Property Management 101


1. What are the risks? This is probably the most important question for anyone considering managing their own rental properties. Property management is a lot more than just finding a tenant and collecting the rent (though even these tasks can be complicated and difficult). A property manager needs to make sure all tenant laws, both Federal and State, are followed. If laws aren’t followed correctly, it can be very costly. A property manager is both a real property manager as well as a “people” manager. Someone who doesn’t have the knowledge or skill to manage a property correctly can potentially find themselves facing a law suit or paying fines to regulatory agencies.

2. What does a property manager do? The short answer is: a lot. The California Bureau of Real Estate (CalBRE), defines the many duties of a property manager to include establishing a rental schedule that will bring the highest yield, overseeing maintenance and repairs, maintaining proper records, preparation and execution of leases, tenant qualification, advertising and marketing of vacancies, ensuring proper insurance is obtained, disbursing payments such as taxes, insurance premiums and maintenance/repair bills, and compliance with federal, state and local laws. And that’s just the beginning. As the CalBRE also points out, property managers may be called upon to act as anything from decorators and gardeners to janitors and handymen. And don’t forget, property managers also have the unpleasant task of evicting tenants for various reasons.

3. How are property managers compensated? Property managers can be paid a flat monthly fee or a percentage of the gross rents collected, or a combination. The percentage of gross rents collected can vary, but it generally ranges from 3 percent for major facilities to as high as 20 percent for single-family homes or smaller buildings. In high-demand areas, this may reach as high as 50 percent, according to the CalBRE.

4. Do you need a special license or certification? Property management activity requires a real estate broker’s license.   Salespersons may conduct property management activity only under the broker with whom they are licensed and only with the broker’s permission. Brokers must supervise any property management activity by their salespersons. Of course, property owners can personally manage the property/ies that belong to them. However, if you manage any properties that belong to someone else you are required by law to have a broker’s license. There are no exceptions. The fines from the CalBRE for this infraction can be very severe.

5. How do you deal with difficult tenants? Unfortunately, this is always a potential issue when renting out your property/ies. Difficulties  with tenants range from constant complaining to not paying rent. A property manager is often required to handle and resolve these kinds of issues. If an eviction is necessary, you’ll want to be certain that your property manager has done an eviction before. Many property managers have no clue about how to evict a bad tenant or they do it completely incorrectly. If the property manager does the unlawful detainer incorrectly, it can take months to get it resolved before you can evict the tenants. During that time you are not collecting rent and who knows what the tenants may be doing to your property.

6. Are eviction costs included in property management fees? Evictions are not cheap and are often handled incorrectly by property managers. Most of the time you will need a real estate attorney to file a law suit to evict the tenants. This can be very expensive. The average attorney cost for an eviction ranges from $2000 to $5000. At Providential Property Management we have a real estate attorney on staff and any eviction costs are included in our property management fees. You won’t have to pay any extra costs if you ever have to evict a tenant. Our property management fees are also very reasonable and competitive.

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Scott Cheng - Real Estate Broker


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  2 comments for “Property Management 101

  1. February 1, 2016 at 11:28 pm

    Great post. I used to be checking constantly this weblog and I am inspired! Very helpful information specially the ultimate phase 🙂 I deal with such info much. I was seeking this particular information for a long time. Thanks and best of luck.

  2. May 9, 2016 at 6:51 am

    Great article Scott! It is amazing how many people don’t look at property managers correctly. Their value is made back to the Property Owner many times over the monthly investment. Thanks for posting this.

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