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Property Management: Overview & Role

Instructor: Racquel Fulton
A professional or a business that deal with the day to day responsibility of real estate is called a property manager. In this lesson, we will explore the role of a property manager in real estate.

What is a Property Manager

When real estate is neglected it is susceptible to damage and loss. To maintain homes and businesses, owners of real estate hire property managers. In this lesson, we will explore the role of property managers in real estate.

A property manager is a professional or a company that oversees the daily responsibilities of a property. Managers work on behalf of owners of investment properties. An investment is anything someone owns that provides them with income or has the potential to be sold for more than they paid for it. It is the role of the property manager to maintain and grow the owners investment.

Type of Properties

Because there are so many different types of properties, many property managers specialize in managing residential or commercial real estate. Residential real estate is classified as property created for people to live in, including:

  • Single family homes
  • Mobile homes
  • Multi family homes (ie, duplex or triplex)

Commercial real estate is classified as property created for people to work in, such as a business. Commercial properties include but are not limited to the following:

  • Offices
  • Storefronts
  • Parking lots
  • Shopping malls
  • Storage facilities
  • Apartment buildings

Property managers may specialize in the management of a specific type of residential or commercial property. For example, Live Here Property Management specializes in commercial real estate but only provides management for apartment buildings.

Duties of a Property Manager

The responsibilities of a property manager are outlined in an agreement with the property's owner. The most common services are making sure that a property is well maintained, in compliance with the law, and that income and expenses are managed. A typical agreement may including the following services.

Compliance

The property manager must make certain that the property is in compliance with zoning regulations and fire safety standards. Compliance include:

  • Conducting inspections
  • Obtaining rental licenses
  • Paying insurance premiums
  • Meeting building code regulations

Maintenance

The physical structure of properties, the land surrounding it and the supplies utilized to perform maintenance must be properly cared for to prevent the property from deterioration and financial loss. A property manager may oversee the following types of maintenance:

  • Lawn care
  • Renovations
  • Snow removal
  • Carpet cleaning
  • Window cleaning
  • Securing the premises
  • Chimney / duct cleaning
  • Indoor and outdoor lighting
  • Appliance upgrades and installations
  • Emergency repairs and replacements

Financial

A property manager is responsible for making sure that a property is performing well financially. To do so, they may provide the following services:

  • Collecting rents
  • Filing evictions
  • Managing escrow accounts

Property managers may also show properties to prospective tenants. A tenant is an individual or a business that has a lawful right to occupy a property for a specified period of time. The property manager will negotiate and secure leases on behalf of the owner. A lease is a legal document that creates a relationship between the owner and the tenant. The lease outlines terms and conditions.

When property managers perform this service they are acting as an agent on behalf of the owner. Therefore, many states require property managers to have a real estate salespersons or brokers license. Licensed salespersons and brokers are required to adhere to the laws of agency, which requires them to act honestly on behalf of their clients.

Working As a Property Manager

Most property managers work for property management companies. The companies put systems in place so that several properties can be managed at one time and for all the responsibilities to be handled as a team. Companies customarily get paid for their services using the four basic revenue models.

Here are four examples.

Percentage of Rent

Nearby Real Estate Agency is a residential real estate agency specializing in leasing single-family and vacation homes. They retain a percentage of the rent that they collect. For example: They manage a property that rents for $1,000 per month and they retain 10% out of each rent payment as compensation for their services.

Annual Rent Totals = $12,000

Nearby Real Estate Agency Fee = - 10%

Total Revenue for services = $1200

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