As one of the best passive income sources, real estate and renting out properties are the best ways to make money. With the right prices and market conditions, you can build a small contingent of your properties, thereby significantly increasing your passive income. When you do so, you will have initiated the need for property management, which is crucial in managing rental properties that are supposed to bring in considerable income. Today, we’ll look at property management, and everything from its definition to its many particulars will be discussed and understood. Let’s get started by looking at what property management is.
What is property management?
Property management is a broad concept that involves several aspects of maintaining and promoting properties for rental purposes. These include the properties’ operations, control, oversight, and overall management to ensure optimal revenue generation. Since most landlords cannot manage several properties efficiently, the best course of action is to have a professional manage the properties for you.
To summarise, being aware of and actively working to manage several revenue-generating properties is what property management is at its core. Now, we’ll look at what property management entails or what the responsibilities of a property manager are.
What does a property manager do?
In the case of a property manager, the responsibilities are very hands-on and endless to a certain extent. However, broadly categorizing, the property manager is expected to do the following:
Maintenance of properties
The first and foremost responsibility of a property manager is the maintenance of the rental properties; whether routine maintenance or looking into resolving some newfound problems, all of these fall within the scope of maintenance. Since the property manager is responsible for maintenance, he or she will be the primary point of contact for the tenants, and any issues they might have with certain aspects of the building will need to be addressed by the property manager.
The second most important responsibility of a property manager is collecting rent. This ensures that this otherwise arduous process is dealt with easily and without involving additional personnel. To ease the collection process, many property managers utilize newer and digital technologies to ensure that tenants pay up on time and that a complete track record of payments and any dues is kept and maintained for bookkeeping purposes.
A rental process involves leases that are legally binding agreements between the landlord and the tenant. This document governs the relationship between a landlord and the tenant and details the terms accepted by both parties, including rent amount, increases to rent, and any other relevant details. The property manager is responsible for drafting, executing, and renewing every tenant’s lease to ensure that the process of leasing properties goes as smoothly as possible.
Gauging potential tenants
In the case of a singular property, most of the time, the task of gauging an applicant and deciding on their eligibility to rent a property falls on the landlord. However, with multiple properties that may accommodate several tenants, this process can become too hectic for the landlord, which is why this is part of the responsibilities of a property manager. They are supposed to conduct background checks on potential tenants and gauge their risk factors when one applies for a rental property.
Managing the financial aspects
Everything from budgeting to planning out the financial details of the repair works is also part of the property manager’s responsibilities. A financial expert on such matters might help them. Still, the property manager will decide on the decision-making, including earmarking budgets for improvements/ repairs and tax matters. It’s only logical that the property manager deals with the financial aspects of the properties since they are the ones collecting the rent and dealing with all the repair work.
Ensuring compliance with local and state laws
The relationship between a landlord and a tenant is further governed by many laws and regulations enforced by state and local governments and, in some cases, the federal government. It is the property manager’s responsibility to be aware of and stay up to date with the local and state laws and ensure that the properties under their management comply with local and state requirements.
Marketing unrented properties
One of the often overlooked responsibilities of a property manager is the marketing they have to do to attract new tenants. During the tenure of a property manager, the property will be rented out, and after the lease has ended, the tenant may or may not choose to renew it. In the latter case, the property manager will ensure that the property is marketed efficiently and effectively to ensure that the property is profitable and churns out rent.
Now, we’ll look at the types of property management.
Types of property management
Property management is often mistaken as limited only to residential units like high-rise apartments, condominiums, and other residential units designed for efficiency in real estate. However, property management goes beyond that. Let’s start with residential and progress on the other types of property management.
- Residential: The bread and butter of most property management professionals. In residential properties, property managers are expected to manage a wide variety of residential properties, including single residential units, apartments, condominiums, townhouses, and other establishments like vacation rentals and manufactured houses.
- Commercial: The commercial property management portfolio includes but is not limited to business ventures and private for-profit properties like hotels, malls, restaurants, clinics, and coworking spaces. The responsibilities of the property manager stay the same across both spectrums.
- Administrative roles in special-purpose properties: While the first two types are delineated entities, efficient administration is also required for properties that might not fall into either of these two categories. These include movie theatres, sports arenas, resorts, places of worship, and other institutions like schools, colleges or universities. Property managers must also manage these properties efficiently and ensure that all matters run smoothly.
The bottom line of property management
Property management entails concepts of maintaining and concerning oneself with the various aspects of commercial and residential properties, from ensuring that the needs, requirements, and complaints of the tenants are resolved to sorting out taxes and other various expenses of the overall business, a property manager might have their hands full of responsibilities, but that makes for a lucrative career option for detail-oriented and hardworking people. Property management is an incredibly lucrative career and can allow you to hone your management skills.
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