Effective rental of the property is essential to ensure the long-term financial health of the property. The Property Manager sometimes makes use of a Leasing Agent as one part of property management.
Setting Rental Rates
Rental rates are influenced primarily by supply and demand. The Property Manager should conduce a detailed survey of the competitive space available in the neighborhood, emphasizing similar properties. In establishing rental rates, the Property Manager has four long-term considerations:
A rental rate for residential space is usually stated as the monthly rate per unit. Commercial leases (office, retail, and industrial space rentals) are usually according to annual rate per square foot.
 A high level of vacancy may indicate poor management or a defective or an undesirable property. On the other hand, a high occupancy rate may mean that rental rates are too low. Whenever the occupancy level of an apartment, house, or office building exceeds 95 percent, consideration should be given to raising rents. First, however, the Manager should investigate the rental market to determine whether a rent increase is warranted.
Selecting Tenants
Proper selection is the first step in establishing and maintaining sound, long-term relationships with Tenants. The Manager should be sure that the premises are suitable for a Tenant in size, location, and amenities and that the Tenant is able to pay for the space.
The residential Property Manager and any Leasing Agents employed by the Property Manager must always comply with fair housing laws in selecting Tenants. Although fair housing laws do not apply to commercial properties, commercial Property Managers need to be aware of federal, state, and local antidiscrimination and equal opportunity laws that may govern industrial or retail properties.
 Collecting Rents
A Property Manager and any Leasing Agents employed by the Property Manager should accept only those Tenants who can be expected to meet their financial obligations. In addition to contacting credit bureaus, the selection process now involves criminal background checks, eviction history, calling financial references, and if possible, interviewing the former Landlord.
The terms of rental payment should be spelled out in the lease agreement, including:
The Property Manager should establish a firm and consistent collection plan. The plan should include a system of notices and records that complies with state and local law.
Every attempt must be made to collect rent without resorting to legal action. Legal action is costly and time-consuming and does not contribute to good Tenant relations. When it is unavoidable, legal action must be taken in cooperation with the Property Owner’s or management firm’s legal counsel. Specific legal procedures must be followed in taking legal action against a Tenant. In addition, it may be more efficient to utilize a separate lawyer, experienced in evictions, to minimize costs and time it takes to complete the process.
Security Deposits & Interest
Illinois law has specific provisions regarding the maintenance and payment of interest on security deposits. Additionally, local municipalities may have laws regarding interest on security deposits.
Property Managers (who must have Broker or Managing Broker licenses) must put security deposits in a special escrow account, in the same way that Real Estate licensees must handle earnest money.
The security deposits must be deposited in the escrow account by the next business day after a lease is signed.
The security deposit must be recorded in a journal, which contains a chronological record of all deposits and withdrawals of security deposit monies going into and out of the escrow account.
The security deposit must be also recorded in a ledger, which is set up for each lease, and contains the information about the security deposit, interest paid and how much and when the security deposit was returned at the end of the lease.
This escrow account is a non-interest-bearing account unless the property is residential with 25 or more units, in which case, interest must be paid to the Tenants.
The Property Manager must be able to handle residents who do not pay their rents on time or who break building regulations. When one Tenant fails to follow the rules, the other Tenants often become frustrated and dissatisfied. Careful record keeping shows whether rent is remitted promptly and in the proper amount. Records of all lease renewal dates should be kept so that the Manager can anticipate expiration and retain good Tenants who otherwise might move when their leases end.
Handling Environmental Concerns
Property Managers must be able to respond to a variety of environmental problems because they have become increasingly important issues. Managers may manager structures containing asbestos or radon or be called on to arrange an environmental audit of a property. Managers must see that any hazardous wastes produced by their employers or Tenants are properly disposed of.
Air quality issues are a key concern for those involved in property management and design. Building related illness (BRI) and sick building syndrome (SBS) are illnesses that are more prevalent today because of energy and efficiency standards used in construction that make buildings more airtight with less ventilation. SBS is more typical in an office building.
Lead-Based Paint
The 1996 federal Lead-Based Paint Hazard Reduction Act – Title X focused more strongly on disclosure and REALTOR® liability. This federal law supersedes any state laws that are not as strong. Real Estate licensees leasing properties built before 1978 must ensure that Landlords disclose any possible lead-based paint or related hazards. This disclosure form must be completed even in the case of an oral lease agreement. Once an offer for lease is received, the licensee representing the lessor (Landlord) must make certain a completed Disclosure of Information (from Landlord) and Acknowledgment Form (from Tenant) are attached to the lease, showing that the disclosure requirements were met. Finally, a Federal Lead Hazard Information Pamphlet, obtained through the National Lead Information Clearinghouse at 800-424-LEAD (5323), must be distributed to the Tenant before leasing the property.
The Illinois Lead Poisoning Prevention Act requires that the Owner of any residential building cited by the state as a lead paint hazard give prospective Tenants written notice of the danger unless the Owners have a certificate of compliance. This act is bolstered in its scope by the federal legislation noted earlier. When a mitigation order is issued to an Owner of a building containing lead hazards, the Owner has 90 days to eliminate the hazard in a manner prescribed by state law, or 30 days if occupied by a child under the age of six or by a pregnant woman.
