Property Management Business
Statistics show that the owner does not occupy a large number of single family homes across the United States. The average unit owned by investors is less than five and all tenancies are managed by the owner or increasingly by property managers. As a group, property managers oversee billions of dollars worth of assets.
Property Management Businesses offer a variety of services depending on the type of property managed.
- 1) Property managers lease and operate residential, commercial, industrial or retail outlets.
2) Property management software simplifies day to day management and bookkeeping. Their software helps in accounting, expense management,vacancies and income tax.
3) Property management personnel help you to navigate the complex laws and regulations of real estate, in essence they help you to comply with landlord/tenant laws.
The property management business is a regulated business requiring a real estate license in many states. Initially an offshoot of real estate, it is now a career option in its own right, offering challenging business opportunities and lucrative growth.
Property managers are usually engaged in any one of these three fields:
- 1) Residential Managers: These managers operate single family homes, residential tenancies, duplexes, townhouses, apartment complexes and mobile home parks. They perform the duties of the landlord often acting as a conduit between the tenants and the landlord.
2) Commercial Property Managers: These managers oversee the management of commercial income generating properties like office and retail space, shopping complexes, malls, industrial facilities and even storage and garage spaces.
3) Community Association Managers: These managers operate and manage common property such as condominiums, co-operatives, and planned communities either through the owners or the community association.
4) Asset Property Manager: These managers take care of the financial status of the property, prepare financial statements, maintain records and report to the owner on the financial ability of the property, vacancies, occupancy rates, leases and matters concerning the law.
Secondary jobs in the property management field are:
- 5) Support Specialist: These individuals who provide support services in the office of a professional property manager. These individuals do not require a license.
6) Affiliate Personnel: These individuals serve or supply the property manager.
Property managers are either onsite or offsite managers. Onsite managers handle the daily affairs of property such as an office building, residential apartment, shopping centers or a community association. Their duties include rent collection, resolving tenant issues, advertise vacancies, meet prospective tenants, inspect the property regularly, determine whether repairs are required and generally see to the upkeep of the property.
They also enforce terms of the lease, deal with problem tenants, prepare up to date records and expense reports and submit the same to the asset manager. Offsite managers do not handle the daily issues of a property. They act as a liaison between onsite managers and owners.
Since the property managers deal in income generating properties, they are required to be knowledgeable of market conditions and required legislation in order to enhance income from the property they manage.
To be a successful property manager you require:
- 1) Education
3) Good documentation
Requirements to become a Property Manager
- 1) A college bachelor's degree in Business Administration, Finance, Real Estate or Public Administration gives you the edge in the job market.
2) Industry groups and trade associations offer basic and advanced courses in apartment management. Continuing education in these courses improve your management skills, you gain knowledge about current legislation and regulations pertaining to real estate, learn about building maintenance and mechanical systems, insurance and risk management, personnel management, common association risks and drawbacks, tenant rights and relations, accounting, bookkeeping and financial concepts. This course of study combined with on the job experience, good scores in an written examination leads to certification from an accredited educational association.
The following associations award a certification in the Property Management field.
- a) The National Apartment Association
b) The Community Association Institute
c) Institute of Real Estate Management
d) The Building Owners and Management Association.
e) National Association of Residential Property Managers
Some certifications awarded by the trade associations are
- a) Certified Property Manager (CPM)
b) Accredited Residential Manager (ARM)
c) Accredited Commercial Manager (ACM)
d) Accredited Management Organization (AMO)
These certifications qualify a property manager as a competent and professional property manager. Apart from certifications property managers follow a strict code of ethics which governs their professional behavior. This code of ethics protects the public, promotes healthy competition and contemporary business practices.
It lays down strict rules about avoiding commingling of funds, fidelity bond for employees who handle money and avoiding misuse of finances from a client's fund. Violation of the code of ethics results in a letter of censure, suspension from the trade association or termination of manager status. This type of censure is published in trade journals. Additional requirements for property managers are good communication skills, computer and financial skills and a pleasing personality.
Many property managers hire fresh graduates to work as onsite managers. As they work and gain experience in overseeing a tenancy, they learn to prepare financial statements, bookkeeping and a working knowledge or rules and laws governing property. They then move to assistant property manager positions and later to property managers handling various properties. Salaried property managers earn nearly $34,880 per year.
The range of earnings spreads from $26,470 to $56,000 for property managers depending on the type of property handled. Salaries are accompanied by fringe benefits such as a reduced rent apartment for onsite managers, reimbursement for travel undertaken for management work and a small percentage of ownership of any development they are responsible for.
As the number of investors in real estate increase, the owners have little time to devote to the rented property and even less knowledge of tenancy laws they are more than happy to hand over the task of daily management of the tenancy to professional property managers. For a given fee the hassles of landlordship are taken over by a property management business.
As David Glump, a real estate investor in rentals says 'As a real estate investor, I want the benefit of residual income without having to live through a trial by fire education in tenant management. My property managers take excellent care of my property, are prompt to answer my calls and provide interactive and timely feedback. I am seriously thinking of purchasing additional property based on my positive experience with my property managers."