Property Management 101

The idea of property management (sometimes referred to as 3^rd party management) has been around since the dawn of time. But, before property management was a job or career, a title or a company, property management has been an action that many people attended to around the land or buildings that they owned themselves or leased from someone else. Property management can mean different things to different people. For some, property management might mean keeping their own property safe, secure and pleasant to the eye. For others, property management could mean paying someone else to make sure your property is in tip top shape. Some types of properties that may need property management are; houses, condos, duplexes, town homes, apartments, shopping centers, malls, offices buildings, airports and public transportation buildings, hospitals and many more. Property management is very similar to the role of management in any business.

One important role that property management has is to act as the middle person between the tenant and the property management landlord. Property management should provide the property management landlord with a sense of security, knowing that everyday needs from the renter can be resolved without involving said property management landlord unnecessarily. Hand and hand with that security, the tenant can be assured that the property will be maintained to some set of standards which can be reviewed with the property management team before an agreement is reached. Property management is a delicate balance between pleasing the property management landlord and keeping the renter happy as well. The task of property management can prove to be harder than it sounds. Maintaining an open line of communication in property management and being able to address the needs of both property management parties will make a successful property management business. Other duties for property management but are not limited to; collecting rent, posting and showing  vacancies, maintenance issues, evictions, failure to pay rent issues, harassment, and background checks on the application forms. It is very important that a profitable property management staff or team be knowledgeable in the current laws of the city, state and county concerning tenant rights vs. landlord rights. Be sure your property management team is up to date on current property management codes, and other items that will benefit your property management business. Getting caught up in property management legal matters is no way to run a property management business.

 The following is the definition of property managers/property management as posted by Wikipedia on their website. Property management is a person or firm responsible for the operation of a real estate property for a fee, when the owner of the property cannot or is not interested in managing the property themselves. The property manager or the property management company has a primary responsibility to the landlord and a secondary responsibility to the tenant. Relationships the property manager or property management team have with the landlord and with the tenant are crucial in forming the expectations of both parties to the lease since both parties will seek and expect certain rights and benefits out of it. Owner’s expectations from the property manager/ property management team are to carry out the owner’s instructions, control costs and maximize revenue to maintain a stabilized cash flow as a return on capital invested, exercise control over the building to safeguard the capital invested, provide a duty of care through proper maintenance of the building, to be professional and well informed, enhance the value of the property by making improvements that will increase its market value, retain and enhance pride of ownership. The tenant’s expectations from the property manager/ property management team are the “quiet enjoyment” –assurance of the use and enjoyment of the premises for the intended purposes without interference from the landlord, comfort—a living environment properly heated, cooled and ventilated with as many amenities as possible compatible with the rental level, security and safety—to live or work in a building in which there are no inherent defects or conditions that might be hazardous to health or to property, status—accommodation and facilities that meet social-economic and cultural standards for the tenant’s and their guest.

Property management can be a very lucrative business when handled correctly. Property management takes an organized, well communicated, and dedicated individual or staff to be able to pull off a successful property management company. Typically property management companies will charge their landlords a percentage of the gross rent collected each month. This percentage for property management fees can range from 3 to 10% depending on the property management market. Sometimes a flat fee is more appropriate when the property is a condominium or a type of cooperative complex for property management. Some states might require that property managers have a property management license or a real estate license to be able to claim the title of property manager or property management business.    

A cousin to property management is facility management. Facility management is like property management but the focus is the management of buildings and services. One definition from a large facility/property management association says, “A profession that encompasses multiple disciplines to ensure functionality of the built environment by integrating people, place, process and technology.” Australians prefer the term: Commercial Services to property management, this term replaces facilities management in some organizations. Besides keeping the property up to date, commercial services can also include duties such as waste disposal, parking, security, landscaping and more.

A homeowner may provide his or her own property management, but property management is not limited to the duties of house cleaning, lawn care and landscaping, building maintenance, trash and waste disposal and interior upkeep. Property management can be all of these, and can be hired out to a professional that can provide better property management services than the homeowner can or would provide themselves. These property management services come with a price and if the homeowner is willing to pay for outside property management, the sky is the limit on what they can have managed. Some property management companies even manage home owners associations (HOAs). In this instance the property management company is the middle person between the homeowners and the land developer. Once the developer has completed his contracted tasks, the neighborhood is then turned over to the HOA. The property management company may stay on board for a fee to help the HOA. A landlord may also provide property management services himself or have it hired out to a property management company. A large company or corporation might have internal structures in place to provide property management on site or they may choose to hire an outside property management company to provide the property management services that they would need on a day to day basis. Both of these operations are a reasonable and effective way to tackle the issue of property management on a large scale.

