One of the fastest growing facets in real estate practice, property management, is often spoken about but not as commonly understood. This sector of real estate includes the leasing, management, marketing, and overall maintenance of real estate typically owned by other individuals. A majority of these properties are rentals and as such mortgage lenders require investors to hire a professional to manage their investment properties.
The ebb and flow relationship, along with the boom in investment real estate, makes for a productive trajectory for both sides. Property management is often seen as a simpler task than traditional buy/sell real estate but in truth, property managers are required to wear many hats.
The purpose and focus of a property manager must be directed towards achieving goals of the owners, generation of income, and the preservation and/or increase in property value. Typical day-to-day responsibilities can include: collection of rent, hiring and supervision of employees, maintenance, budgeting and controlling of expenses, keeping accurate accounts, and producing periodic reports for the property owners.
Clients that may be in need of a property manager aren’t limited to apartments or investment rentals. Other business models that require these specialized skill sets include: corporate owners, industrial parks, homeowners associations, shopping centers, trusts, and office buildings in addition to these commonly known clients. With the increasing specialization in property management new opportunities are coming available within the field. New positions such as concierge services, leasing agents, asset management, and the management of housing for senior communities are becoming more familiar.
Interestingly, most metro areas have local associations of property managers that are affiliates of regional and national associations to fulfill education requirements as well as providing support and experience. Property managers are faced with making many more decisions on the owner’s behalf than a real estate agent would make for their buyer or seller. Upon entering into an agreement, the property manager is charged with handling the property in the same way the owner would.
Property management begins with the manager preparing a management plan detailing the owner’s desires and objectives in combination with what they expect to achieve and how that will be financially realized. In the creation of this form the property manager utilizes 3 factors: owner’s objectives, regional/neighborhood market, and the specific property.
Financial reports are sent at agreed upon intervals and an operating budget is established annually to provide the owner a projection of earnings and performance. A monthly cash flow statement details the financial status, showing a current financial snapshot.
The property manager is simultaneously responsible for setting rental rates and may or may not use a leasing agent to help with filling the property. In order to come to a figure for rental amounts the manager must take into account vacancy rates, investment return, comparable rates, and operating expenses. The marketing, advertising, and management activities for public relations are also responsibilities of the property manager.
The property manager is additionally charged with balancing the preventative, routine, and repair maintenance efficiently while conducting all other operations. Depending on the size of the property, expenses and availability, they must also choose to use contracted labor or hire on-site employees.
In addition to all these tasks the property manager is also required to be familiar with ADA (Americans with Disabilities Act), FHA (Fair Housing Act), and ECOA (Equal Credit Opportunity Act) , and environmental guidelines in order to keep the properties within legal constraints. If
that isn’t enough to keep you busy there is risk management. Both security of tenants and types of insurance are vital to this critical portion of property management. Many insurances offer multiperil policies for apartment buildings allowing for a package of coverage that includes both standard and specialty coverage.
Do you have what it takes to be a master multi-tasker?