Property management is the overseeing of residential, commercial and/or industrial real estate, including apartments, detached houses, condominium units, and shopping centers. It typically involves the managing of property that is owned by another party or entity. The property manager acts on behalf of the owner to preserve the value of the property while generating income.
Breaking Down Property Management
In property management, some 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 also lists, shows, and leases vacation rentals. Property managers help owners create budgets, advertise rental properties, qualify tenants, collect rent, comply with local landlord-tenant and real estate board laws, and maintain properties. Preventive maintenance, interior, and exterior cleaning, and construction all fall within the scope of a property management company's responsibilities. Owners pay property managers a fee or a percentage of the rent generated by a property while under management.
Reasons for Hiring Property Management Firms
Property owners hire property management firms for various reasons. Some owners may have many rental properties in their portfolios but lack the time or expertise to maintain the properties and deal with 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.
Property owners who participate in affordable housing programs sometimes make use of property management services. This is because participating in such programs requires knowledge of federal guidelines that some owners do not have, even though they wish to reap the benefits of affordable housing programs.
Property Management Credentials
Property management licensing requirements vary among the states. Most states require property management companies to be licensed by the local real estate board. 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. States such as Delaware, Florida, and Illinois require property management companies that provide on-site management services to condominium communities to hold community management licenses.