With the world of technology growing everyday, it makes perfect sense to have applicable property management software and property management computer systems that deal with property management in place to help with property management or facility management. You can have your home wired and programmed to turn the lights on and off when entering a room. Constant temperature and humidity levels can be monitored along with major appliance functions. Watering of lawns and security systems has become high tech and available to the everyday homeowner who wants property management. Some passenger vehicles now include a “remote” that when programmed can turn the lights on, turn the TV on your favorite station and more, all from the comforts of your car. Heaven forbid you will have to walk into your dark and quite home. Home builders, architects and engineers saw the potential for using large scale property management ideas in the home. Beyond the home, large commercial properties, computer aided facility management (CAFM) has been a natural progression of the marriage between technology and facility/ property management. In the late 1980’s CAFM evolved to allow larger properties to manage their property management sites more efficiently. Most often, CAFM systems track and maintain; floor plans, LAN and telecom information, business continuity and safety information, workplace assets, employee and occupancy data, building and property information and space characteristics and usage. Being able to supervise the goings on of your with a property management company in an efficient and well structured way will help your property management bottom line.

If you need information about property management, the internet is a great place to start. You will find loads of property management web sites with topics such as property management, property management careers, property management executives, property management classes, tips on property management, property management blogs, property management jobs, property management books, property management chat rooms, property management bulletin boards, property management seminars, and property management software and property management courses. Many property management sites will offer some free property management advice and tips on property management for maintaining your property. Property management blogs are a popular way for anyone with access to the internet to read and learn about property management from different property management sources. Property management companies will post property management blogs about stories, tips, and advice in the property management blog for all to read. The internet will also allow you to make comparisons about the property management information presented. This allows you to make the best decision on your property management needs.  

In the self storage world, property management is very important. The site must have accurate, complete and thorough property management systems in place to be thriving and competitive in this property management market. Once a property management site has been established, convenience for the property management customer is the number one reason people tend to rent from your site and should a property management priority. Property management for self storage would include some things like; outside structure upkeep (buildings, roofs, doors, security gates, fences, lighting, security cameras), inside unit monitoring (compliance to the lease on what is allowed to be stored), rodent and bug control, general preservation of the grounds, constant repairs, tenant issues, lock issues, trash and waste disposal, collection of rent, running the office, showing the property to future tenants and more. Many self storage property managers or property management staff also live on site for added property management security. The property is their backyard and they are able to keep an eye out 24/7. Having someone on site full time is great if you ever need property management emergency repairs. The less time spent tracking people down will save you money. This also helps with customer relations. Knowing your property management customers habits on site will help you to provide the best customer service possible. There is a recently published property management article about a self storage / property management owner that contacted the police department about having a police substation on the property. This not only provided an extra level of security for the property, it didn’t cost the police department any additional money. The police were allowed 24 hour access and had a small office set up that they could eat or do paperwork at. It was a win-win situation for both parties. Property management software and property management computer systems play a huge part in up to date property management. There are tons of computers and software property management systems that can be purchased to help with property management, such as; available units, accounts receiving, accounts payable, online payments, real time reservations, rentals, customer payments, security, door alarms, cameras, tenant screening, truck rentals, insurance, property management upkeep reminders, and more.

In any business, and property management is no exception there are always some property management clients who can’t seem to pay their property management bill on time.  The self storage / property management business is no different.  However, if you don’t pay your storage bill/property management bill, your items may end up being auctioned off to offset the money you owe the storage facility/property management company in rent.  While auctioning off someone’s storage unit is not fun for any property management staff, it does serve a purpose.  It allows the storage company/property management company to recover any lost rent from the property management tenant.  If after items are auctioned and all monies owed are paid, there might be extra money left over.  Many storage companies/ property management companies then send the money to the state where it is held for the past property management tenant to pick it up. The storage company/property management company only wants the money owed to them.

When’s the last time you did any updating of your self storage / property management business? What do your roads and roofs look like? Do your windows need cleaned in the office? Do you have security as good as your competitor or better? What does your curb appeal say about your business? Do you have a restroom for customers? When was the last time it was cleaned? Try putting some plants in the office for color they add a great mood to an otherwise sterile area. Watch technology and listen to what your property management customers are saying about your property management business. Put comment cards out to get feedback from your property management clients.

