the regular oversight of commercial, industrial, and residential real estate by a contractor who is a third party.
How Property Management Works
The oversight of a property on behalf of the property owners is known as property management. Property managers are hired by property owners to handle and manage the property's daily tasks on their behalf. Property managers can be hired to manage a variety of properties, including homes, commercial buildings, apartments, and many others. Often the property managers prefer to hand over the daily operations of the property to another company for various projects. However, the property managers continue to hold the property title. Some of the real estate agents can also act as property managers since they can also provide services that involve property management. Following are the key responsibilities of a property manager:
- Collecting rent
- Ensuring the budget for the property maintenance is set up and has been adhered to
- Screening any potential tenant
- Renewing, signing and drafting leases for the property
- Arranging for repairs
- Marketing the property
- Making preparations for tenants to move into the property
- Evicting tenants in the case that they break their lease
There are reasons why property owners hire property managers to overlook their property. Some of the property owners have multiple properties that need management. Others might own the properties, but they do not have the know-how to deal with the tenants and maintain their properties. Also, there are others whose main goal is to only earn profit from the property. In addition, the property managers can be paid in one of two ways by the property owners; they can either be paid with a percentage of the rent generated by the property or with a certain fee agreed upon.
Hiring a property management company can also work for absentee landlords. These are mainly landlords who rent out their property since they won’t be around; they might be absent because they own another property, or they are consistently out of the area or country. On the other hand, there are also property owners who are members of programs for affordable housing. These property owners hire property managers since their property needs to follow federal guidelines. The federal guidelines are often so complex that they require quite specialized expertise.
Example of Property Management
Kevin owns a number of properties under his name (both residential and complex houses). However, Kevin does not have either the expertise or the time to take care of the property.
Fortunately, Kevin does not need to worry since there are property management companies that he can hire. The property managers will keep track of the tenants living in the property and manage/maintain the property. All the responsibilities for the property fall to the property managers.
After Kevin has hired the property managers, they start overseeing all the aspects related to the property. Now all the tenants will be making payments to the property managers, and the company will address all the other issues related to the property like the screening of the tenants, overseeing repairs, etc.