Real Estate Management vs Property Management
To most readers, property management and real estate management might be seen as the very same business to most people.
Yet others would say these tasks are widely divergent. If landlords take a moment to consider the differences between them and professional real estate managers, they might launch themselves into a more profitable future.
If your properties are losing money via inflation, then it may be wise to consider selling and investing in other better investment properties. This is what an asset manager would do. As you’ll read below, they are more interested in capital appreciation, because they plan to sell the asset. There is no emotional attachment.
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How Real Estate Managers Differ from Mom and Pop Landlords
Here’s a real estate asset management firm in New York. Their website tells you quickly what their value proposition is and their core services. And in New Jersey this firm manages residential properties and contracts out services as needed.
The Asset Manager
Consider the asset manager who works with real property real property (including residential, retail, commercial, but could work with less tangible REITs). An asset could be anything today.
An asset manager can manage residential rental properties, commercial property, mortgage loans, real estate stocks, real estate investment trusts (REITs), crowdfunding investments, and beyond — quote from Liz Brummer of Motley Fool.
Asset managers typically work in the private or institutional marketspace among private equity firms, hedge funds, or REITs on larger rental property portfolios. They may offer specialized broker and financial services, and at scale.
Property management on the other hand refers to the active management of rental units and tenants. It gets confusing when asset and revenue manager’s duties overlap with property management.
The point for landlords, is what is the goal and how do we get there?
Real estate asset management refers to the process of maximizing the value and return on investment of a property. This includes finding the highest and most consistent sources of revenue, reducing expenditures whenever possible and risk management, among other things — from article on Mashvisor.com
An asset manager could consider long term revenue in evaluating and purchasing property. They’re more likely concerned with capital appreciation.
Property Management Software Takes on More Responsibility
Property management supports your real estate management goals of choosing the best properties, setting the right rent prices, monitoring performance, managing cash flow and the revenue source (tenants)reducing taxes, marketing your rentals, maximizing profit, and streamlining the process of building your wealth.
So just as there are differences, (and perhaps differences between property management software and real estate management software), the two do like they will converge. Will the growing power and capabilities of the software platforms accelerate a fusion? It’s already happened with some companies.
Some property management service firms and software products have improved profit as their purpose. In fact, property management software is becoming central to all real estate management tasks. It’s very valuable considering the low software subscription costs and striving to become a complete real estate management solution.
While small portfolio landlords don’t talk about their own properties as investment vehicles, they really should upgrade their vocabulary and goals. You are real estate entrepreneurs.
It’s impossible to talk about commercial, retail, office, or residential real estate without mentioning property management’s activities. If a property management software solution can help you grow yields, avoid bad properties, identify which to sell, and aid in tax management, cash flow, keep tenants happy and keep the building ship shape, well, then it is central to your real estate investment strategy.
What are Top Real Estate Management Challenges in 2023?
The challenges major property managers face in managing are not dissimilar to those property owners do. Yields, profitability, cash flow, expense management and tax management are key. Some owners must also manage tenants directly. Here’s the top ones you might be facing:
- understanding real estate law and regulation changes
- what is the best asset manager/property management company mix?
- at what size of property portfolio do you hire a property manager or asset manager?
- which properties to buy?
- who will advise and buy the new properties?
- which properties to sell?
- how to set the right rent price?
- which property management software to choose?
- whether to do it yourself or hire a property management company
- how to improve rent revenues and minimize taxes with advanced tax management?
- what to pay property managers?
After making smart, reasoned decisions about buying residential, office, retail or commercial properties, the business focus moves to organizing them to maximize revenue and minimize costs. And that is where property management software arrives to help make the venture a profitable one. You should view the software as a platform for business.
Whether you’re managing, evaluating, and growing your real estate asset values, or optimizing rental income, you’ll want a software solution that offers excellent financial, tax, tenant, maintenance and overall reporting tools. This keeps investors fully informed about how their properties are performing.
What are Real Estate Investors (Including small business landlords) Doing Now?
Keeping up to the market today is a challenge, whether it’s technology, demand, laws, or competition.
And the trends are are always in response to the top property management challenges. These are the critical areas of business where profit is eroded and risk is high. Please do read up on the top property management challenges.
Now is a good time to reflect on your top priorities and goals:
- researching properties more carefully and examining long term value
- assessing the end of a boom and perhaps a downturn in the markets
- finding available quality rental properties
- researching and choosing the right property management company
- using powerful analytics tools to identify opportunities for rental income growth
- using powerful analytics tools to identify activities and assets that are underperforming
- using powerful analytics tools to identify great tenants and money losing tenants
- upgrading digital marketing strategy to grow demand from high quality tenants and promote your assets
- using Proptech tools and apps to optimize aspects of your business that are lagging
- investigating short term rental income properties
- preparing for potential economic downturn with recession-resistant properties/tenants
- preparing for inflation and rising interest rates in the years ahead
- diversifying your property portfolio to protect your wealth
- choosing a Realtor with good knowledge/systems for property management
- managing legal liabilities in your state and city
- how to adjust your portfolio when a downturn begins
- how to manage taxation well
- how to manage tenants in arrears and handle tenant evictions legally and effectively
- whether to adopt green infrastructure and other amenity costs
- determining best improvements to make in your units or buildings
The final note on any real estate management plan is about which properties to buy. The next downturn will tell you more clearly how well you chose.
Build a powerful business model and take action with a great property management software platform is the best decision. The best tools with the best insight will help you choose properties better going forward. Put your bad choices behind you and manage like a pro with a great software platform.
Visit the ManageCasa property management blog for more ideas and tips on protecting and optimization of real estate management.
Here are some additional real estate management resources to help you excel in 2021 and beyond:
- Tips for Buying Rentals Properties: moneyunder30.com/formula-buying-rental-properties
- About Asset management: https://realestate.vt.edu/content/dam/realestate_vt_edu/industry/AssetManagement_Final_2017.pdf
- How to protect your real estate assets: andersonadvisors.com/real-estate-asset-management-how-to-protect-your-rental-property-income/
- About Rent Controls: https://managecasa.com/articles/rent-controls/
- Important property management documents: https://managecasa.com/articles/profit-and-loss/
- Leasing Optimization: https://managecasa.com/tenants-and-leasing/
- Choosing a Property Management Company: https://managecasa.com/articles/property-management-companies/
- Property Management Fees: https://managecasa.com/articles/property-management-fees-explained/
- Best Cities to Buy Rental Properties: https://managecasa.com/articles/best-cities-to-buy-property/
- How to Grow Rent Yields: https://managecasa.com/articles/grow-your-rental-yields/
- Definition of real estate management: millionacres.com/real-estate-investing/rental-properties/real-estate-asset-management-vs-property-management-whats-difference/
- Definition of asset management: fortunebuilders.com/real-estate-asset-management/
More insight and strategy from the ManageCasa Blog: Property Management Software | Compare Major Property Software Alternatives | Property Management Cost | Built to Rent | Switch Property Management Software | Simple Property Management Software | Hausverwaltung Software Germany | California Housing Market