The relationship between a property manager and owner will evolve in many different ways. A successful property manager partnership will mutually achieve the goals of both parties. Many partnerships do not work when either party chooses to pursue their own interests first. Like any relationship, the business that transpires between a rental owner and their manager has it challenges. It’s essential to the process that the owner and manager operate from the same sheet of music in order to achieve their goals.
When a rental owner and a property manager share priorities, many successes can follow. The key elements of creating this successful partnership should be agreed and prioritized by both parties. The following key priorities should be shared by the owner and manager. When they exist, a successful property management partnership will result.
Everything almost always boils down to communications. If communications are not maintained, keeping the relationship healthy is not possible. The ease and responsiveness to communications between an owner and their manager will result in ongoing success or a breakdown of the relationship. On the management side, a business that offers multiple contact points will ensure ease of communication and more rapid responses. If every single question from an owner must be handled by one person, communication failure becomes much more likely.
Owner’s also need to be responsive to communications. Many requests are made to an owner in order to properly facilitate a successful management experience. An owner who does not respond to these requests is placing their manager in a difficult and awkward position. Owner’s should advise their manager if the ownership structure of the property changes. Managers have many responsibilities that involve properly understanding all aspects of the ownership of a property.
The duty to maintain a property in rent-ready, habitable, condition should be a priority for a property manager and owner. A successful property manager partnership will include systems that emphasize solving tenant maintenance requests timely. If requests to the owner are not addressed with priority there may be a problem with the partnership. To avoid a breakdown in the partnership the following should remain a priority.
Tenant Requests Are Addressed Quickly
Many landlords have run into problems with their tenants by not repairing or fixing problems with a rental unit. The priority for the owner or manager should be to repair a problem with a rental property as soon as possible. Heating and plumbing problems deserve immediate responses. Other requests should be assessed by the manager and submitted to the owner for a response within just a few days after being received. The tenant is a shared customer and the more they are shown appreciation by both the owner and manager, the better the chance for a sustained cash flow from the property.
Owner Reserves Are Maintained
The reserves are seed capital for the manager to be able to service small problems or ensure the owner has equity in larger ones. It should not require multiple requests from the manager to the rental owner to send reserves. These funds are an important part of the relationship and enable the manager to know that the successful property manager partnership remains active and a priority to the owner.
Funds For Repairs Are Sent Quickly
When the tenant has an emergency, or even a normal repair, the property manager will need to pay a vendor for materials or workmanship. The reserves are not intended to cover these costs. The owner will approve (except in emergencies) the cost associated with the repairs. After approval, the owner should expedite funding their manager so that the manager is not impacted waiting for reimbursement.
Shared Desire To Maintain Housing Standards
A few years ago, a property we managed was cited by the city for safety issues. The tenant had repeatedly mentioned electrical issues and we were not able to receive permission from the owner to invest the significant dollars needed in upgrades. The city code enforcement was called by the tenant and happily decided to move the process along by citing the owner, and our management company, for this issue. The owner stopped responding to our phone calls. The tenant surprisingly continued to live in the home, and we were in the middle. The final outcome was our invoking the Early Termination clause of the management agreement and notifying the city we were no longer involved. At that point the tenant chose to move also. I suspect that home has many dollars of fines and postings on it today.
This rental owner could have received a better return on investment by maintaining their rental. Placing your manager in a situation where they are powerless, and on the front line with a tenant and local officials, is not the way to strengthen a partnership. Ignoring a manager’s requests for important maintenance because the owner does not believe it is necessary creates at minimum a communication conflict. At worst the end result is a vacancy and the end of a partnership.
A few years ago we created our Housing Minimum Standards for rental owners. It is incorporated in our management agreement and each of our clients acknowledge an agreement to these standards. In doing so, the owner and our company commit to exercise responsibility for required maintenance and the safety of our tenants. I believe these written standards have eliminated many potential owners who did not agree with the standards as we now have very few incidents like the one above.
A successful property manager partnership includes both the owner and manager being committed to managing risk. Beyond the physical issues that can be maintained and corrected with the property, additional measures are required. The owner should maintain a current insurance policy for their property that includes coverage for risk of loss and liability. The manager should be covered as an additional insured. The manager should maintain their own business insurance that provides extensive liability coverage. The manager should be willing to produce a certificate to the owner proving this coverage is being maintained.
Effective Leasing Strategies
One of the most important duties of the property manager is to keep the owner’s property occupied with a paying tenant. The manager owes it to the rental owner to utilize effective leasing strategies that locates, and more than adequately screens, applicants. There is a huge difference in identifying great tenants versus renting to anybody who applies. The successful property manager partnership will balance locating a tenant with low eviction rates. Low eviction rates are a key result of the manager thoroughly screening all applicants.
Transparency Of All Funds
It should be very simple for the owner to track the receipt and disbursement of funds. Multiple options to review the performance of their property should be available from the manager. The manager should be willing, or have a financial person ready and available, to answer any and all questions for the owner. The partnership should be based in 100% complete trust and transparency.
Mutual Respect For The Law
There are a lot of different laws associated with owning, marketing, leasing, and managing real estate. Knowledge and respect for these laws is crucial to the success of the partnership. A rental owner should never expect their manager to take any actions that are in violation of any Fair Housing laws and guidelines.
A profitable, and mutually beneficial relationship will be the result if the owner and manager operate with joint respect for these key priorities. At the first sign that one party or the other does not share the same level of respect for these priorities, return to communication and do whatever is needed to straighten it out. Otherwise, the opportunity for experiencing a successful property manager partnership will be lost and with it, there is a significant chance of financial loss. This failure can be avoided by making a commitment to these priorities and ensure you are involved in a great, profitable relationship.