Many landlords hire resident managers for their apartment building. But to make it work, requires writing a job description, thoroughly screening prospective managers, and preparing a property manager agreement. Here’s how to legally and effectively do so.
Determine the Resident Manager’s Duties, Schedule, and Pay
Here are the key issues you need to decide before you start your search for a resident manager:
- The manager’s responsibilities. The first question you need to ask is why do you want to hire a manager? Do you want someone to handle all the day-to-day details of running your building, such as screening new tenants, handling repairs and collecting rent? Or do you want the manager to have limited responsibilities, such as doing minor repairs or showing vacant apartments to interested tenants? Making a list of all the job duties you’re looking for in a manager will make the hiring process more objective and will give you ready standards to measure which applicants are most qualified for the job.
- Hours and schedule. Figure out whether you want the manager to be full- or part-time and how many hours you anticipate the manager working. Decide how many hours you want the manager to be on the rental property or available by cell phone.
- Pay. You may pay an hourly wage, generally ranging from $10 to $25 per hour, or a flat salary. How much you pay depends on the manager’s responsibilities, the number of hours, time of day and regularity of the schedule, benefits, and the going rate in your community. You can get an idea how much managers are paid by asking other landlords or checking want ads for managers. Offering slightly above the going rate in your area should allow you to hire the best, most experienced candidates. And if you’re thinking give someone reduced rent in exchange for management services (as opposed to paying a separate salary or hourly rate), don’t—especially if your property is under rent control.
Screen Potential Resident Managers
Your screening process should include the following:
- Phone screening. When people contact you about the manager’s job, be prepared to describe the responsibilities, pay and hours.
- Face-to-face interviews with strong manager candidates. Limit your in-person interviews to people who meet your job requirements. To avoid potential charges of employment discrimination, ask everyone the same questions—such as “Tell me about your previous jobs managing rental properties.” Don’t ask questions that are not clearly job-related—for example, the applicant’s medical condition or religion. Get a completed application (you can use the rental application available on the Nolo site, and delete what’s not relevant).
- Reference checking. Talk with former employers or supervisors (ideally at least two people) with whom the person held similar manager positions. Ask about the applicant’s previous job responsibilities, character and personality traits, strengths and weaknesses, and reasons for leaving the job. Take your time and get all the information you need to decide whether an applicant is the best person for the manager’s job.
- Credit check. Checking an individual’s credit history is especially important if you want a manager to handle money. Before you order a credit report, be sure you get the applicant’s consent.
Choose your manager carefully. If you don’t, and the manager causes legal problems (for example, by injuring a tenant or stealing tenant property), you may be legally liable. See Landlord’s Liability for a Manager’s Illegal Acts for more on the subject.
Prepare a Written Property Manager Agreement
Once you’ve chosen someone to be your resident property manager, and all terms and conditions of employment are mutually agreed upon, you and the manager should prepare a written property manager agreement that covers manager responsibilities, hours, and pay, and that can be terminated at any time for any reason by either party. Nolo’s Residential Rental Property Manager Agreement provides a sound written agreement between landlord and manager.
Prepare a Separate Rental Agreement
In addition to a specific property manager agreement, it’s a good idea to prepare a separate month-to-month rental agreement that can be terminated by either you or the manager with the proper amount of written notice, typically 30 days, required under state law. See How Month-to-Month Tenancies End for details.
Meet Your Legal Obligations as an Employer
When you hire a resident property manager, you’re an employer, and must comply wage and hour laws, pay Social Security and payroll taxes, and meet other legal obligations of an employer. If you hate paperwork, your accountant or bookkeeper can probably handle this work for you. An alternative is to hire a reputable payroll tax service.
Landlord’s Legal Liability for a Manager’s Illegal Acts
Depending on the circumstances, you may be legally responsible for the acts of your property manager
Undecided About Hiring a Resident Manager?
In some states, you may not have a choice: California, for example, requires a resident manager on the premises of any apartment complex with 16 or more units, and New York City has similar requirements for buildings with nine or more units. Check with your state or local landlords’ association to see if your state requires resident managers and in what situations.
What About Property Management Companies?
If you don’t want (or need) to hire a resident manager, but you want to delegate some landlord responsibilities, consider hiring a property manager firm. This may be a good option if you own one or more apartment buildings or live too far away from your rental property to be directly involved in everyday details, such as responding to repair requests and collecting rent.
More Information on Managing Your Rental Business
For more details on hiring property managers and the business of landlording, see Every Landlord’s Legal Guide, or, (if your rental property is in California), The California Landlord’s Law Book: Rights & Responsibilities. For useful information on hiring, managing, and firing employees, see The Employer’s Legal Handbook.