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Hiring a property manager doesn’t eliminate all owner involvement. Owners retain certain responsibilities and decision-making authority even with full-service management. Understanding the division of responsibilities helps set appropriate expectations and maintain a productive relationship.

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Financial Responsibilities

Owners must maintain adequate funds for:
  • Operating reserves (manager holds for routine expenses)
  • Capital reserves (major repairs and replacements)
  • Emergency funds
Managers cannot advance funds indefinitely. Underfunded accounts delay repairs and create problems.
Owners typically approve expenses above a threshold:
  • Capital improvements
  • Non-emergency large repairs
  • Appliance replacements
  • Vendor contract commitments
Fast owner response prevents delays and tenant frustration. Establish clear approval limits in your management agreement.
Managers typically don’t pay:
  • Mortgage payments
  • Property taxes
  • HOA dues (unless specifically included)
  • Special assessments
  • Insurance premiums
Some managers offer these services for additional fee. Most owners handle directly.
Owner remains responsible for:
  • Accurate tax filings
  • Depreciation schedules
  • Capital gain calculations
  • 1099 review and verification
  • Tax strategy decisions
Manager provides documentation; owner/accountant handles tax compliance.

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Decision-Making

Depending on agreement, owners may:
  • Approve all tenants
  • Set criteria and delegate selection
  • Retain veto power
  • Approve only exceptions
Clarify process in management agreement. Delays in approval cost vacancy time.
Owner input on rent decisions:
  • Initial listing price
  • Renewal rent adjustments
  • Price reductions during vacancy
  • Lease concessions
Managers recommend; owners typically have final say on pricing.
Major property decisions:
  • Renovations and upgrades
  • Appliance replacements
  • System replacements (HVAC, roof)
  • Property additions
These affect property value and require owner decision and funding.
Owners typically must authorize:
  • Initiating eviction proceedings
  • Settlement negotiations
  • Cash-for-keys arrangements
  • Attorney engagement
Manager recommends and executes; owner authorizes.
Owner responsibilities:
  • Maintaining adequate coverage
  • Landlord/rental property policy
  • Liability coverage
  • Named insured designations
  • Premium payments
  • Claims filing (with manager assistance)
Manager should be listed as interested party for notification.
Owner remains legally responsible for:
  • Property conditions
  • Fair housing compliance
  • Habitability standards
  • Tenant injuries on property
  • Environmental hazards
Management agreement should include indemnification provisions.
Owner may be responsible for:
  • Rental licenses (some jurisdictions)
  • Business licenses
  • Occupancy permits
  • Short-term rental permits
Manager may assist but owner ultimately responsible.

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Communication and Oversight

Owner should:
  • Review monthly statements
  • Monitor property condition reports
  • Track vacancy and turnover
  • Review lease terms
  • Understand financial performance
Delegation doesn’t mean disengagement.
Owner must be reachable for:
  • Emergency decisions
  • Large expense approvals
  • Tenant approval (if required)
  • Legal matters
  • Insurance claims
Unresponsive owners create problems for managers and tenants.
Owner rights and responsibilities:
  • Right to visit property (with proper notice)
  • Annual property inspection recommended
  • Capital planning assessment
  • Relationship with manager
Regular engagement ensures alignment and catches issues.

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Long-Term Planning

Owner should plan for:
  • Roof replacement
  • HVAC systems
  • Appliances
  • Flooring and paint
  • Exterior maintenance
  • Major repairs
Manager can help identify needs; owner must fund reserves.
Owner decisions:
  • Hold vs sell timing
  • Refinancing decisions
  • Additional property acquisition
  • Renovation investment
  • Exit planning
Manager executes strategy; owner sets direction.
Stay informed about:
  • Local rental market conditions
  • Regulatory changes
  • Property values
  • Competition
  • Economic factors
Manager provides local insight; owner makes strategic decisions.

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Common Problems from Absent Owners

Impact of slow owner response:
  • Extended vacancy (waiting for price approval)
  • Tenant frustration (delayed repairs)
  • Lost tenants (slow renewal decisions)
  • Escalated repairs (small problems become big)
Set response time expectations with manager.
Problems from inadequate reserves:
  • Delayed repairs
  • Emergency funding scrambles
  • Tenant complaints
  • Property deterioration
  • Manager cash flow issues
Maintain adequate reserves and replenish promptly.
Common misalignments:
  • Expecting premium rent for average property
  • Refusing reasonable repairs
  • Expecting no vacancies
  • Blaming manager for market conditions
  • Micromanaging while expecting full service
Clear communication and realistic expectations prevent conflict.

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Working Effectively with Your Manager

Establish:
  • Preferred communication methods
  • Expected response times
  • Regular check-in schedule
  • Escalation procedures
  • Emergency contact methods
Document:
  • Spending authority limits
  • Tenant approval process
  • Emergency procedures
  • When to notify vs when to decide
  • Exceptions and special situations
Schedule periodic discussions:
  • Monthly financial review
  • Quarterly performance review
  • Annual strategy discussion
  • Lease renewal planning
  • Capital needs assessment

Next: Evaluating Performance

Metrics and indicators of quality management

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