Property Management: Definition & 4 Examples

 

 

If you’re seeking a complete and comprehensive property management definition, look no further.

Read on to find out what property management is and the many types of management out there. Additionally, discover what property managers are and what they do. Plus, learn how to become a property manager and why property management is vital to the real estate industry.

This post covers:

• What is property management?
• What are the 4 types of property management?
• What do property managers do?
• What does a property management company do?
• How to become a property manager
• The importance of property management in real estate

 

What is property management?

Property management is defined as the act of supervising and overseeing the daily operations of residential, commercial, or industrial real estate.

In most cases, a property manager is designated to handle the operations of a property, but a company may also be responsible. Responsibilities typically consist of regular maintenance, marketing the building to new tenants, increasing revenue, and overseeing daily operations. Above all, it’s up to the property manager to maintain the profitability of the property.

 

Learn the difference between a condo and an apartment:

 

What are the 4 types of property management?

Property management’s definition is divided into four types, each dealing with a different type of real estate.

The four types of property management are:

• Residential
• Multifamily
• Commercial
• Industrial

 

Residential

In general, residential property management concerns real estate that has long-term residents.

Some examples include:

• Single-family homes
• Townhouses
• Condos

 

Multifamily

In the case of multifamily properties, managers usually care for real estate with yearly rental leases. Condos and townhouses also technically fit this category but see significantly more long-term residents than yearly renters. Additionally, many multifamily properties see high turnover, so it’s up to managers to mitigate vacancies as much as possible.

Multifamily property management covers:

• Apartments
• Student housing
• Mixed-use properties
• Retirement communities

 

Commercial

Commercial property management concerns real estate rented or owned by businesses. Most of the time, clients are business owners looking to move their company into an available unit.

Some examples of commercial properties to expect are:

• Malls or shopping centers
• Office buildings
• Coworking spaces
• Hotels

 

 

Industrial

Lastly, industrial property management covers manufacturing and industrial facilities. These require you to maintain strict building codes and regulations.

Some properties that fall under this category are:

• Food packaging facilities
• Automotive assembly
• Steel mills
• Warehouses

 

What is a property manager?

A property manager is an individual or a company responsible for the daily operations of a property.

Owners or investors delegate responsibilities to property managers to maintain the operations of their real estate investment. As a result, it’s up to the property manager to oversee a wide variety of tasks a property may require. Property managers may handle all the duties independently, but in many cases, they hire employees to work alongside them in completing property jobs.

For example, most apartment buildings have a team of maintenance staff to fulfill residents’ work orders. It’s challenging for a single property manager to handle such requests alone, especially without technical knowledge. So, hiring a maintenance team is a good way of meeting residents’ needs and achieving the manager’s goals of increasing occupancy and revenue.

 

What do property managers do?

A property manager does a wide range of tasks for a single property, from adhering to a budget and creating reports to ordering supplies and collecting rent.

More specifically, the most common property manager duties include:

• Marketing and leasing units. Arguably, their biggest task is that property managers must continually market vacant units to prospective tenants. When units are empty, owners lose money. So, property managers need to list available units, schedule tours, and quickly lease up the property.
• Adjusting and collecting rent. Property managers determine the appropriate rate for the available units and collect rent from existing tenants. Managers often collect rent through online portals for faster, more convenient transactions.
• Abiding by laws and regulations. Typically, property owners are too busy to keep up with the latest laws and regulations regarding tenants. So, property managers have to stay educated and updated on the latest local legislation. That way, owners can prevent any legal issues from occurring.
• Performing maintenance and upkeep. To keep tenants happy, managers must maintain appliances or systems in each unit — and across the property. Moreover, properties require different upkeep from summer to winter. Many property managers hire dedicated seasonal employees to handle short-term needs.
• Fostering relationships with tenants. Since owners are off-site, property managers must develop and maintain relationships with tenants. This involves resolving complaints, communicating with tenants regularly, and delivering a positive tenant experience.
• Hiring and supervising employees. Most property managers cannot perform every duty at a property, so they’ll hire staff to assist. Maintenance staff, groundskeepers, and leasing agents are common professions that work underneath property managers.

 

Property manager vs. landlord

In summary, landlords are property owners who manage and maintain the property themselves, whereas property managers are hired by landlords to oversee the property.

With that said, property managers and landlords have other key differences:

 

Property Manager	Landlord
Doesn’t own the property	Owns the property
May work on-site or off-site	Primarily works off-site
Paid by the landlord based on a percentage of rental income	Receives income from rent and other fees
Hire maintenance staff for work orders	Typically performs work orders themselves
Knowledgeable of the industry and housing laws	Knowledge of the industry will vary

 

What does a property management company do?

Property management companies have the same goals and responsibilities as individual property managers. However, instead of a single person overseeing building operations, a dedicated team from a single organization manages it.

Property management companies are best suited for larger properties, such as apartment complexes with hundreds of units. Another reason to choose a property management business is when you own multiple properties.

Owners may want to manage all their properties underneath a single entity, which a management company can provide.

 

What to expect from a property management company

A property management company will perform all the same functions as a property manager but simultaneously for multiple properties. Landlords often seek property management firms to manage their multiple units, properties, or a mix of the two.

If you choose to hire a property management company, expect services such as:

• Property marketing
• Application screening
• Accounting and finance tasks
• Collecting rent and fee payments
• Property maintenance
• Unit cleaning and upkeep

 

 

What is typically the overall goal of the property manager?

