe collecting rent isn’t the problem. It’s everything else that seems to happen when you least expect it.

A tenant calls about a broken appliance. A contractor needs access to the property. Then another maintenance request comes in before the first one is finished. If you’re spending more time coordinating repairs and responding to tenants than you’d like, it may be time to get some help.

You Want to Grow Your Rental Portfolio

Buying another rental sounds exciting until you remember that another property also means another tenant, another lease, more maintenance, and more records to manage.

If you want to grow your portfolio without personally taking on every new management responsibility that comes with it, a property management company can help handle the operational side as you add more rentals.

Of course, recognizing that you could use some help is only part of the decision. You also need to know what you’re getting in return for paying someone else to manage your property. So, let’s look at the benefits of property management next.

What Are the Benefits of Hiring a Property Management Company?

So, let’s say you’ve decided that managing everything yourself is becoming a little too much. What do you actually gain by handing some of that work over?

The benefits of property management go beyond simply having someone collect rent for you. Depending on the services you choose, here’s where a property manager can make things easier:

Now, these benefits can certainly make owning a rental less hands-on. But professional management isn’t free. Before deciding whether it makes sense for your property, you’ll also want to understand what you may pay for these services.

How Much Does a Property Manager Cost?

So, you’ve seen what a property manager can take off your plate. Naturally, the next thing you’ll want to know is how much all of that is going to cost.

Well, there isn’t one standard property manager cost. What you pay can depend on the company you hire, where your property is located, how many rentals you own, and the services you need.

For example, a property management company may charge a percentage of the rent it collects each month. At Bay Property Management Group, monthly management fees typically range from 5% to 8% of collected rent, although the full range can fall between 3% and 10%. But still, the exact percentage depends on factors like your location, monthly rent, and the number of units you have under management.

But here’s where you need to pay attention: the monthly management fee may not be the only cost involved. Depending on the company, you may also come across fees such as:

Need a new tenant? This fee usually covers the work involved in finding one, such as marketing the property, handling showings, and screening applicants.

If your current tenant decides to stay, you may be charged a fee for preparing and handling the lease renewal.

When you first sign up with a property management company, there may be a one-time fee to get your property set up for management.

• Rental licensing or permit fees

Depending on where your rental is located, you may need certain licenses or permits. These costs aren’t always included in the management fee, so check whether you’ll be paying for them separately, including when it’s time to renew.

• Maintenance or other service fees

Some companies may charge extra for services like maintenance, inspections, advertising, or technology. Others may include some of these services in the monthly management fee. Ask what’s included so you know what you’ll actually be paying.

This is also why you shouldn’t compare property management companies by the monthly percentage alone. A company with a lower management fee may charge separately for more services, while another may include them in the monthly price.

You can check our property management fees and rates to see BMG’s current pricing and what’s included.

Property Management Cost Example

Still trying to picture what professional management could cost for your rental? Use our property management cost example below to get a better idea based on your property and rental income.

Let’s say your rental brings in $2,000 per month and the management fee is 7%.

So, in this example, you would pay about $140 per month for property management, or $1,680 per year. That would leave you with about $1,860 in monthly rent before other rental expenses.

For a higher-rent property, the same calculation works the same way. For example, a rental bringing in $3,500 per month with a 7% management fee would cost approximately $245 per month, or $2,940 per year, before any additional fees or rental expenses.

Is Hiring a Property Management Company Worth the Cost?

Now that you have an idea of what property management may cost, you may be wondering if it’s actually worth paying for. And the truth is, there isn’t one answer that works for every landlord.

For that reason, let’s compare what managing a rental yourself looks like versus hiring a property management company.

As property managers, we think one of the easiest ways to answer this question is to look at what the management fee would actually cover for you.

You can start with the work you currently do for your rental. How much time goes into tenant communication, rent collection, maintenance, leasing, and keeping your records organized? Once you have an idea of that, look at what a property management company would take over and how much they would charge you to do it.

