How does property management work?
We’ve seen a lot of questions lately about how property management companies work, and it’s hard to answer them all individually. So because of this we’ve decided to set up a FAQ (frequently asked questions) guide for people to check out if they are interested in renting from a property manager, hiring a property manager, or are just plain curious about the industry.
Why do people hire property managers?
People hire property managers for many varying reasons. One of the most common of these reasons is that they are moving out of the area, and maintaining a property with tenants can be really difficult for them from a distance.
The other most common reason is that trying to rent a unit as an individual owner can be a huge time and money sink. Many owners just don’t have the time to maintain the unit if issues should arrive, screen applications, do inspections, and learn all of the state Fair Housing and rental laws. Some may also not have the extra money to pay legal fees or buy an effective lease.
Property managers take care of all of these things for property owners! The manager takes care of property and tenant concerns from start to finish. They usually already own a good lease, they have a fleet of handymen and vendors on call to address unit issues, they know the property laws, and they can take maintenance and emergency requests so the owners can rest easy that their unit is in good hands. Property mangers can even help when someone is locked out of their rental! Don’t worry… we’ve all done it.
Property mangers streamline the rental process for both owners and renters by being available, knowledgeable, and prepared.
Why do property managers have such a problem with pets?
We don’t! In fact, many of us have pets of our own and are very fond of pets. The reasoning for so many units not allowing pets varies. For some property management companies, allowing pets can be considered a liability in the eyes of their insurance companies.
Normally, however, the “no pet” policy is set by each individual property owner. Just as in everything, for every amazing and attentive pet owner, there is going to be one out there that will cause damages to a property. On average, pet damage to properties goes above and beyond what was paid for a security deposit. Unit owners often see allowing pets as a gamble, and some will want to make that gamble while others will avoid it.
Do property managers set prices for individual units?
No, they don’t! This is the responsibility of the owner(s) of each individual unit. As property managers, we’re able to advise owners about what we think market value for each unit is by comparing it to similar units on the market. After this, the pricing is set at the owner’s discretion, and they are free to either take our advice or leave it.
Do property managers get paid more if an apartment is priced high?
Yes and no. While all property management companies are different, here at Schmidt Property Management we get a certain percentage of monthly rent as our wage. If a property sits empty we do not get paid for those months. If a unit is not rented we will not draw a wage from that unit.
So while it’s true that higher-priced units will draw more of a wage for us, if a unit is priced too high it will not rent. If a unit does not rent, that means that we continue doing work on said unit for free. Because of this we’re motivated to encourage our owners to price their units at a comparable market value to other units similar to them so that they will be rented. We see it as beneficial to property owners, ourselves, and people looking for housing to have units filled rather than sitting empty. Filled units are a win-win for everybody involved!
And finally the question everyone has been waiting for:
Why are rent prices in Bozeman so high?!
In Bozeman, the market drives the prices of rent. There is a unique atmosphere in Bozeman that attracts college students and young professionals. These people are living in homes where there are multiple people paying rent from individual incomes. Towns where this is the case with the majority of renters tend to have rental markets that can be very high, because these people who have roommates drive the market up. This has the unfortunate side-effect of making rent prices very high for families that may be paying rent from individual incomes. This is something that property managers aren’t in control of, and something that people should talk to their city representatives about in order to help find a solution that works for everyone.