In the world of managing rental properties, property management companies deliver services to property owners depending on their preferences. From full service management, to partial service management, property management companies can provide full oversight of a property’s operations or only limited components. Below we take a deep look at the full picture of property management services.
What are Property Management Services?
Property management services are all of the duties executed by property managers to successfully operate a rental property without involving the owner.
List of 12 Most Common Property Management Services
The vast scope of services offered in property management requires property managers to wear many hats. While some duties vary by property type (e.g. Single Family Rental Homes vs Commercial Hospitality Properties) there are many duties that are common among all property managers. Below is a list of some of the most common services offered by property management companies:
1. Tenant Relations
Dealing with a tenant can be an enjoyable experience when they are paying you thousands of dollars in rent every month. Conversely, dealing with that same tenant when they are calling you at 2AM on a Sunday morning to deal with an overflowing toilet is not such an enjoyable experience. Dealing with tenants (i.e. tenant relations) is one of the primary motivators for rental property investors to hire a property management company. Property management companies will take all calls from tenants and address their concerns. New innovations such as property management answering services have even arisen to address this pain point for rental property owners.
2. Rent Collection and Accounting
Rent is due on the first of every month. Collecting rent and keeping record of all deposits, is a never ending and fundamental service provided by property management firms. Pursuing late rent and applying late fees are other more tedious tasks tied to the rent collection process. A majority of larger property management companies are turning to real estate software solutions for rent collection and tenant account management. Many of these programs allow for tenants to pay online via ACH, view account charges (such as RUBS or late fees), and monitor their ledgers to track account balances.
3. Leasing and Marketing
Often one of the strongest value propositions of a property management company is their leasing and marketing capabilities. Since vacant units are a drain on a property’s cash flow, minimizing vacancies with qualified tenants as quickly as possible is a very important role in the overall rental property process. Property management companies often utilize comprehensive marketing programs that include listing the vacancy online on a website such as Apartments.com, Loopnet, or other online vacancy listing websites, as well as hosting open houses and property tours, and installing prominent leasing signage to catch drive-by prospects.
3. Interview Tenants & Check Credit Profiles
Along with the aforementioned marketing efforts, property managers or leasing agents will handle application processing, ordering credit reports and checking references, and ultimately facilitating a signed lease agreement. Checking prospective tenant’s creditworthiness is often done with third party tenant screening softwares.
4. Financial Reporting & Budgeting
Keeping record of income and expenses (i.e. receivables and payables), and generating ongoing financial reports such as Profit and Loss reports (i.e. P&L) for property owners are cornerstone services provided by management firms. Property management companies also deliver value by performing financial planning such as creating budgets to ensure that properties remain adequately maintained and profitable. Part of this planning requires performing market rent analyses, which are analyses of comparable market rents, changes in area demographics, and anticipated vacancy rates.
5. Maintenance Requests
Maintenance issues are an unavoidable part of rental property management. Property management companies field all maintenance requests directly from tenants and then coordinate repairs with respective property maintenance technicians. Furthermore, property managers monitor maintenance cost reporting and plan for preventative maintenance as needed; among also overseeing contracted work such as building improvements jobs.
6. Vacancy Unit-Turning
In addition to handling maintenance jobs, management companies can also handle “unit turnovers” which becomes a more frequent occurrence as the number of units grows larger. As the name implies, “unit turning” is the process of taking a recently vacated rental property unit and preparing it for the next tenant. The process can be as simple as applying a fresh coat of paint to the unit, or require a full remodel.
7. Third-Party Vendor Management
Rental properties employ third-party vendors for countless types of services – landscaping, window washing, plumbing repairs, etc. Keeping track of these vendors is surprisingly a demanding job. Each vendor should always be hired based on a contract, whereas the terms need to be negotiated before work is performed. Performing the service then needs to be coordinated with tenants, with the goal to minimize tenant disruption. Lastly, upon successful performance of the service, the vendor needs to be paid.
8. Oversee Property Improvement Projects
Well maintained properties are easy to command higher rents and retain quality tenants. In order to maintain these properties, improvements must be a regular part of the operational plan. Projects usually require significant effort to start and see through completion. From first getting multiple competitive bids for the work and building materials, to ensuring minimal disruption to tenants while the job is ongoing, overseeing property improvement projects is a thorough and lengthy process.
9. Enforce Property Rules Among Tenants
From a noisy apartment tenant, to an incorrectly parked commercial office building tenant; property rules are often broken and need to be enforced. Property management companies are usually the first point of contact when issues arise and also the ones in charge of ensuring that the issue is resolved. Both property owners and tenants rely on property managers to be the settlor of tenant disputes.
10. Legal Proceedings
Unfortunately not all tenants are going to play by the rules. In the case of non-payment of rent, property management companies can assist with seeing through the often arduous eviction process (e.g. Posting the 3-Day Notice to Pay Rent or Quit). In the occasional event of a tenant abandoning a rental unit before the lease term expires, property management companies can assist with the legal filings to pursue any financial damages.
12. Compliance Tracking
Many years ago, owning and managing rental properties was as simple as putting a “For Rent” sign up outside and collecting some cash every month. Times have changed significantly and rental property owners are becoming increasingly subject to new rules to comply with. From local business licenses, to routine property fire & life safety system inspections of commercial properties, the responsibility to remain compliant is ultimately the property owner. However, skilled property management companies in your area should be familiar and helpful to comply with the nuanced local laws required for your rental property.
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Property Management Services FAQ
How do Property Management Companies Charge for Services?
Property management fees vary based on factors such as the type of property, location, size, and the range of services required. Some companies may include all services for one monthly payment, while others may bill each service separately.
Can a Property Management Company Help With Acquisitions and Sales?
Yes, a property management company can potentially help with property investment related services (if offered). Their experience can provide valuable insights on market trends and identify suitable properties based on the investor’s goals and criteria. Additionally, property managers can assist with due diligence, negotiation, and acquisition processes, leveraging their local expertise and industry connections. If they do not directly offer these services, they can typically recommend local professionals who can help.
Differences Between Commercial and Residential Property Management Services
Commercial and residential property management services both involve overseeing and maintaining properties on behalf of their owners, but they differ in the specific services they provide. The unique needs and requirements of each property type lead to differences in the services offered by residential and commercial property management companies.
|Property Management Services||Commercial Property Management||Residential Property Management|
|Leases||Typically longer term leases (3-10 years), triple net leases, etc.||Typically shorter term leases (6-12 months), gross leases, etc.|
|Tenant Screening||Focus on financial stability of the company, business reputation, industry, and use of the space.||Emphasis on individual personal financial profile including credit score and employment.|
|Maintenance and Repairs||Typically includes maintenance of common areas, exterior maintenance and specialized systems such as HVAC or elevators.||Primarily focuses on interior and exterior maintenance, and repairs within individual units.|
|Rent Collection and Financial Management||Common Area Maintenance (CAM) charges, annual rent escalations, and reconciliation of property expenses.||Monthly rent collection, late fees, and security deposit management.|
|Legal Compliance||Compliance with commercial zoning, building codes, ADA regulations, and environmental regulations.||Ongoing adherence to local, state, federal housing laws, landlord-tenant laws, and fair housing regulations.|
|Marketing and Advertising||Targeted marketing strategies for specific industries and/or business usually through a commercial real estate broker.||Focus on online residential rental listing platforms and physical signage on the property.|
|Tenant Relations and Retention||Building mutually prosperous relationships with business tenants and addressing specific commercial needs||Fostering positive relationships with tenants while maintaining property rules and responding to maintenance requests and property concerns|