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Property Manager Job Description, Part Three
By eric | November 12, 2007
PAYING THE BILLS
When you own rental property, you may think you are in the accounting business. There are lots of accounting duties associated with property management. Property managers are responsible not only for collecting and depositing rent into the bank account, they also are responsible for paying all the hills on time. Every expense line item in the operating budget will have bills attached to it. Property managers you hire will take care of all monthly bills as well as all other bills that occur less frequently. At the end of each month your property manager or you should complete an analysis of the income and expenses and compare it to the budget. Do it monthly and you’ll stay on top of your business.
MANAGING THE BUDGET
Along with collecting the rent and paying the bills, it is the property manager’s job to manage the property’s operating budget. That means that all expenses as well as rental income need to be posted and compared to the operating budget. If they come in lower, great. If they come in higher, then you’ll want to know why.
There are many property management software packages that help you manage the operating budget and most of them work this way: When you enter the bills into the system for payment you code them to the correct account in your chart of accounts. Each account has a monthly allocation and when the bill is entered the software simply deducts the invoice amount from the budget, leaving you with the balance. In a way it’s as if each account in the overall budget has its own checkbook register. This way, you can manage each individual account instead of just the bottom line.
Life is not perfect and there will be times that you must overspend in an account or you learn the hard way that you did not allocate enough in your budget to operate efficiently in either case, many software programs will help you analyze how far over or under budget you are for each account. This is called a variance analysis and I do them monthly. Variance analysis reports help you see just how to adjust your spending so your bottom line stays on budget. It also is a good learning tool for future budgets you will do. Your budgets will get increasingly accurate the more you do.
EVICTIONS
Evictions are a necessary part of this business, but the good news is they don’t have to be traumatic to you, the property owner. Evictions can happen for a number of reasons, including nonpayment of rent. But my company has evicted people for all sorts of reasons and it is well within our rights to do so. The only time I feel good about evicting someone is when the eviction involves drug dealers. As difficult as it is under normal circumstances, however, I never avoid the inevitable when it comes to evicting people.
Once again, a property management company that professionally manages your building will handle evictions to the letter of the law Before you do one on your own, be sure you know your rights and the resident’s rights. If you are managing your property yourself, you may want to consult with your attorney before embarking on this process.
CUSTOMER SERVICE
A big part of managing a property is being available for your residents. Residents need to know that they can call any time of the day with a problem or an emergency and that their request will be attended to in a reasonable time. This is not too much to ask; after all, if they wanted to handle their own maintenance problems they’d own their own home. This round-the-clock customer service is built into a professional property management agreement. It’s something you have to provide if you manage the property on your own.
At our properties we have a twenty-four-hour policy n all non-emergency maintenance items and an immediate response on emergencies. What constitutes an emergency? For us it is fire, flood, or blood. There are certainly exceptions to this but we do not dispatch maintenance after hours for residents locked out of their apartments because they lost their key (and they do call). We have an on-call system 24/7 set up for all of our communities that is very responsive. On emergency items like a murder, we are quick to respond so that we can cooperate with the authorities and the families of the victim.
Those are just some of the job responsibilities that come with the title property manager. It is a big job that is round-the-clock, 365 days a year. If after reading this, you’re thinking, Property investing isn’t for me, I don’t want to work that hard, take heart. Maybe property investing is for you. Property management isn’t. I realize the first inclination is to want to save money so you can maximize your cash flow, but if you don’t want to manage properties, that’s not the place to cut corners. If a property is not managed well, it will not only make it difficult for you to find residents, it will make it difficult for you to raise your rents to market value. That will make it impossible for your asset to appreciate-after all its value is based on how it operates. Finally, hiring a professional property management company frees up your time to look for and evaluate your next property investment. As we discussed early in this book, the way to wealth is property ownership, not property management.
Poor property management is one very large contributor to a property’s under?performance and reduced valuation.
Read More:
- Property Manager Job Description, Part 1
- Property Manager Job Description, Part 2
- Property Manager Job Description, Part 3
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Topics: Agent, Auction, Broker, Commercial, Company, Contract, Development, Investment, News, Property, Rental, Sale, School |
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