A property manager’s overall goal is to maximize a property’s occupancy rate and, in turn, increase revenue. To achieve such a goal, the property manager must maintain tenant satisfaction and reduce tenant turnover.

Tenant turnover can be reduced by:

• Maintaining the property
• Attending to work orders promptly
• Investing in property upgrades and amenities
• Screening tenants
• Marketing vacant units
• Cultivating a community among tenants

 

How to become a property manager

To become a property manager, you must meet certain requirements. But more importantly, you must have the right skills.

So, do you want to be a successful property manager?

If so, you must have the following:

• Property manager requirements
• Qualities of a good property manager

 

Property manager requirements

Property management is not federally regulated, so each state sets its own requirements. Most states require some form of license, most commonly a real estate broker’s license. Other states may refer to their license as a “property manager license.” However, some states have no licensing requirements at all.

Aside from licensing, you must also meet these requirements:

• At least 18 or 21 years old (depending on the state)
• High school diploma or GED
• Legal US citizen or permanent resident

 

Qualities of a good property manager

Equally important are the qualities of a successful property manager. Property management is not an easy career, but it can be very rewarding when you have the right skill set.

Good property managers have the following qualities:

• Professionalism
• Organization
• Flexibility
• Assertiveness
• Knowledgeable

 

Professionalism

Being professional in all your job duties is key to earning the respect of tenants, employees, and the owner. You must also be warm but firm to ensure your boundaries are maintained.

 

Organization

With so many tasks, managers must stay organized. Use tools to set reminders, keep track of your day, collect rent, and streamline all processes. When organized, it’s easier to complete duties with few issues.

 

 

Flexibility

By staying flexible, you’ll find it easier to tackle issues as they arise. You’ll not only have room for such problems but will have a clear mind for solving them.

 

Assertiveness

Property managers make many decisions, some of which call for assertiveness. That way, you can develop solutions faster and on the fly to benefit owners and tenants.

 

Knowledgeable

The best property managers constantly learn new things by educating themselves on the latest real estate trends and regulations. So, attend conferences or subscribe to a newsletter for the latest property management tips. As a result, you’ll create a better experience for tenants while adhering to tenant-landlord laws.

 

The importance of property management in real estate

The definition of property management alone should tell you how essential it is to real estate. Nonetheless, the work of property managers is often overlooked. To truly understand a property manager’s role in real estate, you should know what they do for owners, investors, developers, tenants, and more.

Property management benefits real estate owners and developers in the following ways:

• Increasing return on investment (ROI)
• Improving the tenant experience
• Handling day-to-day operations
• Planning for the future
• Maintaining a safe property

 

Increasing return on investment (ROI)

Maximizing their return on investment is a top priority for any property owner. So, a large part of property management is maintaining ROI and increasing it over time.

But achieving such a goal can be difficult when so many factors are involved. For that reason, property managers are effective tools in navigating the obstacles many real estate investments face.

A property manager will implement multiple tactics to boost ROI, including:

• Research and set appropriate rental rates.
• Market and advertise to a target demographic.
• Find the right tenants for long-term leases.
• Build a skilled and experienced team of employees.

With these methods, property managers leverage the industry knowledge they’ve accumulated. Real estate is an evolving industry, and the laws associated are always changing. So, property managers will have to implement the latest strategies for optimal success.

 

Improving the tenant experience

Without an owner, it’s up to the property manager to handle all tenant relations. By developing a friendly, professional relationship with tenants, managers can deliver a better experience. Managers can address issues immediately with the right team when tenants have issues.

Furthermore, property managers are there to make tenants feel heard. Whatever issues a tenant may have, the manager must hear them out and do what they can to resolve them. Clear communication with tenants will cultivate a welcoming environment, and as a result, they’ll be more likely to renew their leases.

 

 

Handling day-to-day operations

There are a lot of things that go on in a single day for many properties. Property management’s job is to oversee those happenings and ensure they go according to plan. Whether you’re working with a property management company or a single manager, they must coordinate those day-to-day operations.

Without oversight of the property’s operations, problems can quickly arise. Managers ensure things are scheduled, organized, and working as planned. What’s more, property managers are better qualified than owners to handle many daily tasks, such as collecting rent, drafting leases, and avoiding legal mishaps.

 

Planning for the future

While many property management duties fall into day-to-day operations, the most crucial duties involve looking to the future. Marketing to prospective tenants takes time and is a major part of filling vacant units with suitable, long-term tenants.

However, not every prospective tenant is suitable. Property managers must be alert to spot problematic tenants. These applicants may become issues if they become tenants, so managers should filter them out.

Maintaining the quality of the property is important, too. As a building age, managers need to make upgrades. These upgrades can be specific to certain units (new appliances, hardwood flooring, etc.) or amenity spaces (dog park, gym equipment, etc.). Regardless, the property will require renovation over time to meet evolving tenant expectations.

 

Maintaining a safe property

Finally, the safety of the apartment is a serious concern for tenants. If they feel unsafe, they’ll consider moving. So, managers must take action to secure the property through upgrades, maintenance, or repairs. When a property has security problems, it poses legal concerns from tenants and puts investors’ assets at risk.

With this in mind, property managers must protect real estate from internal and external threats. As a result, they’ll reduce operating costs through fewer repairs while making tenants feel more comfortable with the safety measures in place.