Breaking Down Property Management
In property management, some real estate brokers also operate as
property managers. For example, a broker in a resort town may
provide buyer and seller agent services, as well as property
management services. When this is the case, the real estate broker
also lists, shows, and leases vacation rentals. Property managers
help owners create budgets, advertise rental properties, qualify
tenants, collect rent, comply with local landlord-tenant and real
estate board laws, and maintain properties. Preventive maintenance,
interior, and exterior cleaning, and construction all fall within
the scope of a property management company's responsibilities.
Owners pay property managers a fee or a percentage of the rent
generated by a property while under management.
Reasons for Hiring Property Management Firms
Property owners hire property management firms for various reasons.
Some owners may have many rental properties in their portfolios but
lack the time or expertise to maintain the properties and deal with
tenants. Some owners only have an interest in owning rental
properties and earning profits from them. When this is the case,
they hire professional property managers. Absentee landlords also
make use of property management services.
Property owners who participate in affordable housing programs sometimes make use of property management services. This is because participating in such programs requires knowledge of federal guidelines that some owners do not have, even though they wish to reap the benefits of affordable housing programs.
Property Management Credentials
Property management licensing requirements vary among the states.
Most states require property management companies to be licensed by
the local real estate board. Holding a real estate broker's license
allows property managers to list rental properties in the multiple
listing service (MLS) and to market the properties by standard real
estate marketing methods. Holding a real estate broker's license
also allows the property management company to place a real estate
board lockbox on a property's door so that other licensed agents
can show the property. States such as Delaware, Florida, and
Illinois require property management companies that provide on-site
management services to condominium communities to hold community
management licenses.
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