Many property management people are also able to provide for your company current conversation rates for property management occupancy, lead follow up and lead generation. These items are the basics in keeping your property full and obtaining the maximum amount of profit for your property management business. Lead follow up is of the most importance in keeping your rental capacity at the highest level. Property management leads should be followed until they are dead. Don’t assume the potential customer doesn’t want a follow up call. Many property management customers will see this as a friendly gesture and it keeps your property management companies name in their mind. It is been researched that most callers will call up to 4-5 companies before deciding on who to go with. Some property management companies will offer a referral bonus to a current tenant in an effort to get more renters by word of mouth. A small incentive passed along to your current property management tenants will cost you less than regular property management advertising any day. This is also a great way to obtain feedback from your current property management customers. If you don’t see a lot of referrals coming in something could be wrong with your property management.

Does your property or property management offer something that you can’t deliver? Be careful of your property management advertising and signage that might lead your customers or future customers to think you have something that you really don’t. I am not talking about being sold out of something; I am talking about providing great customer service to your property management customers. Are you letting property management business walk out the door? Are you letting your property management customers down? If you are on the phone with a property management business call and a property manager customer walks in, acknowledge them and they should wait patiently until you can help them with their property management needs. But, don’t forget to acknowledge them.  

We have all had our good days and bad in property management, but even on the bad days you should be able to provide great customer service to your property management customers. It’s your property management job. If you make your property management job into a stressful and undesirable situation then you will project negativity. Customer service is just that, a service that you are providing for the property management customer. You should be able to provide property management well, and it will insure that you still have a property management company to work for.

What are you doing in your day to day property management business to expedite your property management customer’s needs? Start the day with a plan of attack, and allow time for those unexpected property management moments that a customer might need you. Think of every property management item that you get accomplished that much closer to the end of the work day and great customer service. Property management is not just standing behind a counter or answering the phone, it takes people skills, common sense and a great attitude.

How would you or your current property management team respond to these property management situations?

Here are some property management ideas that could work; of course there could be other property management ideas:

Property management tenants who can’t pay their rent or pay a partial amount- refer to lease agreement on correct procedures for your property management.

Property management who die? Hopefully a family member can contact you, do you have an emergency contact person on the property management lease?

Property management who abandon their lease or property? Landlords have rights too! Go through the proper procedures to try and recover lost revenue.

Property management who divorce? This can be tricky, again who actually signed the lease?

Property management for disabled customers? You must be able to provide certain items for the ADA. Check with you local government.

Being knowledgeable and flexible and having patience will take you far in the property management business.

How does the property management owner oversee his property management staff or personnel? One way is property management monitoring. Different companies can monitor your property management staff if you feel the need. Again this is a situation where the property management owner can monitor or pay someone else to monitor the property management staff. Along the way there must be safeguards for the property management company. Allowed to “run free” the property management staff can lose their focus, once the focus is lost, who know what might happen. If the property management staff is in house, the property management owner falls directly responsible. If the property management team is an outside firm, they will have to answer to their own property management bosses.

I interviewed a flourishing property management person. They manage a large self storage site for a nationally known storage company.

I asked them to tell me what their biggest challenge was in property management?

            Keeping up with all the changes in the computer system is the biggest challenge in property management. We are constantly trying to improve our property management systems by using property management software that allows up to manage the property and maintain a consistent manner on which is time saving and efficient. There are many, many property management software programs out there, be sure to address your property management needs and pick the program that best suits your property management business.

How many hours do you spend each day on property management?

            The hours you put in a day vary each day with property management. Between over locks on the units, at least one or two times a week and lock checks before and after work and sometimes late in the evening after the gate is locked. Units are sometimes found empty and they will need to be cleaned before the next tenant can move in. So, it’s hard to say how many hours but it is a lot of work to be in property management.

Then I asked them for the time they have been involved in property management, what were some of the changes they have experienced in property management?

            Going from property management notes and property management records or a previous way, to having virtually everything on the computer can be time consuming to learn. The computer will remind us of property management leads that need to be called and followed up on, who owes money, property management vacancies and the current tenant list to name a few. It seems as soon as we learn a new property management program or way of doing things, along comes a “faster, better” way to run the property management business.

I asked if they would share a funny story about property management.

