What Does A Property Manager Do?
A property manager is responsible for handling almost every aspect of a rental property. This involves looking for new tenants, making sure that the tenants are satisfied with the property, and that the rent is paid on time. A property manager sort of works as a middle man between the client and the property owner with the aim of meeting both their needs.
One of the most important decisions a landlord has to make is if they should hire a property management company or not. This is because a lot of property owners manage their properties by themselves without the assistance of a property manager. However, in some instances, property owners find themselves in situations where they require the help of a property manager.
Hiring a property manager is a sensible decision for owners with various properties or in circumstances where the property owner lives far from their properties. It’s very important for the property owner to understand what sort of property manager they are looking for. This decision is influenced largely by the nature of the property they own.
Residential Vs Commercial Property Management
There are different uses for different properties and so the target market for property occupancy will differ. It could either be a commercial type of real estate or residential, and hence different types of property managers.
Understanding Residential Property Management
Residential property management entails exactly what the name refers to. It involves managing properties intended for people to take up residency. It’s a housing real estate property in which tenant groups can occupy. They could be apartments or family houses in a gated community.
Residential Property Manager Job Description
It’s the job of a residential property manager to make sure that all properties have been occupied with tenants by conducting advertising and preparing on-site property visits for potential tenants who want to view the property.
Foster positive relations with the residing tenants through creating reasonable rental contracts, enforcing the terms of the contracts if need be, assisting the tenants in matters relating to the residential experience, and resolving any disputes that may arise.
The residential property manager should be able to report to the property owner in a timely manner.
-Keep all records pertaining to the property such as financial records, tenant profile records, and any other records from the operations of the property.
-Inspect the property to make sure operations are running smoothly, to oversee maintenance and repairs required, especially in emergency situations.
-The property manager should be well-versed in the relevant state and federal laws involving residential properties.
Understanding Commercial Property Management
A commercial property manager’s work involves overseeing the maintenance and tenancy of commercial properties such as shopping malls and business plazas. Commercial property managers usually oversee a good number of commercial properties depending on the size of these properties. They are the go-to guys for commercial property owners who need someone to take care of the important aspects of managing a commercial property such as accounting, preparing the financial report of the property, planning an annual budget, among many more tasks outlined below.
Commercial Property Manager Job Description
-Attend to and supervise any ongoing repairs or property structure alterations.
-Establish and implement a regular maintenance schedule for all property equipment and systems.
-Make sure that the rent and any other miscellaneous charges such as service or garbage collection charges are paid and on time too.
-Make sure that all expenses charged on the property such as water and electric power bills are paid in full and on time.
-Market the commercial property to make sure that it is fully occupied at all times.
-Acquire, verify, and pay property taxes to the state.
-Create a status report detailing certain aspects of the property such as tenant profile data, bank statements, and current income from rent.
The Differences Between A Commercial And A Residential Property Manager
There exists a myriad of differences between commercial and residential property managers. Ideally, new property managers begin their careers as residential property managers because of the difference in complexity between the two aspects of property management. Here is a breakdown of everything that sets the two apart.
As far as commercial property goes, tenants are required to pay a certain amount if not all of the charges that involve real estate ownership. These charges are the rent, maintenance fee, insurance, and property tax. They are what is commonly referred to in the market as ‘NNN’ or ‘three nets’. For residential properties, tenants pay their rent, water, and electric power bills, but they do not have to pay for insurance or property tax. The costs associated with maintenance will fall on either the property owner or tenant depending on the tenancy agreement.
Leasing and Renting
Getting tenants on both commercial and residential property may seem similar because there are contracts, property space, and clients willing to occupy the property. However, the two are not the same.
Rental agreements on residential property are easy to work with. They are easily renewable and span a short duration. Commercial leases, on the other hand, are more complex as compared to rent on residential property. They involve a much longer time, the extension options are very difficult, and rent is reviewed every year with rental costs increased after a certain amount of time. Commercial lease contracts are also harder to go around because they have a lot of termination clauses.
There are various commercial leasing options that commercial property managers offer prospective clients. A good property management company can assist with this. For example, a percentage lease is a type of commercial lease that is common in malls and shopping centers. This option requires the tenant to pay the base rent as well as a percentage of their sales volume. Gross lease is another option that involves the property owner collecting all the money from the rent and paying for any expenses accrued from the rent collection. However, gross lease contracts tend to have a lot of clauses that might heighten the rental fee to cover any increase in taxes or property insurance for the property owner.
On-Site Property Management Protocol
Having an on-site property manager to oversee ongoing activities such as maintenance and repair is absolutely necessary for both residential and commercial property owners. While the situation for residential property is a bit more relaxed in that maintenance vendors are not required to be on-site all the time, it’s completely different for commercial property owners and tenants. In shopping malls or large business office plazas, having an on-site manager to deal with any issue that may arise is of high importance. In some states in the US, the necessity of having an on-site manager for such properties is stated by law.
How Much Do Property Managers Charge
A good property manager will offer their services at a certain price. The amount they will charge depends on certain facts such as the size of the property. Managing a property large in size is a lot more tedious than a small property. The type of property also has a big say in the cost charged by the property manager. The property could be family homes or shopping malls. Property managers will also charge differently depending on where the property is located. If it is in a place that will command high rent rates, then they will naturally charge more. The nature of the services requested of them will also play a big role. If you just want someone to do the rent collection the property manager will not charge as much as if you want them to handle repairs, manage the property, and collect the rent.
How Much Does Property Management Cost (The Breakdown)
A lot of property management companies or individuals will charge a monthly a monthly fee. There is also and additional charge referred to as an initial setup fee. This cost is usually around $450 or even less and involves the company doing property management site visits. However, not all companies do this. Then there is a monthly management fee. This charge is synonymous with all property managers. Some will charge a fixed amount of money such as maybe $150 every month while others will charge a percentage of the rent income. This could be as low as 5% or as high as 12%. For instance, property management fees for apartment buildings where the rent is $2500 per unit will mean a company charging 5% will make $250 from every unit.
Some property managers will charge a fee for finding tenants. This can be a fixed charge (1 months rent) or a commission as a percentage of the rent the tenant will pay.
Hiring a property manager can either work out very well or very bad for you. Make sure that the company or individual you hire has a property management certificate. It is also advisable to use a company that has incorporated the use of modern property management software in its operations. The software should be able to provide data on tenants and status reports on finances and planned maintenance. Do online research or look for recommendations from partners in the real estate industry to get the best property manager for you.