According to a recent Buildium survey, more property managers are looking to increase their portfolios in the next two years than any year since 2017. With property management firms scrambling to expand and connect with owners, how can you know who to trust to manage your property?
Today’s article will define the four types of property management available for property owners and the five types of property managers you can hire. Be sure to read to the end—there are some red flags you should also look out for and avoid at all costs.
Any space owned by one individual or group and occupied by another is a candidate for property management. Property management firms generally specialize in the type of property management they offer. Some firms may offer more than one type of service, depending on their size, expertise, and capacity.
A residential property manager oversees properties rented for private, personal use. They’re responsible for handling the day-to-day issues of tenants living there. This property manager may manage multifamily apartments, single-family homes, vacation rentals and timeshares, townhomes, condominium complexes, or even a gated community.
A commercial property manager works with retail properties, such as stores or restaurants. They may also manage office spaces, co-working spaces, public accommodations, and hotels. Commercial property management is appropriate for commercial areas, where tenants spend some of their time but not where anyone lives.
An industrial property manager works with spaces that supply commercial properties. This could be distribution facilities, retail warehouses, or manufacturing factories. These spaces don’t host customers and aren’t often open to the public.
Finally, a special service property manager is the catch-all term for anything not mentioned above. Places like theaters, schools, places of worship, or senior living communities all fall within the realm of a particular service property management company.
Once you’ve determined which type of property management best suits your needs, it’s time to search for the perfect property manager. In our experience, there are typically five types of property managers. Be warned; the first two types are often best to be avoided. But seriously consider the others on this list according to your property management needs.
This type of property manager is one part friend, one part business associate. It’s someone you already know who has at least some experience with managing properties but isn’t necessarily a professional property manager.
Property owners working with this type of property manager are usually in some kind of informal partnership. There’s no contract per se. It’s more like calling in a favor to a friend.
Unfortunately, this generally means you’ve found an undependable property manager. You’re not a top priority, you aren’t paying much (or any) fees, and you fall to the bottom of their to-do list. All Property Management does not recommend this arrangement to solve your property management needs.
The side hustler is an enthusiastic go-getter. You’ll often find a side hustler within another type of company, but the company isn’t necessarily a property management company. It may be another real estate or investment firm with a small management department. The side-hustling employee, looking to make a name for themselves, may have even launched the property management department.
This property manager typically manages the properties their firm wants to purchase. Their priority isn’t managing the property but rather keeping it on the back burner for the day you (the owner) finally decide to sell. They are not involved in the day-to-day workings of a property and don’t offer hands-on service.
The one-man–or woman–band is a highly motivated, meticulous, hands-on property manager. They’re working as a team of one or just getting their business off the ground to scale one day soon. Qualified and experienced, this property manager may have recently left a more prominent firm to cherry-pick their clients and offer more robust and personalized attention to everyone they serve.
This type of manager can be brilliant but may have higher pricing. However, the heftier price tag may be worth it for customizable services and creative solutions to save money and improve your property’s worth.
A downside of this type of property manager is that they can be inclined to bite off more than they can chew. You may want to ask for a complete client list to ensure that managing your property will be a top priority. Plus, they’re only one person. What happens if they travel or get sick?
Go with a one-person band if you:
The small-to-medium portfolio property management company is generally locally or regionally focused. They provide hands-on service with one point of contact (property manager) who handles your property personally, but they’ve got an admin team to back them up and people to carry the torch if they get sick or need to take a few personal days.
With good organization, these property managers are more proactive than the one-person band, offering consistent communication and accountability to you and your property. Plus, most mid-sized property management companies still provide customizable services to meet your needs while bringing greater efficiency, cost-saving creativity, and vendor relationships that result in excellently maintained properties.
This type of management company handles 100 to 500+ properties, while individual managers (and their admin teams) tend to manage portfolios of 100 to 200 homes. Plus, if they manage residential properties, they’re usually an active member of NARPM, a national organization of residential property managers, to consistently hone their skills and stay up to date on laws and other relevant practices.
Go with a small-to-medium property management company if you:
Most national brands, averaging 500 to 1000+ properties, fall into this category. Large or departmental property management companies can offer lower pricing for their services as they use their size to increase efficiency.
However, higher efficiency results in lower flexibility. Property management companies of this size have rigid systems that coordinate different departments and groups of people handling distinct property management elements.
Unlike a smaller firm, larger companies will have several property managers who handle many management aspects. While this works well with routine needs and can be one of your most cost-effective options, property owners should understand that managers in this situation can’t spare much individual attention for each property.
This can lead to solving problems reactively, missed opportunities to save money, and a lack of creative problem-solving. Of course, the very best property management companies will be able to provide you with personalized service, regardless of their size. The real danger to be aware of with this type of property manager is your property could become just another box for the machine to tick.
Go with a large property management company if you: