Property managers play a crucial role in managing and maintaining properties for owners and landlords. In this article, we will explore the key roles and responsibilities of property management in the context of the US real estate market.

Management Functions

Property management involves a variety of roles and responsibilities aimed at ensuring that a property is maintained and operated effectively. These features include:

Types of Managers

In property management, there are several types of managers, each with their own responsibilities and approaches:

• Individual Manager (Individual Manager): This type of manager works independently and may manage properties for multiple owners. They are responsible for a variety of tasks, from finding tenants to maintenance and financial management.
• Building Manager (Building Manager): Building managers are employed to manage a single property, such as an apartment complex or office building. Their focus is on ensuring that particular building runs smoothly.
• Resident Manager (Resident Manager): Resident managers live on the property they manage and often receive free accommodation as part of their compensation. They are responsible for daily management and attention to the needs of tenants.

Additionally, some managers may specialize in a specific type of property, such as single-family homes, apartments, commercial properties, or industrial properties. Regardless of the type, a property manager acts as a fiduciary on behalf of the owner and has the responsibility of managing the property efficiently and profitably.

Reporting

Effective reporting is a critical part of property management. Managers must provide regular reports to owners on the condition and performance of the property. These reports can be monthly, quarterly or annual and include:

• Annual Operating Budget: This report details projected income and expenses for the property in the coming year. Includes information on rental rates, capital expenditures, contingency reserves, salaries and wages, and more. The operating budget is an important tool for planning and controlling property finances.
• Cash Flow Reports: These reports show how cash flows in and out of the property over a specific period. They help owners understand the liquidity of their investment.
• Profit and Loss Statements: These reports summarize actual income and expenses for a given period. They allow you to evaluate the financial performance of the property compared to the budget.
• Budget Comparison Statements: These statements compare actual data to budgeted data, allowing owners to identify deviations and take corrective action if necessary.

Accurate and timely reporting is essential for property owners to make informed decisions about their property investments.

Budgeting

Managing a budget is a crucial part of property management. Managers must establish and maintain an operating budget that includes a variety of items, such as:

• Rental Rates: Determining appropriate rental rates is critical to maximizing property income. This involves understanding the local market and setting competitive rates.
• Capital Expenditures: Capital expenditures refer to investments in the property, such as major renovations or long-term repairs. The budget must include funds for these needs.
• Reserves (Reserves): Reserves are funds that are set aside for unforeseen or future expenses, such as major repairs. Having adequate reserves is essential to avoid unexpected financial problems.
• Salaries and Wages: If the property has staff, the budget should include labor costs, such as salaries and benefits.

A solid operating budget is a critical tool for effective financial management of a property. It helps owners and managers plan and control expenses, optimize revenue, and ensure long-term profitability.

Rental

Property management involves ensuring that units are occupied and tenants are satisfied. Some of the key responsibilities in this area include:

• Keep the Property Rented and Inhabited: It is the manager's responsibility to ensure units are rented and occupied. This involves actively promoting the property, selecting suitable tenants and managing leases.
• Select Compatible Tenants: Choosing compatible tenants is essential to avoid problems in the future. Managers should conduct a thorough background check and assess the suitability of candidates.
• Legal Issues Compliance: Property managers must comply with all laws and regulations related to leasing properties, including equal housing opportunity laws, the Americans with Disabilities Act, and the Fair Credit Opportunity Act ( Equal Credit Opportunity Act, ECOA).

Effective rental management is essential to maintaining property income and ensuring tenant satisfaction.

Property Maintenance

Proper property maintenance is essential to protect the investment and ensure tenant satisfaction. This includes:

• Balance of Costs of Services (Balance Costs of Services): Managers must ensure that maintenance services are efficient and cost-effective. This involves balancing utility costs with the landlord's financial goals and the needs of tenants.
• Routine, Preventive or Corrective Maintenance (Routine, Preventive, or Corrective): Property maintenance falls into three main categories. Routine maintenance involves daily tasks, such as cleaning and basic maintenance. Preventive maintenance refers to performing regular inspections and repairs to prevent major problems. Corrective maintenance involves addressing existing problems.
• Internal or Contracted Personnel (Staffed In-House or Contracted Out): Managers must decide whether to maintain an in-house maintenance staff or outsource maintenance services. This depends on the property and the owner's strategy.

Keeping the property in good condition is essential to protecting its value and ensuring tenants are satisfied and safe in their homes.

Construction

In some cases, construction or renovations may be required on a property. This may include:

• Tenant Alterations: If tenants wish to make modifications to their units, such as renovations or upgrades, managers must ensure they are done in accordance with applicable building code and regulations.
• Renovations (Renovations): Major property renovations, such as updating systems or modernizing common areas, may be necessary to maintain or increase the value of the property.
• Expansion (Expansion): If a property is to be expanded, such as adding new units or spaces, managers must coordinate and oversee these expansions efficiently.
• Environmental Remediation: In the event of environmental problems, such as the presence of toxic substances, managers must take steps to remedy the situation and comply with all regulations, including the Americans with Disabilities Act.

Construction and renovations can be complex areas of property management, and managers must ensure that all activities comply with applicable regulations and standards.

The Management Agreement

The management agreement is a fundamental document that establishes the terms and conditions of the relationship between the owner and the property manager. This agreement includes several important components:

Components

• Names: The agreement should clearly identify the parties involved, i.e. the owner and the property manager.
• Description (Description): It should include a detailed description of the property or properties to be managed, including its location and key features.
• Contract Term (Lease Term): The agreement should specify the duration of the management contract, including details about how and when it can be terminated.
• Owner's Purpose: This component establishes the owner's objectives and expectations regarding the management of the property.
• Responsibilities: The agreement should detail the property manager's specific responsibilities, including the tasks and services he or she will be expected to perform.
• Authority: You should clarify the scope of the manager's authority to make decisions on behalf of the owner.
• Budget (Budget): The agreement should include information on developing and maintaining the property's operating budget.
• Allocation of Costs: It is important to specify how costs related to property management, including manager fees, will be allocated.
• Presentation of Reports (Reporting): The frequency and format of reports that the manager will provide to the owner should be established.
• Compensation (Compensation): The agreement should address the property manager's compensation, including fees and payment methods.
• Equal Opportunity Statement: This component may include a statement ensuring that all equal housing opportunity laws will be followed.

Rights, Duties and Liabilities

The management agreement should also address the rights, duties and responsibilities of both the property owner and the property manager. These may include:

From the Landlord:

• Receive rent payment from tenants.
• Receive the property in the specified conditions.
• Have the right to enter and inspect the property.
• Examine financial books and records.
• Hire and pay service providers.
• Pay the management fee.
• Comply with all applicable laws and regulations.

From the Property Manager (Manager):

• Hire and fire necessary personnel.
• Enter into contracts on behalf of the owner.
• Perform management tasks without interference.
• Maintain accurate financial records and provide reports.
• The manager may have fiduciary responsibility for the funds held in trust.
• Comply with all applicable laws and regulations.

The management agreement establishes the foundation for a successful relationship between the owner and property manager by clearly outlining their roles, responsibilities, and expectations.

Leasing Considerations

The leasing process is a fundamental part of property management. It involves both landlords and tenants and involves a number of key considerations.

Landlord Rights and Responsibilities

Landlords have certain rights and responsibilities when it comes to renting property. Some of the most notable ones include:

Rights:

• Enter the property with adequate notice.
• Receive rent payment in a timely manner.
• Recover the property at the end of the lease.
• Seek legal remedies in case of non-compliance by the tenant.

Responsibilities:

• Provide habitable conditions on the property.
• Maintain essential systems, such as heating, cooling, electrical and plumbing.
• Keep the property clean and in good repair.

Landlords must also comply with all applicable rental laws and regulations in their area.

Tenant Rights and Responsibilities

Tenants also have important rights and responsibilities in a lease. These may include:

Rights:

• Enjoy a quiet and peaceful occupation of the property.
• Reside in a habitable and safe property.
• Take legal action in case of non-compliance by the owner.

Responsibilities:

• Pay rent according to the terms of the contract.
• Comply with the rules and regulations established in the lease agreement.
• Provide adequate notice before moving.
• Return the property in the conditions specified at the end of the lease.

It is essential that both landlords and tenants understand and comply with their rights and responsibilities to ensure a harmonious relationship during the tenancy.

Evictions

Evictions are a legal process that occurs when a tenant must vacate a property. They can occur in two main ways:

Actual Eviction: This is the standard legal process in which the tenant is notified and a legal procedure is followed to evict them. It includes giving notice to the tenant, filing a lawsuit, obtaining a judgment, and, if necessary, enforcement of the judgment.

Constructive Eviction: In a constructive eviction, the tenant abandons the property due to lack of maintenance or poor living conditions. The owner does not need to follow a formal legal process, but may be subject to lawsuits for breach of contract.

Evictions are sensitive legal procedures and must be carried out in accordance with applicable laws and regulations. Property managers must understand these processes and ensure all legal guidelines are followed.

Termination of a Lease Contract (Termination of a Lease)

A lease can be terminated in several ways, and it is important that both the landlord and the tenant are informed about these options. Some of the most common ways to terminate a lease include:

• Expiration: The lease comes to an end in accordance with the specified terms and is not automatically renewed.
• Compliance (Performance): The contract is considered terminated once both parties have complied with all terms and conditions.
• Agreement (Agreement): The landlord and tenant can mutually agree to end the lease before the scheduled expiration date.
• Abandonment: The contract is considered terminated if the tenant leaves the property before the expiration date with no intention of returning.
• Breach: If either party fails to comply with the terms of the contract, it may result in termination of the contract.
• Notice: Both the landlord and the tenant can give notice based on the terms of the lease or state and local laws.
• Destruction of Property (Destruction of Premises): If the property is destroyed or seriously damaged, the lease may be terminated.
• Expropriation (Condemnation): If the property is subject to government expropriation, the lease can be terminated.
• Mortgage Foreclosure (Foreclosure): If the property is foreclosed upon, this may result in termination of the lease.

It is essential that both the owner and the tenant understand the conditions under which a lease can be terminated and how to proceed in each case.

Security Deposit Procedures

The security deposit is an essential part of many lease agreements. This deposit is used to cover any damage to the property or the tenant's failure to comply with the terms of the contract. The procedures related to the security deposit are determined by law, rules and the lease agreement.

Some key points about security deposit procedures include:

• Determined by Law, Rules, and Agreement: The amount of the security deposit and the rules for its retention and return are determined by state and local law, as well as the landlord's specific rules and the lease.
• Inspection and Documentation: Prior to move-in, a detailed inspection of the property should be performed to document any existing damage. This documentation is then compared to the condition of the property at the tenant's move-in.
• Retention and Return: If damage or non-compliance is found, the owner may retain part or all of the security deposit to cover costs. Otherwise, the deposit must be returned to the tenant in accordance with the deadlines and processes established by law.

Security deposit procedures are designed to protect both the landlord and tenant and ensure fair resolution in the event of disputes.

In summary, property management in the United States involves a number of key roles and responsibilities, from financial management to tenant management and dispute resolution. Property managers must have a thorough understanding of local laws and regulations, as well as industry best practices, to ensure success in managing properties effectively and efficiently.