Defining property management in a single sentence is impossible. Instead, to get a sense of the job as a whole, it’s best to examine the different types of property management. Before becoming a property manager or hiring a management company, familiarize yourself with the different niches of property management.
In this post, we define the role of a property manager, including specific responsibilities. Then, we compare and contrast the four primary types of property management. Finally, we discuss who needs a property manager and why.
This post covers:
What is property management?
Most property owners own more than one building or estate. As a result, they need help to run their properties. So, many owners opt to hire a property manager to oversee the day-to-day operations of their property.
But what exactly is property management? While property management services vary based on the property type, the impact of hiring a property manager is generally the same.
Property management is the oversight of property functions at all types of properties handled by a third-party contractor. When you hire a property manager, you hand over most of the hands-on management responsibilities. As a result, your tenants will have a more robust relationship with your property, maintenance issues will be caught early on, and the property will maintain positive cash flow with enforced on-time rent payments.
Pro tip: The standard fee for hiring a property manager is 5% to 10% of the revenue generated through rent.
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What are the different roles and responsibilities of property managers?
The responsibilities of property managers differ between all types of property management.
However, the primary duties of property managers include:
- Collecting rent and handling late rent payments.
- Scheduling and organizing property maintenance and repairs.
- Screening prospective tenants.
- Hiring and managing property staff.
- Drafting and signing leases and lease renewals for the property owner.
- Creating and adhering to budgets — as agreed upon with the property owner.
- Marketing the property’s vacant units.
- Coordinating and completing property inspections.
- Communicating with tenants on behalf of the owner and handling resident complaints.
- Serving as a face of the property — especially to contractors and prospective tenants.
- Handle lease agreements, including deciding if short-term leases are appropriate.
The 4 types of property management
Since properties come in a variety of sizes and classifications, there are a few different types of property management to address each unique property’s needs.
First, let’s take a look at the types of properties in each property management category:
Single-family rental homes.
Vacation rentals and timeshares.
Retail properties, such as stores and restaurants.
Office spaces, including large businesses and single-unit offices.
Coworking spaces rented out by individual workers.
Public accommodations, including hotels.
Light manufacturing factories for paper and plastic making.
Heavy manufacturing factories that work in steelmaking and carmaking.
Theaters, including movie theaters and live theaters.
Schools and university campuses.
Churches, temples, and other places of worship.
Senior living communities.
Now, let’s dissect the difference between the four primary types of property management:
- Residential property management
- Commercial property management
- Industrial property management
- Special purpose property management
1. Residential property management
Residential property managers typically oversee rental properties. This type of property manager handles tenants living in a space.
Residential rental properties don’t just include apartments, however. The definition also extends to single-family homes, condos, vacation homes, and gated communities.
2. Commercial property management
Commercial property managers oversee many kinds of non-residential properties. Typically, commercial property management concerns business owners who need a rental space to work out of.
While large offices and single-unit offices make up most commercial spaces, coworking spaces, hotels, and retail properties also count as commercial properties.
So, commercial property managers spend the majority of their time dealing with tenants who rent spaces long-term. However, they also interact with monthly renters in coworking spaces and even customers in retail spaces.
3. Industrial property management
Industrial property management is unique as it requires you to adhere to strict building regulations and codes. Because most industrial complexes deal with production and manufacturing, you must comply with local laws to guarantee a large return on your investment.
In fact, if just one part of production is tampered with, thousands or even millions of dollars worth of product can be destroyed in a matter of minutes.
4. Special purpose property management
Special purpose properties are just like they sound — they’re properties that need management but don’t fit perfectly into one of the above categories!
By definition, a special purpose property can’t be easily converted for other uses. So, most special purpose properties cannot be marketed or used for any purpose other than the one it was originally intended for.
For example, a football stadium can’t easily be transformed into apartments, senior housing complexes can’t straightforwardly be renovated into offices, and converting university campuses into shopping centers isn’t feasible.
Who needs a property manager?
Figure out if you need a property manager with one simple question:
Do you own multiple properties or rental units?
If the answer is yes, then you need a property manager!
In fact, the more rental units you have, the more you’ll benefit from hiring a property management company. Depending on the type of property you own, you have many types of property management companies to choose from.
While it’s enticing to save money by handling all property management duties yourself, it’s often necessary to hire a third-party property manager.
You may consider hiring a property manager if:
- You don’t live near your rental property.
- Hands-on management isn’t for you.
- You don’t have time to properly manage your property.
- You own a large number of rental properties.
- The cost of hiring a manager is within your budget.
- Property owners hire property managers to oversee the daily operations of their properties.
- There are four primary types of property management: residential, commercial, industrial, and special purpose property management.
- The roles of property managers differ for each type of property. However, the main duties include hiring and managing property staff, collecting rent, marketing vacant units, and screening potential tenants.
- If you own or handle several properties or rental units, you need a property manager.