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What is Property Management?

A commercial property manager may supervise office buildings.
Property managers may seek out business tenants to rent out vacant storefronts.
Property managers may oversee the sale of residential properties.
Property managers negotiate lease agreements, among other responsibilities.
Article Details
  • Written By: Charity Delich
  • Edited By: Bronwyn Harris
  • Last Modified Date: 11 October 2014
  • Copyright Protected:
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Property management is the oversight of a property by a property manager on behalf of the property owner. The owner generally pays the manager a fee. In exchange, the manager usually handles the day-to-day management of the property, serving as a liaison between the owner and any tenants. Property owners and managers typically enter into a written contract specifying the duties to be performed by the manager and the compensation to be paid by the owner.

Property owners may elect to use property managers for a variety of reasons. If an owner has multiple rental units, he or she may find it helpful to engage a property manager. An owner with limited time or an owner who does not want to be involved in the day-to-day management of a property may also benefit from the assistance provided by a property management company. In addition, property managers can prove invaluable to owners that live far away from their rental properties.

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Managing a property often involves a variety of administrative tasks, including handling property maintenance, supervising building repairs and ensuring outgoing expenses are paid. Owners who desire to rent their properties to tenants may use the services of a rental property management company. These types of companies can provide services such as marketing rental properties, securing tenants, and negotiating rental lease agreements. Additionally, a rental property manager is usually responsible for collecting rent and addressing tenant complaints. Some rental property managers may even handle tenant evictions.

Two common types of property management are commercial and residential property management. A commercial property manager supervises industrial or commercial properties, such as office buildings, retail space or industrial and storage facilities. A residential property manager oversees rental housing, such as apartment buildings or single-family homes. Some countries require commercial and residential property management companies to adhere to certain licensing requirements if they are performing functions like collecting rent, marketing properties or negotiating lease agreements.

A property owner seeking to hire a property management company should take care to select a company with experience. Prior to selecting a company, the owner should conduct thorough interviews. In addition, he or she should ask for references and require details about the company’s fee arrangements. While management fees are typically a percentage of the rent revenue, flat fees may be more appropriate in some cases. Professional real estate directories may also prove useful in determining whether a company is appropriately qualified to oversee a property.

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Discuss this Article

Bhutan
Post 4

@Oasis11 - I wanted to say that most property management companies are great but not all are the same. I had a friend that had a vacation property that was poorly managed. It was only rented for a few days out of a given week instead of being rented for the entire week and the property management company was charging her additional fees for cleaning on top of the 50% charge on the rental fees.

She was losing money and was even thinking of selling her property until she decided to manage the property herself. That is when she realized how much she was overcharged for basic services. She said that many of these companies mark up services like plumbing or cleaning in order to earn even more profit.

So you have to do your homework when looking for a property management company and try to get referrals from friends that have used these services before.

oasis11
Post 3

@Comfyshoes - I understand that costs associated with hiring property management company are high, but I rather have someone else deal with the tenants and collect the rent from them. I would hate to have to collect the rent and for that reason alone I would hire a property management company.

They also have to make sure that property is rented and have to screen tenants for you. They really do a lot of work so I think that it is worth the investment for the peace of mind.

comfyshoes
Post 2

@Moldova -I agree that if you have investment property in another state you would almost have to have a property management company handle the rentals unless you are retired and could handle the rentals yourself.

The only downside is the cost. Most of these property management companies, especially those in resort communities, charge anywhere from 30% to 50% of the rental proceeds. That is a lot of money to give to a property management company. I know that for residential real estate that is more stable, they usually charge about 10% of the monthly rental fee.

Some investors consider the property management fee before they buy a property that they cannot actively manage to see if it is a good long term investment. Most investors break even after the first few years of obtaining the property.

I think that it depends on your situation if hiring a property management company is worth it.

Moldova
Post 1

I wanted to add that property management services are really valuable if you have a property in another state. I have a friend that owns vacation cabins in Tennessee but she lives in Florida and without the property management company she would not be able to rent out these properties because many of these rentals are short term rentals of a week or so.

The property management company takes care of everything for her. All she has to do is tell them when she will be visiting her cabin and then they block out those weeks and rent it for the rest of the year. She then gets the rental checks every month. She loves it.

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