For example, if you’re spending several hours each month dealing with your rental, the fee may be worth the time you get back. The same may be true if you’re paying for help with leasing, maintenance coordination, or other tasks separately.

Don’t just look at the percentage or dollar amount on the management agreement. Look at the services included in that price and compare them with what you’re currently doing or paying for yourself. That will give you a much better idea of whether hiring a property manager is worth the cost for you.

What Should You Look for in a Property Management Company?

Let’s say you’ve decided that hiring a property management company makes sense for you. Now comes the harder part: choosing one.

There are probably several property management companies in your area, so you may have quite a few options to choose from. So, how do you narrow them down? Let’s look at a few things worth paying attention to as you compare companies.

Local Market Experience

Where your property manager works matters; someone who manages rentals in your area regularly is more likely to have a feel for the local market, from the rent similar properties are getting to what tends to matter to renters looking for a home there.

Local experience can also come in handy when dealing with rental requirements that vary by city, county, or state.

Services That Match Your Needs

Remember the services we talked about earlier? This is where we will use them. 

Maybe you want someone to handle everything from leasing and rent collection to maintenance and tenant communication. Or you’re mainly looking for help finding and placing a tenant. Knowing what you need makes it easier to find a company that offers the right services.

Clear Fees and Contract Terms

Make sure you know what you’ll be paying before you sign anything. Ask what the monthly management fee covers and if there are other fees you may have to pay.

And don’t skip the management agreement. Check how long the contract lasts, which services are included, and what you need to do if you want to end the agreement later.

Communication and Availability

Think about how often you’d like to hear from your property manager. You may want regular updates, or you may only want to hear from them when they need your input.

Ask how the company communicates with you and your tenants. You should also know who you’ll contact when you need help and who handles issues after regular business hours. If getting a simple answer is difficult before you’ve even hired the company, that’s worth paying attention to.

Maintenance Processes and Vendor Relationships

Maintenance is one of those things you don’t want to figure out after a pipe starts leaking at 10 p.m.

Ask how the company handles routine repairs and after-hours maintenance requests. You can also find out who performs the work, how contractors are selected, when you’ll be contacted for approval, and how repair costs are billed.

A clear maintenance process gives you a better idea of what will happen when your property eventually needs attention.

Technology and Owner Reporting

You should be able to easily check what’s happening with your rental. Ask if the company has an owner portal where you can view things like rent payments, expenses, maintenance updates, and financial statements.

Technology doesn’t automatically make one property manager better than another, but it can make managing the relationship much easier, especially if you don’t live near your rental.

Reputation and Track Record

Before making your decision, see what other rental owners have to say about the company. Online reviews can be a useful starting point, but don’t stop at the overall rating. Read through some of the comments and look for patterns in what people say about communication, maintenance, leasing, and problem-solving.

You can also ask the company about its experience managing properties similar to yours. Managing a single-family rental, for example, may be different from managing a large multifamily property.

Bay Property Management Group, for example, has 17 years of property management experience and manages more than 8,000 rental units across its service areas. That type of track record is one factor owners can consider when comparing management companies.

Licensing and Local Requirements

Licensing and rental requirements can vary significantly by jurisdiction, which is another reason to ask whether a management company has experience in the specific market where your rental is located. Requirements affecting property management and rental properties may differ across Maryland, Pennsylvania, Virginia, Washington, DC, and Texas.

For example, in Pennsylvania, managing someone else’s property for a fee is generally an activity that falls under the state’s real estate licensing rules. Philadelphia has its own requirements, too. Rental properties generally need a Rental License, which must identify a managing agent who meets the city’s requirements. The owner may serve as the managing agent if they meet those requirements; otherwise, a qualifying local managing agent must be designated.

So, if you own a rental in Philadelphia, ask the company about its licensing and whether it can meet the city’s requirements for managing your property. You can also ask about its insurance coverage and any professional credentials it holds.

What Questions Should You Ask a Property Management Company?

You’ve probably narrowed down your options by this point. Now it’s time to learn a little more about the companies you’re considering.

