What is Property Management?

Property management is the daily oversight of residential, commercial, or industrial real estate by a third-party contractor. Generally, property managers take responsibility for day-to-day repairs and ongoing maintenance, security, and upkeep of properties. They usually work for the owners of investment properties such as apartment and condominium complexes, private home communities, shopping centers, and industrial parks.

Understanding Property Management

Property developers generally want to move on to the next project as soon as each one is completed. Even if they continue to hold title to the property, they prefer to delegate the day-to-day operations to an outside company.

Responsibilities of a Property Manager

The responsibilities of a property manager generally involve the following:

• Screening potential tenants
• Drafting, signing, and renewing leases on behalf of property owners
• Collecting rent
• Maintenance of properties, including landscaping and snow removal
• Arranging for necessary repairs to properties
• Setting up and adhering to budgets for property maintenance
• Understanding state and national landlord-tenant laws and regulations
• Marketing properties
• Supervising other employees
• Handling taxes

Types of Property Management

Just as property comes in many types, so do property managers. Some firms are specialized in providing management for a particular type of property, while others offer management services over a range of property types.

Who Needs a Property Manager?

Several types of property owners can benefit from the services that property managers offer:

Landlords: Some may have multiple rental properties in their portfolios and lack the time or expertise to maintain the properties and deal with individual tenants.

Absentee Landlords: Property owners who don't live near their rental properties often use property management services to handle day-to-day operations.

Affordable Housing Owners: Property owners who participate in affordable housing programs tend to use property management services because their rental properties are subject to complex federal guidelines that require specialized expertise.

Special Property Management Considerations

Property management licensing requirements vary by state. Most states require property management companies to be licensed by the local real estate board, so property owners need to make sure that the firms they hire are properly licensed.

Frequently Asked Questions

Is a property manager worth it?

It depends. Managing property can be costly and take a lot of time. If the cost of a property manager is less than the opportunity cost of managing properties yourself, it's probably a good investment. However, this is an equation that every investor will have to work through for themselves.

Who benefits from hiring a property manager?

Any property manager who doesn't want to deal with the day-to-day management of property can potentially benefit from property management. This can include a residential property owner who doesn't want the headaches of dealing with tenants, or commercial property owners who prefer others to source and manage tenants, leases, and maintenance.

Are property managers regulated?

Yes. Property management licensing requirements vary by state (or country), but most jurisdictions require property management companies to be properly licensed. Property owners should make sure that the firms they hire are properly licensed and insured.

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