Property Management 101
The following article on property management was submitted to us for publication. It covers the basics of property management. The links shown are to exclusive resources for our Real Estate Investor Bronze Members. Considering upgrading today to access all our training materials.
Say the words “property management” to a group of people, and one can get as many ideas as there are letters in the words. There are many misconceptions about the position of Property Manager, whether it be for a small residential property or a large commercial property worth millions. And,the Property Manager can be an individual, real estate broker, or a large company which speciliazes in Property Management. The position does require much more than just a warm body sitting in an office, and occasionally meeting with tenants or prospective tenants.
Property management can be summed up as assuming the responsibility of another’s property. Of course, the actual agreement between the owner(s) and the manager/management company would spell out the fine details of the arrangement but it typically includes the basic areas sale/maintaining tenancy, recordkeeping/financial stewardship, overseeing the physical plant and real estate which can include maintenance, curb appeal, security issues and more. This can include smaller apartment communities, mobile home parks,and commercial properties. Although not usually included in the list of traditional Property Management, general managers in the hospitality industry and managers of storage facilities also deal with some of the same concerns.
In an overview of each category, there will be obvious similiarities and some things unique to the category. Staffing is one similiarity, or rather the ranges of staffing can be similiar. It can be a one-man office, or a fully-staffed company including the top manager with a staff of office/leasing, maintenance, housekeeping, groundskeeping, and possibly security. Or, it can be anything in between the two. Licensing can vary from state to state, as can regulations regarding evictions, leases and such. Anyone interested in becoming involved in Property Management should take the time to do thorough research for state and local regulations, and licensing requirements including those required for any staff members.
For residential and commercial managers alike, maintaining tenancy levels is important. This can be accomplished in two ways- sales and stability of current tenants. While great sales techniques are beneficial, anyone in this business should have a pleasant personality and actually like working with people. Don’t bring prospective tenants in to have them driven right back out by a bad first impression in the office. Correspondingly, curb appeal is of the utmost importance. Something as simple as planting flowers or sweeping a sidewalk and washing windows can make a difference for those important first impressions. A clean office can do wonders as well. One word of caution: a great smelling office is also good, but an overpowering fragance can affect those with allergies or asthma. Use common sense in this. Sometimes just CLEAN is more than enough.
Financial responsibility and integrity is another similarity of all forms of Property Management. Maintaining a steady income, and if possible growing that income is the ideal. In shaky economic times, that can be more challenging and may require more creative approaches. Going hand-in-hand with the finances is record-keeping. There are all types of software available, some just for the financial records and others which combine the financial and tenants records. Different owners may require different reports and the software can be a great tool for both owners and managers. Maintenance is perhaps one of the most important similarities of all management positions. Preventative maintenance protects the owners’ assets as well as makes the tenants more satisfied. Emergency maintenance should be done promptly. It is important to know and follow any state and local codes for inspections and operations of the physical plant.
You can also get more information about Property Management including an extensive collection of free property management forms for our Real Estate Investor Bronze Members.
Until my next post,
James
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