            One of my property management customers took my golf cart and hid it from me as a joke. My property management customers are all special and love to joke around. But that one stands out, so now I keep the key in the office and not in the cart. It makes the day go quicker with a little laughter now and then.

I asked them to list 3 key items in property management.

1.      Cleanliness- the property must be kept up. I patrol the site often and have a bucket and broom on the golf cart for any necessary clean ups that will need to be done. A customer will look at how clean the property is and will comment if they notice a problem with your property management.

2.      Personality-you have to love your property management job. Being positive and knowledgeable about my property management business makes it run smoother. People know and remember me for my wittiness, helpfulness, and my great property management customer service. I am a team player and want my property to succeed.

3.      First appearance and a smile-when someone walks into my property management office, I do whatever I can to make a great first impression. Even if I have talked to someone on the phone, I still need to present myself in a manner that is going to be remembered in a good way. I try and smile at my property management customers and when I am on the phone I smile because I know I have to make a good impression over the phone also.

Another property management interview conducted was with a real estate/property management and investments person who has experience in the property management field. Here is what they said about property management;

What is the biggest challenge in the property management field?

            The biggest challenge in the property management industry for us is keeping the units filled. There is such saturation in the rental market right now (local and nationwide) because of the steady building and with the housing market being very affordable with low interest rates and accessibility. The other thing that is challenging in the property management field is that you have to be able to answer your phone and follow up on leads as soon as you can. There is sometimes such a quick turnover in the rental/buying market that if you are not on top of your property management game it will pass your property management business by. It sometimes feels like you are always on your phone, juggling viewings, setting appointment and giving out property management information.

Then I asked them for the time they have been involved in property management, what were some of the changes they have experienced in property management?

            While there seem to be plenty of customers to keep our property management business busy, the rental market can sometimes be too large. Lately our property management business has seen an over abundance of rental units and when you don’t know the landlord, price cutting among rental properties on the same street can hurt the business. Try to know your landlords and stay in communication with them, it will help your property management business.

I asked them mention a key item in property management.

            The biggest factor in property management to me is the communication the landlord and the tenant. Being able to be the middle person in property management is sometimes a difficult task in the effort to please both property management parties. I would also say that being available to customers is key element in property management. Not all property management businesses are available after 5pm. I have found that by extending my property management schedule, I can make showing appointment in the early evening when it is convenient for my clients.

And last to share a funny story about property management………

            Our property management business recently had a tenant 'stop' a water leak with a piece of tape. So that did not last and  she completely flooded our rental and we just had to file an insurance claim on it for approximately $4,000 that she of course has no money to pay our property management deductible!!!

Here’s my funny story about managing people;

Do you find it hard to discipline your employees or property management staff? Do you have a property management employee handbook or some other property management document that outlines the dos and don’ts of how your employees should conduct themselves? Even if your property management business only has one employee it is best for you if you have some kind plan figured out before hand. Don’t wait for a property management employee to do something wrong to have a discipline plan. This could result in the employee “getting away” with something or the discipline not being appropriate to the wrongness.

One time when I was managing my parent’s restaurant, we had a particular group of servers that were constantly tardy. Besides being tardy, they were an awesome group of workers and we did not want to get rid of them. I repeatedly warned them each time they were late, but it did not help, alas they would be late on their next scheduled shift. Finally, I was fed up and wanted to remedy the situation, but I did not want to fire anyone for being tardy. I decided I would make a special hat, and whenever someone was late, they had to wear the “hat” as punishment. So, off to the craft store I went. I finally created a fuchsia cowboy hat with stuffed chickens and Styrofoam eggs and yellow feathers to decorate it. It was great.

After announcing to the servers that, whenever anyone was late they would have to wear the chicken hat the rest of their shift as punishment, things got interesting. A few days passed and not one person was late, it was working. Then one afternoon as the clocked ticked by, someone was late. I put the chicken hat on the server area of the bar and waited. The server finally arrived and saw the hat on the bar. Nothing else was said, but the tears started. Just a few as they walked around in the glorious hot pink hat. After about 20 minutes, we told them to take it off. That server was never late again. Now it sits retired behind the bar. Previous employees will come by to say hello, see the chicken hat and laugh.

Property management can entail so much, but every aspect is an integral part of a correctly run property management business. Whether it is a property management business of one or a property management business one hundred; communication (written and verbal), organization, flexibility, time management and the ability to delegate authority will make your property management business a success. Remember to be a fair property management liaison between the tenant the landlord.