In 2023, the number of Millennial homeowners in the U.S. finally outnumbered renters. For a generation that’s faced numerous financial hurdles, the path to building wealth may finally look a little clearer.
But as homeowners know, the financial journey doesn’t stop once a home is purchased. Changing interest rates may mean you need to re-finance your mortgage. Or you have to hire a contractor to take care of much-needed renovations. You may want to transform the shed out back into an in-law suite, or the garage into a rental property.
With smart property management, all of these projects will not only become do-able, but will increase your wealth and quality of life for you and your family.
In this guide we’ll show you how to get started with property management, discuss the types of property management, and give you tips and best practices for getting started on your PM journey.
What is a property management system?
Property management is the job of managing the day-to-day operations of a residence, commercial building, or industrial property. When many homes, buildings, or lots are owned, the job is so big it must be outsourced to professional real estate and property management companies.
But in the case of smaller properties or individual homes, you can definitely manage property by yourself. All it takes is a well-oiled property management system.
A property management system is an organized set of tools and processes used to carry out the tasks of property management. A property management system never runs fully on autopilot, but it can automate recurring tasks and reminders, so you can worry about bigger problems than leaky toilets and sending entry instructions to vacationers.
Of course, a technology-enabled property management system can’t replace the human relationships that real estate runs on. But it can reduce headaches, increase efficiency, and give owners more time to grow their real estate investments.
The types of property management
There are three main property types: residential, commercial, and industrial. While we mainly serve residential property owners at Moatkeeper, it’s important to be aware of all the types of property management tasks in order to accurately assess your needs.
As a property manager, you need to know:
- What kind of services are required of each property type?
- What can you do on your own, and what can be outsourced?
- What are the risks involved?
- What legal and financial responsibilities do you have?
Let’s look at each type in more detail.
Residential property management deals with housing: from single family homes to townhomes and apartments. For large residential properties, such as city apartment blocks, or a condominium complex, a residential property management firm can take the weight off the owner’s shoulders by handling things like leases, property taxes, and maintenance requests.
Other tasks of residential property management include (but are not limited to):
- Preparing and signing rental agreements
- Interviews and background checks for new tenants
- Rent collection
- Managing move-in and out: home inspections, key handoffs
- Regular property maintenance: cleaning, repainting, smoke detectors
- Emergency maintenance: leaks, repairs, outages
- Auditing and tax preparation
- Compliance with state and federal property laws
- Bringing in new renters through marketing and ads
- Securing the property
- Outdoor maintenance, landscaping and groundskeeping
Commercial property management is concerned with locations where business transactions are done: office buildings, retail stores, hotels, restaurants, and doctor’s offices, and mixed-use buildings, among others.
Many commercial property management tasks overlap with that of residential property managers. However, there are some key differences, including:
- Managing complex leases: Commercial leases are longer, with more variable terms and conditions
- Availability: Commercial spaces require 24/7 presence of a property manager onsite.
- Compliance with safety laws, noise and light restrictions, and accessibility requirements
- Higher risks and liabilities: Vandalism, destruction, injury, and lawsuits are more common
- Negotiating with more stakeholders: commercial buildings house several competing interests, and conflicts are likely
- Façade maintenance: “Pride of use” is key to bringing in business. A good looking storefront helps.
- Maintenance of amenity and common spaces: Many commercial renters are drawn by amenities like gyms, pools, atriums, and conference rooms. These areas all have high upkeep required.
Industrial properties include factories, warehouses, and distribution facilities.
These spaces are relatively unadorned, with only a few tenants, making some aspects of property management simple. However, because of safety concerns and the high financial profiles of companies renting industrial buildings, firms that offer specialized property management services often take care of it.
Some special concerns for industrial property management include:
- Infrastructure: when it comes to warehouses and other industrial facilities, solid foundations, walls, and roofing are especially important
- Added security: While property managers are not responsible for damages, expensive equipment and inventory needs to be protected
- Special risks: these sites can be dangerous, and again, while worker injuries are generally not the concern of property managers, safety issues can contribute to costs
Now that it’s a bit clearer what property management entails, let’s look into ways to manage property effectively and efficiently.
Tools for property management
DIY property management has many moving parts, but it’s more than possible to do it all, especially for homeowners and/or rental home owners.
As we’ve mentioned, good property management makes your properties more profitable and gives you peace of mind by taking to-dos off your plate.
When speaking to nearly 200 current homeowners, we found that nobody had a system in place that handled the nuances of property ownership with competing maintenance schedules tied to seasonality and the age of systems and appliances.
