South Florida property management is a time-intensive role that requires in-depth knowledge, experience, and round-the-clock availability. Here’s a guide to working with a property management company for first-time property investors in the Sunshine State.
What are the tasks and responsibilities of a property management company?
A South Florida property management company typically cover the following areas:
Lease administration – Also called lease management and lease contract administration, this process involves the day-to-day supervision of your lease portfolio. A property management company keeps track of, and optimizes, real estate leases in an effort to lower operational costs and boost your lease portfolio’s performance. It entails a wide range of administrative tasks, including document management, reporting, and coordinating between various stakeholders.
The company ensures that the terms of the lease are followed – in other words, all existing leases must be in compliance with utilities, renewal percentages, and insurance and tax requirements. It also negotiates lease renewals and markets available tenant space to keep vacancies low. This process requires meticulous attention to detail and on-going communication with tenants and other key individuals.
Tenant retention – Your tenant retention rate measures the number of tenants that remain in your property for prolonged or multiple rental periods. Minimizing turnover is essential to keeping your property profitable. A property management company develops effective tenant retention, tenant sentiment measurement, and customer service strategies for a robust retention program. These strategies may differ depending on the location, seasonality, and property type.
Collections – A South Florida property management company will take charge of collecting the rental fee and any applicable penalties at the agreed upon time, which could be monthly, bi-annually, or annually. Rent collection entails sending monthly statements and compliance letters to tenants, making follow-up calls, and visiting rental units as needed. If a tenant is unable or unwilling to pay, the property management company may initiate legal action with your approval.
Property maintenance – Small issues can lead to costly damage over the long-term if ignored. Working with a property management company ensures that your building and its immediate surroundings are safe, clean, and functional. Maintenance is also about preserving the value of your investment property and protecting it from heavy damage through regular cleaning, inspections, safety checks, and timely repairs.
- Routine or preventive maintenance is done to avoid damage and repairs. It typically entails regular cleaning, HVAC tune-ups and filter replacements, and building walkthroughs and inspections.
- Reactive maintenance is performed when problems arise with the property or appliances. It usually includes repairs and replacements.
Regular maintenance increases tenant satisfaction, retention, and repeat business. It also improves your reputation in the market. A South Florida property management company provides access to insured and experienced contractors that can perform routine checks and maintenance as well as respond to maintenance issues at competitive prices.
Construction supervision and city services – Supervision is crucial to preventing accidents and ensuring the best outcome on both large and small construction projects on your property. Additionally, a property management company also takes responsibility for keeping city and county licenses updated as well as follow up on city inspections and violations so that construction can move forward.
Financial reports and services – Financial reporting provides insight into the profitability and overall performance of your investment property. It also provides clues on whether cuts and improvements are necessary. A property management company tracks the financial health and viability of your property through monthly operating reports. It also prepares the annual budget, state sales tax, common area maintenance letters, accounts payable and receivable, and more.
Should you work with a company or an individual property manager?
There’s a world of a difference between working with an individual and a company for property management:
Availability – An individual takes on all the responsibilities of property management with little to no external support. They may have their hands full during peak times of the month or year. For some individuals, property management isn’t their full-time job, which limits their availability. Even if it was their full-time role, they could be managing more than one property at a time, which divides their attention.
A property management company has different teams and departments dedicated to specific tasks and roles. This structure ensures that the right person is always available to address any issues that may arise during rent collection, tenant disputes, and emergency repairs. Working with a company allows you to provide a higher level of service with dedicated account managers constantly monitoring emails and phone calls as well as an after-hours emergency answering service.
Resources – A company also has more resources for screening and vetting prospective tenants so that you can set a high standard for all applicants. For example, a South Florida property management company can perform exhaustive background checks and verification on top of the usual interview.
Specialization and business contacts – Although a property manager is required to be flexible and wear multiple hats, they may not have the knowledge or expertise needed to carry out specialized tasks like complex repairs and tax issues. An established property management company, on the other hand, has access to a network of experienced tradespersons and service companies.
Credibility – Lastly, it can be difficult to gauge the skill and reputation of an individual property manager, particularly if they’re not as established, whereas a property management company can show that it has a proven track record as well as produce verifiable references and public reviews.
Should you manage a property on your own or hire a company?
From tracking payments and collecting late fees to handling complaints and looking for new tenants, property management is a full-time job. It can be stressful for someone who doesn’t have the skills, resources, and professional experience needed to optimize an investment property.
Working with an established property management company comes with the following benefits:
- It will free up your time, and in some cases, save you more money in the long run
- It ensures that the company has the experience needed to deal with tenants, contractors, service providers, and government agencies
Perhaps the only advantage of managing rental property on your own is that it doesn’t require a license in South Florida – landlords aren’t required to hold a valid real estate license when managing properties that are personally owned.
However, it’s possible to achieve success as a hands-off investor with the right property management company. It’s all a matter of acknowledging your personal strengths and weaknesses – will you be more effective at managing your own property or locating your next investment and growing your portfolio?
When should you hire a property management company?
- You own too many properties or rental units to keep track of – The more rental units you own, the more you’ll benefit from the services of a property management company. When managing multiple properties and units, even basic tasks like sending out invoices and general cleaning can become exhausting. Losing track of your rentals can cause revenue loss and neglect of property maintenance. It can also embolden troublesome tenants.
If you’re close to burning out, or if you suspect that your investment property isn’t performing as well as it should, then it’s time to start working with a property management company.
- You want to grow your real estate portfolio – If you have plans of expanding your investments by acquiring additional properties, hiring a property management company will make it easier to grow your investment and gain access to different investment opportunities without neglecting existing rental properties.
