Property management involves the continual supervision of residential, commercial, or industrial real estate by an external contractor. Typically, property managers handle the daily operations including repairs, maintenance, security, and overall maintenance of properties. They are typically employed by property owners of various investment assets like apartment buildings, condominium complexes, gated communities, retail centers, and industrial parks.
Their primary duties include overseeing assigned tasks from property owners and ensuring that the managed properties retain their value while also generating income.
Understanding Property Management
Property developers typically aim to transition swiftly to the next project upon completing each one. Even if they retain ownership of the property, they often prefer entrusting the day-to-day operations to an external entity.
The duties of a property manager typically encompass the following tasks:
- Screening prospective tenants
- Creating, executing, and renewing leases on behalf of property owners
- Managing rent collection
- Overseeing property maintenance, including landscaping and snow removal
- Coordinating necessary property repairs
- Establishing and adhering to budgets for property upkeep
- Familiarizing oneself with state and national landlord-tenant laws and regulations
- Promoting properties through marketing efforts
- Supervising staff members
- Addressing tax-related matters
Companies are required to adhere to all applicable state and local laws and regulations regarding landlord-tenant relationships.
Property owners compensate property managers either through a fixed fee or a percentage of the rental income generated while the property is under their management.
Types of Property Management
Property managers, much like the diverse array of properties they oversee, come in various types. Certain firms specialize in managing specific property types, while others provide services across a broad spectrum of properties. The scope of properties managed by these firms is extensive and encompasses a wide range of types.
Residential Property Management
Residential property managers are commonly engaged to oversee rental properties, taking charge of various aspects of the rental process. They are typically tasked with managing:
- Single-family homes
- Vacation rentals
- Multifamily homes
- Townhouses
- Condominiums
- Apartments
- Manufactured homes
- Real estate-owned (REO) properties
Commercial Property Management
Commercial property owners have distinct requirements compared to residential property owners. Commercial property management encompasses various types of properties, including:
- Public accommodations such as hotels
- Retail properties like malls, restaurants, and gas stations
- Office properties like real estate brokerages or doctors’ offices
- Co-working spaces where professionals rent workspace on a daily or hourly basis
Industrial Property Management
Management can significantly enhance various industrial properties, including:
- Heavy manufacturing facilities like automotive plants and steel mills.
- Light manufacturing factories such as those involved in food packaging.
- Warehouses.
- Distribution facilities.
Special-Purpose Property Management
Additionally, there exist various types of properties that do not neatly fit into the aforementioned categories but still necessitate management. These encompass:
- Theaters
- Sports arenas
- Resorts
- Senior care facilities
- Schools and universities
- Places of worship
Who Needs a Property Manager?
Various property owners find value in the services provided by property managers.
For instance, landlords enlist property management firms for diverse reasons. Some manage multiple rental properties in their portfolios and lack the time or expertise to maintain them or handle tenant interactions. Others view rental properties solely as investments, preferring to delegate management tasks to professionals. Absentee landlords, who own property but live elsewhere, also utilize property management services. Certain property management companies cater to individual landlords with a single rental property, such as a vacation home.
Property owners participating in affordable housing programs often seek property management services due to the complex federal guidelines governing their rental properties, necessitating specialized expertise. Additionally, some real estate brokers double as property managers. For instance, a broker in a resort town may offer buyer and seller agent services alongside property management. In such cases, the real estate broker handles listing, showing, leasing, and maintaining vacation rentals for multiple property owners.
Special Property Management Considerations
Different states have different rules for property management licensing. In most states, property management companies need to get a license from the local real estate board. This shows why it’s important for property owners to check if the firms they work with have the right credentials.
For example, in Florida, property managers must have a real estate broker’s license to work there. This is because some of the tasks property managers do are considered real estate work. Having a broker’s license allows property managers to list rental properties on the MLS and advertise them using regular real estate methods. It also lets property management companies put real estate board lockboxes on property doors so licensed agents can show the properties.
In Florida, property managers who handle rentals and get paid commissions need to have a broker’s license. However, property managers who oversee properties they own in the state don’t need this license.
On the other hand, in Massachusetts, property managers don’t need a broker’s license. This is because the state understands that tasks like listing properties and leasing them might not be the main focus of property managers there.
FAQ
1. Is hiring a property manager worth the investment?
The answer isn’t straightforward. It entails expenses and consumes significant time. If the cost of hiring a property manager is lower than the opportunity cost of managing properties independently, it’s likely a wise investment. However, this calculation is unique to each investor and requires careful consideration.
Essentially, anyone who prefers not to handle the day-to-day tasks of property management can benefit. This encompasses residential property owners seeking to avoid tenant-related issues and commercial property owners who prefer delegating tasks such as tenant sourcing, lease management, and maintenance.
Yes, they are. Licensing requirements for property firms vary across states, but most mandate that property management companies obtain licenses from local real estate boards. Property owners should ensure that the firms they engage with hold proper licensure.
Conclusion
Property management involves the supervision of real estate assets by a third party, typically a professional property manager or a property management firm. These managers handle various categories of properties including residential, commercial, industrial, and those designated for specific purposes.
The responsibilities of property managers typically encompass the daily administration of real estate affairs, spanning from tenant screening to coordinating repairs and upkeep. They receive compensation in the form of a fee or a percentage of the rental income generated by the property they manage. Property owners must ensure that prospective property managers hold proper licensing tailored to their state, as each state has its own set of regulations governing the activities of property managers.