We are often asked, “What does a property manager do?” It’s a great question—and we have a simple answer for it:
“We do everything you’re going to have to do if you don’t hire us!” Here are a few of those challenging tasks…
Find the Right Tenant
Make a mistake on your choice of tenant and you’ll pay for it—in time, money, and possibly legal troubles. Placing a good tenant yourself actually requires a series of steps.
You must first determine the fair market rental value for your home before advertising for a tenant.
- Once you have determined the rent you’re going to try to get, it’s time to advertise. You can use Craigslist (or other similar classified ad sites) where listings have to be renewed every week. Or you may engage a Realtor who will list your property with the Multiple Listing Service, create the lease, maybe conduct a move-in inspection and then walk away from the transaction.If you list the home yourself, you’ll need to be extremely careful that your advertisement does not violate any of the multiple state and federal Fair Housing requirements.
- Once you have found an interested party, you must qualify them to be certain they are a good credit risk. Their employment must be verified, as well as their rental history (with references obtained from current and previous landlords). And if your applicant’s credit score and debt to income rations are not within an acceptable range, you’ll have to start the search all over again.
Write a Good Lease
After successfully qualifying the tenant’s application, it’ll be your job to write a lease that’s both legally compliant and completely enforceable.
What does that mean, exactly? First, you’ll have to determine whether your lease will be governed by Virginia Common Law or the Virginia Residential Landlord and Tenant Act. And then you’ll have to make certain that the document contains all of the appropriate requirements for your property and is legally enforceable.
Once that’s taken care of, there’s the matter of the security deposit. It must be placed in a separate escrow account, where it has to remain untouched throughout the tenancy, unless it’s used to offset tenant damage. Comingling of funds is a great way to wind up with a serious legal problem!
Fix Things that Break
If something breaks, leaks, bursts, or simply goes kaput—it’s up to you to determine the cause of the problem. For example, did the eight-year-old washing machine die of natural causes (thus constituting reasonable wear and tear), or did it stop running because the tenant abused it? Either way, you’re going to have to fix it. And if it was the tenant’s fault and they’re going to be charged for the repair, you will bear the responsibility of thoroughly documenting the cost with a legitimate contractor’s invoice.
The same same holds true, by the way, for any damage the tenant may cause throughout the tenancy; do-it-yourself invoices are typically not honored by the courts should the tenants take issue with them.
Collect Rent—and Handle Evictions
In the event the tenant stops paying rent, you must do your best to collect it by sending written correspondence and making phone calls. When all that fails and you determine that you must evict them, the law requires that the tenant be sent a legal notice instructing them to pay or vacate the premises. Following that measure, a lawsuit must be filed in court. At the time of the hearing, you or your representative will have to appear before the judge. If the court rules in your favor, you must coordinate the actual eviction with the sheriff’s office and provide the necessary manpower to remove the tenant’s belongings.
Keep Track of Income and Expenses
Finally, there’s the task of accounting. Tracking the income and expenses for your rental property is not merely a good financial habit—it’s the law. You must keep track of all gross rents collected and report this income to the IRS on a specific schedule (form), attached to your 1040. You must also keep track of all legitimate expenses to offset the income when you file your tax returns. The IRS is noted for thoroughly vetting these itemized deductions (and auditing when they flag inconsistencies). So, it’s critical that all of your expenses be recorded and thoroughly documented.
So, what does a property manager do? All the stuff you’ll have to do yourself in the absence of a management professional–market research, advertising, tenant screening, legal document creation, rent collection, escrow accounting, maintenance and repairs and more–while also keeping you on the right side of the law and out of the courtroom.
David Norod is the principal broker of WJD Management. He enjoys keeping his 400+ property owners up to date on the best ways to keep their homes rented and running smoothly. When he’s not managing properties, he’s playing classic rock in local clubs with his band Off The Record.