I have been reading alot of posts on other boards and a few mentions on this one, as to what exactly does a property manager do, and why they charge as "much" as they do. I mean on the surface property management does not appear to be a difficult profession. They only advertise for tenants and then rent out the house, Right? What I hope to explain in detail, is the process that every professional PM will go thru on a daily basis, at least.
1. Laws – As some of you may be aware of, the USA has 4 sets of governing bodies. They are Federal, State, County and City. Each governing body, has the authority to create laws, that pertain to their needs specifically. Not to get into a debate about jurisidiction, but as a rule the order they were listed above, is how it is determined on who has the most power.
Federal Laws as it pertains to Property Management, usually only gets involved in Housing Discrimination situations. They do get involved in drug raids and things of this nature, if the FBI or DEA raids a home. Keep in mind the Section 8 program is a Federally funded program, so there are circumstances where they could get involved there.
State Laws as it pertains to Property Management, will usually get involved in situations where health code violations occur. They also establish the laws on licensing of Property Managers, or not. Keep in mind, it's very unlikely any 2 states share the exact same laws. For example, in Missouri, you must be a licensed broker to be in business as a PM, however in our neighboring state of Kansas, this is not required. The states also set the laws in place for landlord/tenant relations.
County Laws as it pertains to PM, usually they have no interest in this business, as the state and city are in charge of laws regarding this profession. I will say this however, in KC, there is a program called COMBAT, it is a joint task force setup by Jackson coutny missouri and the city of Kansas City, MO. It is a tax funded program, to fight drugs and more specifically dealers. They get tips from citizens, perform sting operations, and raid the home. YOU DO NOT WANT YOUR HOUSE TO GET THE INFAMOUS GREEN STICKER ON IT'S FRONT DOOR. You can expect 1000s in legal fees, to not only reclaim your property, but make all the repairs the city will now require. Much like the DARE program, they can permanetly seize your property, however it is very rare they would do this.
City Laws as it pertains to PM, is the one you really need to be sharp on. They are in charge of just about it all, local ordinances, tenant complaints about living conditions, the property not being properly maintained and many other scenarios. These laws are typically where you will get your most problems out of, if your PM is not on top of it.
In our "justice" system, claiming ignornance to the law is NOT a defense.
It is very important that your PM has a expert Lawyer in landlord/tenant laws as it regards to that State. But this alone is not enough, because they should have a really good understanding of the laws themselves, so they do not break one of those laws, and require the expertise of their attorney to get you out of hot water.
Do not underestimate the importance of this category, I unfortunately have been to eviction court, and I have seen tenants win their cases, based on laws not being followed by the landlord or their PM. If this happens, you will spend a fortune to regain possession of your home.
I'm sure most of you know this, but I will explain how our legal system works when it comes to leasing out a property. In Missouri, and I'm sure most states, the minute you sign that lease with the tenant, you have legally given them full possesion of that property. This basically means, it's their house. The PM, still has rights to protect that property, but the laws have to be followed to even enter the property. In Missouri, if it's a NON EMERGENCY scenario, you must give them a 24 Hour written notice that you will be entering the property. If it's a legitimate EMERGENCY, you do not need permission. However, you better be able to prove it was an emergency, if you can't, 1. The PM can be arrested and 2. you can be sued for loss of privacy. The scary truth about this, is there are alot of PM's and landlords that will simply ignore this law, and enter the property with no notice. I will explain to you a very real scenario of what could happen, if they do this.
They enter the home, the tenant finds out that they were in the home, they call and complain and then file a lawsuit claiming that personal property is missing, like a 5 Carat diamond ring or some crazy item. The problem here is you or your PM cannot dispute whethey they had that ring or not, so you get to buy them a new one.
I will break this post into multiple parts and post over the next few weeks.
Hopefully this will help clarify what a PM goes thru on a daily basis, and how important a professional PM is to the success of your business. In all cases, there is no justification for going with the cheapest of anything, it will cost you considerably more in the long run, as these companies typically are not properly structured, and is highly unlikely they are aware of landlord/tenant laws.
Have a Great New Year!
John
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