The History of Property Management
By Bryan Law, Author of Residential Property Management: For agents, employees and owners
The landscape of real estate has changed a lot since the industrial revolution in the 19th century. More forms of real estate ownership, structures and uses were created and developed. Before the industrial revolution, there were only farmlands, houses, inns, and small downtown business units for rent. All of them were managed by the owners.
Buildings with unique features were built as factories to accommodate industrial needs. Some were user-owned, while some were built by developers to rent out to manufacturers. On the other hand, as more laborers were attracted to industrialized neighborhoods, multi-unit buildings started to be built and rented out.
Initially, those rental buildings were small, usually with a few tenants only. Even for residential apartment buildings, there were not more than 40 units. Since the concept of incorporation or company formation was relatively new, most of the buildings were owned by individuals. Those owners would manage the facilities themselves, even though they had other businesses or were employed in other fields.
The tasks of managing those small buildings were relatively simple compared to the modern ones. The owners just had to rent the units, collect the rent, pay the superintendent or contractors to maintain the building, order the fuel, and pay the utilities and taxes. Although those tasks are still part of property management work today, they were easy due to the straightforward tax rules, simple building features and materials used. Moreover, there were no laws to govern residential tenancies at that time.
As building structures and tenancies laws become more complicated, maintaining buildings and managing leases become complex tasks that are too much for the owners to do without professionals to help. Moreover, since the rental market size has become bigger and bigger, the scale of rental properties also becomes more considerable. Institutional investors replace many individual owners to become the key players in the market. They own large portfolios of investment properties. As a result, professional property management companies take care of the buildings for the owners.
Many owners, especially those who own smaller buildings or individual dwellings, choose to manage the properties themselves. Some of them have other businesses or jobs to do, while some of them work as full-time property managers. Many of them do it as a semi-retirement job, especially when the building does not require frequent maintenance or attention. However, many of them are ruining their real estate investments by poorly managing their properties because they fail to maximize the potential of the properties.
To realize the maximum value of an investment property, effective property management is crucial to all owners. Professional knowledge is required to attain maximum revenue with minimum costs and ensure that the property value is not jeopardized. Hiring an experienced property manager to take care of your investment property may be the smartest choice you would make for your investment.
Professional property management companies act as the owners’ agents to rent the units, collect rent, pay the bills, and maintain the buildings. Such professional firms bring valuable experience and advanced technologies to their clients for better results. A property management contract must be signed between the property manager and the landlord to spell out the contract term, the duties of the manager and their fee. Their fee is negotiable, usually a percentage of the net operating income of the property that they manage. Some will use gross operating income too.
To learn more read Residential Property Management, a practical guide that helps property managers, employees, and owners manage their residential rental buildings effectively and professionally, emphasizing the balance between responsibility and service to the owners and tenants.
About the Author
Bryan is an entrepreneur with a diversified professional background. He has over 25 years of experience in real estate, brokerage, franchise, education, training, and development. Besides being a management consultant, Bryan is also a legal researcher in various areas, including contract law, environmental law, human rights law, labor law, privacy law, and real estate law.
He was a certified instructor, professor, legal and real estate subject matter expert of various real estate and business colleges. He provided one-on-one training to the management levels in corporations, including C-level executives in public companies. He authored over 30 books on various topics, including real estate, creative thinking, entrepreneurship, and human rights. Bryan’s wide-ranging knowledge and professional experience, coupled with excellent training and coaching skills, have placed him as one of the foremost management consultants and trainers.