Property Management: Definition and Responsibilities

Property Management: Definition and Responsibilities

Property Management: Definition and Responsibilities – When a landowner owns a property but doesn’t have the time or experience to handle the business-related tasks involved, they have the option of hiring a property manager. Essentially, a property manager is the middle man between an owner and a renter that is responsible for various tasks including handling property upkeep. If you’re interested in this profession, you’ll need to know what property management entails and what responsibilities come with it.

In this article, we will define property management, a property management license and the various duties property managers face on a day-to-day basis.

What is property management?

Property management refers to the overseeing and management of various commercial and residential real estate properties. This includes taking care of all the daily operations for a property including collecting rent, handling maintenance, tenant complaints and more. The amount of responsibilities property managers have depends on their contract with the landlord.

For example, a landlord can hire a property management firm to help with one task such as collecting rent or they can stipulate that they want them to handle all business operations for their property in their entirety.

What is a property management license?

A property manager will typically need a property management license or real estate broker’s license to have a career in this profession. A property management license allows property managers to work in real estate and perform business-related duties in this profession. The specific licensing requirements will depend on the state in which you live and work. Not only will you likely require a license, but earning one will also give you credibility in your field.

A property management license can be obtained through state governments, local authorities or real estate boards. To obtain a property management license, you’ll need to be at least 18 years of age and have a high school diploma, however, more companies want property managers to have a bachelor’s degree in business, real estate or a related field.

What is a property management firm?

A property management firm is an office where property managers work. Property owners can hire a firm to maintain their properties when they don’t have the time, experience or capability to manage their properties themselves. There are several property management firms throughout the United States offering their real estate assistance.

Property management responsibilities

The number of responsibilities a property manager has is entirely dependent upon what’s stipulated in the contract between them and the landlord. Whereas some landlords may only want a property manager to collect rent, others may want a property manager to handle all aspects concerning their property. Here is a list of various property management responsibilities:

  1. Understanding landlord-tenant laws and regulations

  2. Handling maintenance requests and repairs

  3. Marketing properties

  4. Managing tenants

  5. Managing rent

  6. Supervising other employees

  7. Managing the budget

  8. Handling taxes

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Property Management: Definition and Responsibilities

1. Understanding landlord-tenant laws and regulations

To be a good property manager, you’ll have to have a deep knowledge of both state and national landlord-tenant laws. This involves understanding how to screen a tenant, evict a tenant, end a lease and more. The better you understand these regulations, the more fair and better property manager you’ll be.

2. Handling maintenance requests and repairs

One of the main jobs a property manager can have involves making sure the property is kept up. To ensure a habitable and safe environment, property managers must respond to maintenance requests and repairs in a timely manner. This involves handling water leaks, extermination, trash removal and more.

To perform these tasks, property managers can do it themselves or hire a third party such as a plumber or electrician to handle the matter. The better a property manager keeps up with proper maintenance and repairs, the happier the tenants will be and the more attractive the property will be to future tenants.

3. Marketing properties

One of the main reasons landlords hire property managers is to help them market their property for new tenants. This involves taking photographs of the property and listing the property on various mediums such as housing websites. The greater the marketing job, the greater the chances are that a property will get a lot of interest. If a property manager gets a lot of interest on a property, they can afford to be more selective when it comes to choosing the right tenant.

4. Managing tenants

Property managers are often tasked with managing various tenants. This involves finding the right tenant for a landlord’s property and screening these tenants through various background and credit checks to ensure they’ve selected the right candidate(s).

Also, property managers will probably be entrusted to handle all tenant leases. They’re also tasked with handling tenant emergencies, move-outs and evictions. When dealing with a move-out, a property manager will have to assess the property for damage. Depending on the condition of the property, the property manager can determine how much of the tenant’s deposit will be returned to them.

After a tenant moves out, they’ll need to ensure the unit is clean, handle any necessary repairs and start marketing the unit once again. In regards to an eviction, if a tenant violates the lease, the property manager is responsible for starting the eviction process.

5. Managing rent

Managing the rent is one of the main responsibilities of a property manager. This involves setting a rental rate for a property. To do so, the property manager needs to assess the property, its location and the current market. Once a tenant moves into the property, they’ll be tasked with collecting rent on the property on a certain day and through their chosen medium. A property manager can also change the rental rate so long as they abide by state or city laws.