- You don’t have time to effectively manage all your properties – There are only so many hours in a day but property management comes with a seemingly endless list of things to do. If you have many duties and responsibilities outside of your real estate portfolio, whether it’s your business, family, education, and relationships, then hiring a property management company is worth considering.
- You have other goals and aspirations – Are the daily demands of property management holding you back from your relationships, health goals, or travel plans? If you feel like you’re missing out on other aspects of your life, it might be time to give up control. You can live a fuller and more active lifestyle by delegating property management to a dependable company.
- You live in another town or city – Technological advancements have made it easier for investors to acquire properties across different markets nationwide. If you’ve purchased a rental property in a different state, or have plans to relocate, let a local property company management deal with emergency repairs, rent collection, and other urgent tasks that require hands-on involvement. Hiring a property management company affords more convenience and translate to better customer service for tenants.
- Your passion lies elsewhere – Property management is a demanding job and not everyone is cut out for it. Hiring a company to help manage and protect your property will give you more freedom to pursue your passions outside of real estate investing.
The Advantages and Disadvantages of Working with a Property Management Company
Some of the advantages of working with a property management company includes:
- Timely rent collection – One of the main benefits of working with a property management company is that it ensures consistent rent collection. The company will make sure that you receive rent payments on time and that penalties are enforced if payments aren’t received. This practice improves cash flow and profitability over the long-term.
- Decreased tenant turnover – Property managers will work to maintain high levels of tenants satisfaction through professional service and responsive communication. This leads to improved tenant retention and keeps vacancies filled.
- Improved customer service – If you live in a different city, or have obligations elsewhere, a local property manager will be more readily accessible to tenants in need of assistance. They can respond to complaints and inquiries faster to ensure tenant satisfaction.
- Increased professionalism – The property management company serves as a buffer between you and your tenants. They will handle problematic behaviors like late payments and property damage so that you can maintain objectivity and professional distance.
- Better compliance – Real estate investors are bound to legislative requirements in dealing with tenants. For example, you need to follow several steps in evicting a tenant in South Florida, which includes serving a written notice and initiating an eviction process in court. Property management companies stay up-to-date on ever-evolving legal requirements to help you avoid legal trouble and potentially receive a favorable decision in court.
- Better prices – Many property management companies have a network of tradespersons, suppliers, contractors, and service providers to make sure that you get the best prices on maintenance jobs, which translate to significant cost savings in the long run.
- Fewer problem tenants – An experienced property manager knows how to screen tenants, check references, and review their rental history for any red flags. They also know how to handle troublesome behavior and when to seek legal counsel in extreme cases. This ensures you will only have good tenants on your property.
- Reduced stress – There’s simply no substitute for inner calm. When you work with a property management company, you’ll have peace of mind knowing that a professional is managing your property and protecting your interests.
Are there any downsides of hiring a property management company? Most companies charge a percentage of monthly rent collected. According to The Balance, property management fees typically range from 4% to 7% of your rental income though it can go up to 10% or more depending on property type and size. The company may also charge maintenance fees for garbage removal and other related services. However, effective management of your property can lead to substantial cost savings over the years.
What to Look for in a Property Management Team
Specialization – When choosing a property management company, keep in mind that there are four general types of property management:
- Special Purpose
If your investment property is zoned for residential or commercial use, choose a company that has successfully managed similar properties. However, some properties may fall into overlapping categories. These include mixed-use developments with a combination of residential units and retail space. To make the most of your real estate investment, look for a company that specializes in your market and property type.
Local Expertise –Licenses and Certifications – In Florida, leasing and renting property are considered real estate activities. A property manager must have a valid license if they earn a commission to carry out property management duties for clients. Although the state doesn’t require a property management license, it does require either a broker license, real estate sales associate license, or Community Association Manager license.
To obtain a real estate license, applicants must complete a pre-licensing course that has been approved by the Florida Real Estate Commission (FREC). This course covers real estate laws and principles with a minimum of 63 hours.
Community Association Managers (CAMs) possess a valid Community Association Manager license, which is obtained through a similar process, but with a different educational program. To obtain a CAM license, an applicant must manage a homeowners association (HOA) with more than 10 units or an annual budget in excess of $100,000.
Services – Choose a company that offers a comprehensive range of property management services for either repetitive and specialized tasks such as lease negotiations, lease compliance, rental deposits, maintenance, and more.
Reviews and Referrals – When consulting with several property management companies, follow up on all their referrals and check for reviews across the internet and social media sites for additional insight. Online reviews and referrals will give you a complete picture of the company and its track record with previous clients.
Other Frequently Asked Questions
- How much does it cost?
Property management companies usually charge 4% to 10% of monthly rental income depending on the size and number of units.
- How do they look for tenants?
Property management companies advertise vacancies using a combination of digital and traditional media to attract qualified tenants.
- What are the essential members of a property management team?
The key members of a property management team include leasing agents, contractors, suppliers, accountants, property managers, and real estate agents and lawyers.
Work with a Property Management Company Today
Maximize your net profits with a dependable property management company.Contact The DeMarco Real Estate Group at 954.453.1000 or send us a message here. We’re licensed Community Association Managers dedicated to the financial success of your property. Our team provides the highest level of service to free you from the daily tasks of property management.
With over 12 years of experience, our team specializes in leasing services, property value appreciation, acquisitions, and 1031 exchanges. Broker-Owner John DeMarco leads a team of professionals at The DeMarco Real Estate Group. John has been practicing real estate since 2005 and has been a South Florida resident for over 25 years. We can’t wait to start working with you.