And really, the easiest way to do that is to ask. Don’t be afraid to get specific. You’re trusting someone with your rental, so make sure you know what you’re signing up for.

Use this checklist when interviewing a property management company:

Property Management Company Interview Checklist

☐ How long have you managed rental properties in this area?

☐ What types of rental properties do you manage?

☐ Which property management services are included in your fee?

☐ Are there any additional fees I should know about?

☐ How do you determine the rental rate for a property?

☐ How do you market vacant rentals and handle property showings?

☐ What does your tenant screening process involve?

☐ How do you collect rent and distribute rental income to owners?

☐ How do you handle late rent and lease violations?

☐ How are maintenance requests and after-hours emergencies handled?

☐ How do you choose contractors or maintenance vendors?

☐ When do you need my approval before making a repair?

☐ How often do you inspect the property?

☐ What financial statements or reports will I receive, and how often?

☐ Will I have access to an owner portal?

☐ Who will be my main point of contact?

☐ How will you communicate with me when something happens at my property?

☐ How do you handle lease renewals and tenant move-outs?

☐ What happens if a tenant stops paying rent?

☐ Can I review your property management agreement before signing?

☐ How can I end the agreement if I decide the company is no longer the right fit?

There isn’t one right answer to every question on this list. Instead, pay attention to how clearly they answer and whether you’re comfortable with what you hear. After all, this is the company you’ll be trusting to manage your property, deal with your tenants, and handle your rental income.

Review the Property Management Agreement

Once you’ve asked your questions and found a company you like, don’t rush to sign the management agreement. Take some time to read it and make sure you understand what you’re agreeing to.

Pay attention to the services included, management fees, your responsibilities as the owner, maintenance authorization limits, and how the company will handle rental income and other funds. You’ll also want to check how long the agreement lasts, how much notice you need to give if you want to cancel, and whether there are any termination fees.

Most importantly, make sure what you see in the agreement matches what you discussed with the property manager. If something isn’t clear, ask about it before you sign.

And while you’re reviewing everything, keep an eye out for anything that doesn’t quite sit right. Let’s look at a few red flags before you hand over your property.

What Are the Red Flags When Hiring a Property Manager?

So, you’ve asked your questions and compared a few companies. Before making your final decision, pay attention to anything that doesn’t quite add up. Here are a few red flags to watch:

Fees or Services Aren’t Clear

If you’re having a hard time figuring out what you’ll pay or which services are included, pay attention to that. A property management company should be able to clearly tell you what you’re paying for and which services cost extra.

Communication Is Difficult

Are calls and emails being answered? Are you getting clear responses to your questions? Poor communication early on may give you an idea of what working with the company could be like.

There’s No Clear Maintenance Process

A property manager should be able to explain how maintenance requests, repair approvals, contractors, and emergencies are handled. If the company can’t clearly explain its maintenance process, that’s worth paying attention to.

They Lack Relevant Experience

Look for a company with experience in your rental market and with properties similar to yours. This can be especially important when local rental requirements come into play.

Their Promises Seem Unrealistic

Be cautious of promises that sound too good to be true, especially when they aren’t clearly explained or backed up in the management agreement.

You’re Pressured to Sign

You should have time to review the agreement, understand the fees and services, and ask questions. Don’t feel pressured to sign before you’re comfortable with what you’re agreeing to.

One red flag doesn’t necessarily mean you should walk away. But if you’re noticing several concerns or struggling to get straightforward answers, it may be worth considering another company.

Once you’ve done your research, asked your questions, and compared your options, you’re ready for the final step: hiring a property management company.

How Do You Hire a Property Management Company?

At this point, you know what property management costs, what to look for, what to ask, and which red flags to watch for. So, how do you go from researching companies to hiring one?

Here’s a simple process you can follow:

1. Know What You Need Help With

First, think about what you want the property manager to handle. Do you need full management, or are you mainly looking for help with leasing, maintenance, or tenants? Knowing this will make your search much easier.