6. Supervising other employees

If a property has other employees, such as a security guard, property managers are responsible for supervising them. This involves salary discussion as well as possible termination if applicable.

7. Managing the budget

Property managers may also be in charge of managing the property budget and other important records. This involves taking into consideration the property budget, organizing all tenant leases, complaints, repair costs and more.

8. Handling taxes

Lastly, landlords may need assistance from the property manager when filing taxes. In some cases, the property manager may file the property taxes themselves.

Property Management: Definition, Roles, Types, and Duties

Property Management: Definition, Roles, Types, and Duties

What Is Property Management?

Property Management: Definition, Roles, Types, and Duties – 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.

Their main roles are to manage routine tasks delegated to them by the owners and to preserve the value of the properties that they manage while generating income.

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.

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

The companies must comply with any state and local landlord-tenant laws and regulations.

Owners pay property managers a fee or a percentage of the rent generated by a property while it is under their management.

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. A huge range of property types can be managed.

Residential Property Management

Residential property managers are typically hired for rental properties, and they manage the rental process. They can be hired to manage:

  • Single-family homes
  • Vacation rentals
  • Multifamily homes
  • Town houses
  • Condominiums
  • Apartments
  • Manufactured homes
  • Real estate-owned (REO) properties

Commercial Property Management

Commercial property owners have different needs from those who own residential property. Commercial property management can apply to:

  • Public accommodations like hotels
  • Retail properties like malls, restaurants, and gas stations
  • Office properties like real estate brokerages or doctors’ offices
  • Co-working spaces where professionals rent work space by the day or the hour

Industrial Property Management

Industrial properties that can benefit from management include:

  • Heavy manufacturing facilities such as automotive plants and steel mills
  • Light manufacturing factories such as food packaging
  • Warehouses
  • Distribution facilities

Special-Purpose Property Management

There are also numerous types of property that don’t fit neatly into the categories above, but that require management nonetheless. These include:

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Property Management: Definition, Roles, Types, and Duties
  • Theaters
  • Sports arenas
  • Resorts
  • Senior care facilities
  • Schools and universities
  • Places of worship

Who Needs a Property Manager?

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

Landlords, for example, hire property management firms for a variety of reasons. Some may have multiple rental properties in their portfolios and lack the time or expertise to maintain the properties and deal with individual tenants. Some owners only have an interest in owning rental properties and earning profits from them. When this is the case, they hire professional property managers. Absentee landlords also make use of property management services. Some property management companies cater to individual landlords who rent out a single property such as a vacation home.

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. Certain real estate brokers also operate as property managers. For example, a broker in a resort town may provide buyer and seller agent services as well as property management services. When this is the case, the real estate broker lists, shows, leases, and maintains vacation rentals for a number of property owners.

Special Property Management Considerations

Property management licensing requirements vary by state.1 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.

For instance, property managers in Florida are required to have real estate broker’s licenses to operate in the state.2 That’s because some of their responsibilities are deemed real estate activity. Holding a real estate broker’s license allows property managers to list rental properties in the multiple listing service (MLS) and to market the properties by standard real estate marketing methods. Holding a real estate broker’s license also allows the property management company to place a real estate board lockbox on a property’s door so that other licensed agents can show the property.

Florida also requires property managers to hold a broker’s license if they deal with rentals or leases and receive a commission for their services. However, property managers who manage the properties that they own in the state don’t need a license to do so.2

Managers in Massachusetts don’t require a broker’s license.3 That’s because certain duties considered to be real estate activities, such as listing and leasing properties, may be secondary to the main duties performed by the property manager.

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, but most states require property management companies to be licensed by the local real estate board. Property owners should make sure that the firms they hire are properly licensed.

The Bottom Line

Property management is the oversight of real estate by a third party, normally a professional property manager or property management company. Property managers can manage many different types of property: residential, commercial, industrial, and property for special purposes.

Property managers are generally responsible for the day-to-day operations of the real estate, from screening tenants to arranging for repairs and maintenance, and are paid via a fee or a percentage of the rent generated by the property. Every state has its own laws regulating the activities of property managers, so it’s important for property owners to check that potential property managers are properly licensed for their state.