Moreover, these DIY property managers used systems on the back of simple project management and documentation tools like Excel, Asana, and Google Docs. None of these tools are designed for property management, and none have data-driven approaches to building out a sustainable maintenance plan.
Better options are out there.
There are many specialized tools dedicated to specific aspects of property management. Others are feature-heavy, highly personalized software as a service (SaaS) tools that serve community managers and firms with large real estate investments.
Most of the relevant tools fall into one of the following categories:
- Leasing and tenant management
- Accounting and financial planning
- Marketing and communications
- All-in-one tools
Here are some of our favorite tools for managing your own properties.
Leasing and tenant management: Turbotenant
Turbotenant helps owners and landlords manage multiple property listings, leases, and rental income, all from one central location. It’s designed for smaller scale rental operations, and its simple dashboards are easy to learn. Plus, you can’t beat the pricing: its first tier is free.
Maintenance: Hippo Home Assist
Wouldn’t it be nice to have an on-call concierge that can address any and all maintenance problems in real-time, as they come up? Hippo Home Assist, a tool from the Hippo Home insurance team, can connect you with maintenance and repair professionals in minutes.
It will cost you, though: plans start at $149 per year.
Accounting and financial planning: Real Life
Real-life Planning counts its customers as, “Rental property investors, investors considering adding real estate to their portfolios, professionals considering a real estate side hustle, people with inherited rental property, homeowners maximizing opportunities for income, and married couples who want to make the most of their economic partnership.”
With a mix of real-life financial advisors and tools for managing cashflow, investments, and savings plans, Real Life is a great tool for DIY real estate investors. Its pricing is variable based on income and risk factors.
Proactive property management solution: Moatkeeper
No one tool can forsee the future of your home, but we at Moatkeeper certainly try. Our soon-to-be released software will be a complete and customizeable suite to help make residential property more profitable in the years to come.
Moatkeeper helps you to create a system to formalize your residential property maintenance, make it digestible, and handle it before major problems arise.
With Moatkeeper’s planning tools and process, property owners and homeowners can strategically execute their property maintenance. They have the ability to add their specific home systems and appliances and manually generate a maintenance plan for themselves.
They can also leverage ndustry data for over 120+ systems/appliances across thousands of manufacturers to align with the manufacturers' recommendations. This proactive approach to maintenance helps to extend the serviceable life of systems and appliances and, in turn, saves homeowners money. There are fewer emergency service calls in the middle of the night and more peace of mind.
We know real estate investors do not always have the time or the systems to proactively monitor their properties, and some lack the expertise to do it all on their own. With Moatkeeper’s property management stystem in place, owners can enjoy or stay in their properties longer, and continue to grow their wealth in the meantime.
Best practices for property owners
While tools can certainly help increase the value of your property, they can’t do everything a human can. Here are some best practices to keep in mind as you embark on your real estate journey:
- Keep your property in good condition. As the saying goes, “An ounce of prevention equals a pound of cure.” Inspecting your property as a whole, its systems, and appliances, and regular upkeep will delay — and even prevent —the need for big renovation and repair projects down the line.
- Respond promptly to tenant concerns. Service businesses often have an upper limit on response time to support requests. If a tenant has a problem with the property, address it as soon as possible, and set a reasonable expectation of when it will be solved - whether that’s in one hour, one day, or one week.
- Charge rent and pay bills on time. Making sure you stay on top of payments going both ways ensures financial prosperity and accurate reporting to authorities such as the IRS.
- Keep good records. Track more than just rental income. Track visits from service providers, design details (like paint colors), communications about the property, and contracts. Good record keeping can help you learn from costly mistakes, and spot opportunities for maximizing your real estate income.
- Prepare for the worst. …But hope for the best. Homes can be fragile, and not every tenant is reliable. Put an emergency plan and emergency funds in place for things like resident turnover, natural disasters, and other unexpected events.
- Get adequate insurance coverage. Protect your home and preserve your financial well-being from risks like accident or other loss.
- Hire a property manager if you need to. Lastly, if you find you don’t have the time or expertise to manage your property yourself, consider hiring a professional property manager.
Grow your wealth, and your peace of mind
While many professional firms lay claim to expertise, property management is not as intimidating as it sounds. When implemented well, it will actually will relieve many of the stresses of homeownership. By automating tasks, streamlining communication, and providing data-driven insights into your property's performance, a property management system can help you save time and money. Additionally, a property management system can help you stay organized and compliant, which can give you peace of mind knowing that your property is being well-managed.
If you are a property owner, or if you are considering investing in real estate, a property management system is a valuable tool that can help you achieve your financial goals now and in the future.