2. Look at Companies in Your Area

Next, see who’s managing rentals where your property is located. Check the services they offer, the types of properties they manage, and what other owners say about them.

3. Compare What You’re Getting

Once you have a few options, look at their services and fees side by side. Don’t stop at the monthly management fee. Check what’s included and what you’ll have to pay extra for.

4. Talk to the Companies You Like

This is your chance to ask questions. Use the checklist we shared above and ask about anything else that matters to you. You should feel comfortable with how the company plans to manage your rental before moving forward.

5. Read the Agreement

Found a company you like? Don’t sign just yet. Read the agreement first and make sure it matches what you’ve discussed with the company. Pay attention to the fees, services, maintenance terms, and what happens if you decide to cancel later.

6. Make Your Choice

If everything looks good and you’re comfortable with the company, you can move forward. From there, they’ll let you know what they need from you to start managing the property.

FAQs About Hiring a Property Management Company

Still have a few questions before hiring a property management company? Here are some quick answers to questions rental property owners commonly have.

Can I Hire a Property Manager for Just One Rental Property?

Yes. You don’t need a large rental portfolio to work with a property management company. Many companies manage single rental properties as well as larger portfolios. The important thing is finding a company that works with your property type and offers the services you need.

Can I Hire a Property Manager If I Already Have a Tenant?

Yes, you can. You don’t have to wait until your rental is vacant to bring in a property manager. If there’s already a tenant in place, the company can take over the day-to-day management of the property.

Just make sure you know how the transition will work. For example, who will collect the rent going forward? How will the tenant be introduced to the new management company? You’ll also want to discuss the existing lease, security deposit records, and any maintenance issues already in progress.

How Much Does Property Management Cost Per Month?

Property management costs vary depending on the company, location, property, and services provided. At Bay Property Management Group, monthly management fees typically range from 5% to 8% of collected monthly rent. However, owners should also ask about any placement, renewal, maintenance, licensing, or other fees that may apply.

Do I Still Have Control of My Property If I Hire a Property Manager?

Yes. Hiring a property manager doesn’t mean giving up control of your rental. You’re simply handing over some of the day-to-day work. How much the manager handles will depend on your management agreement and the decisions you’ve given them permission to make on your behalf.

For instance, you may allow your property manager to handle routine maintenance up to a certain amount without calling you each time. Bigger decisions may still need your approval. This is something you’ll want to discuss before signing the agreement.

Can I Choose Which Property Management Services I Need?

Sometimes, but it depends on the company you hire. You may find a company that handles everything from leasing to ongoing management, while another lets you hire them for just one part of the job, such as finding a tenant. Take a look at the services offered and how they’re packaged before deciding what works for your rental.

What Happens If My Tenant Doesn’t Pay Rent?

If a tenant doesn’t pay rent, a property management company can handle communication with the tenant and take appropriate next steps based on the lease and applicable state and local law. Depending on the circumstances and management agreement, this may include sending required notices, documenting the unpaid rent, and coordinating the eviction process when legally appropriate.

How Long Does It Take to Switch to a Property Management Company?

There isn’t a set timeline for making the switch. If you already have tenants in the property, for example, the new management company will need time to collect the information they need to take over. That may include the current lease, tenant and security deposit records, financial information, and any ongoing maintenance details.

Can I Change Property Management Companies Later?

Generally, yes, but you’ll need to follow the termination terms in your property management agreement. Check the required notice period, possible termination fees, and any responsibilities you or the management company have when transferring records, funds, keys, or other property information.

Ready to Find the Right Property Management Company?

Hiring a property management company is a big decision. After all, you’re trusting someone with your rental property, your tenants, and many of the day-to-day responsibilities that come with being a landlord.

The good thing is that you now know what to look for. Take your time comparing services, fees, experience, and management processes, and don’t be afraid to ask questions before making your decision.

Ready to spend less time managing the day-to-day details of your rental? Get a free rental property analysis from Bay Property Management Group. Our team can help you understand your property’s rental potential and walk you through what full-service property management could look like for your specific rental.

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