Property Management Fundamentals and Operations
The manager's role and the management agreement
Property management is the business of operating real property for an owner's objectives, whether that is income, value preservation, or a mix. The management agreement is the governing document: it defines scope of authority, fee structure, reporting cadence, spending limits (often a per-item and aggregate threshold above which owner approval is required), and termination terms. Candidates should be able to name the core operating functions: marketing and leasing, rent collection, maintenance, accounting and reporting, budgeting, risk control, and owner relations.
Ownership objectives and property types
Owners differ. An institutional owner may prioritize NOI growth and benchmarking; a private owner may prioritize long-term hold and low turnover. Distinguish residential, commercial, and mixed-use operations, since lease structures, service expectations, and accounting differ.
Traps to watch for
- Confusing the management plan (the strategy document) with the management agreement (the contract).
- Assuming the manager can approve capital expenditures without authority - spending limits govern this.
- Treating owner reporting as optional; regular statements and variance explanations are core deliverables.
- Mixing fiduciary duty with general customer service courtesy; fiduciary duties (loyalty, care, disclosure) are legal obligations.
Rule of thumb
If a decision changes recurring income, occupancy, or capital outlay beyond the agreement's spending threshold, it belongs to the owner, not the manager. When in doubt, document the recommendation and seek written approval.
Worked example
An agreement sets a $2,500 per-item approval threshold. A $2,100 HVAC replacement is within the manager's authority; a $3,400 roof patch requires owner sign-off even though it is urgent - the manager should notify, recommend, and obtain approval while mitigating damage.