A property manager can be the buffer between the property owner and the renter. The investor who wants to rent out their property, yet does not want to spend the time finding or screening renters, collecting rents or listening to renter complaints, can hire a property manager to do those tasks.
A property manager is typically a person who is hired to manage residential or commercial rental property. The property manager's duties might include finding and screening renters, collecting rents, arranging repairs to the rental property and handling evictions. In most circumstances a property manager must be a licensed real estate professional. This is determined by state laws and the type of properties being managed.
When a licensed real estate agent is a property manager, they work under a broker. If collected rents are not issued directly to the property owners, they are deposited into the broker's trust account. A trust account is a special bank account set up by the broker, and money from the broker's business or personal accounts cannot be commingled with funds deposited in the trustee account. Security, cleaning deposits and rents are deposited into the trustee account. From that account payments can be made to the property owner, to the agent for management fees and to make property repairs.
When hiring a property manager, a property owner usually signs a property management contract. The payment a property manager receives is typically a percentage of the gross monthly rents. Security or cleaning deposits are normally collected by the property manager, and deposited into the broker's trust account, rather than given directly to the property owner. Late fees that are collected can either be paid to the owner of the property or the property manager, depending on the rental contract. Some rental contracts specify that if the property is sold during the duration of the rental contract, the owner will be liable for real estate fees to the property manager.
Property managers must follow state rental practices and the Federal Fair Housing guidelines. Federal Fair Housing laws prohibit discriminating on the basis of color, race, national origin, religion or sex. States have specific laws that govern the amount of allowable security deposit that can be requested, and eviction procedures. Federal Fair Housing guidelines do not apply to non-residential commercial properties.
Property managers normally specialize in commercial or residential properties. Within those types, there are additional specialties. In residential, a property manager might specialize in full-time rentals, seasonal rentals or vacation rentals. Commercial property managers might specialize in a specific type of commercial property, such as warehouses or retail space.