Property ManagementProperty Management Expenses

Managing a rental property in Texas, especially a single-family home, involves a careful balance of responsibilities and financial management. Property managers play a crucial role in overseeing the day-to-day operations of rental homes. Their duties are extensive, ranging from collecting rent to handling the nitty-gritty of property maintenance. A previous article from our management company outlined the array of services provided by most management companies in Texas for single-family rentals. But one question often arises in the minds of property owners: What expenses do property managers actually pay?

Typical Expenses Paid by Property Managers

Property managers take on a variety of financial responsibilities, ensuring that the property remains in top-notch condition and that any issues are swiftly addressed. Here are some typical expenses that property managers in Texas are responsible for:

1. Repairs and Routine Maintenance

One of the key roles of a property manager is to maintain the property. This includes addressing any necessary repairs and conducting routine maintenance. Whether it’s fixing a leaky faucet, addressing electrical issues, or ensuring that the property is well-painted and presentable, these items are typically paid by the property manager on behalf of the owner. Managers work with various contractors and service providers, and the costs incurred for these services are deducted from the rental income before disbursing the remaining balance to the property owners.

2. Eviction-Related Expenses

Although no one wishes for it, sometimes evictions become necessary. In such cases, property managers handle the entire process. This includes legal fees, court costs, and any other expenses associated with evicting a tenant. The property manager takes care of these expenses upfront, ensuring that the process is as smooth and legally compliant as possible.

Expenses Typically Not Covered by Property Managers

While property managers handle a wide range of expenses, there are certain costs that typically fall outside their purview. These include:

1. Mortgage Payments

Mortgage payments are usually the responsibility of the property owner. Property managers do not cover these expenses as they are directly linked to the ownership and financing of the property.

2. Insurance Payments

Payments for casualty and hazard insurance are also not covered by property managers. These insurances protect the property owner’s investment and are thus considered the owner’s responsibility.

3. HOA Dues

If the property is part of a Homeowners Association (HOA), the dues associated with the HOA are typically paid by the property owner. These dues can cover a range of services or maintenance of common areas but are not the responsibility of the property manager.

The Importance of Financial Reserves

It’s advisable for property owners to maintain financial reserves, ideally enough to cover one to three months of expenses. This is crucial for times when the property might be vacant or if there are delinquent tenant payments. Having this financial buffer ensures that the necessary expenses can still be covered without causing undue stress or financial strain.