Real estate management is the administration, operation, marketing, and maintenance of real estate in order to achieve the objectives of the owner of that real estate. Real estate management is growing steadily as a profession because of three significant trends:
- Simultaneous growth of the population and its requirements for space has increased the total number of all types of buildings.
- A larger percentage of real estate is considered investment property, and property management is regarded as a critical factor in managing real estate as an investment.
- There is a wide acceptance of the fact that real estate management requires special training and education.
The ever-changing nature of the real estate industry has and continues to create employment and career development opportunities for those who possess a commitment to continued improvement, performance excellence, and the highest quality and level of service to customers.
Types of Real Estate Management Positions
The work real estate managers perform varies greatly depending on the position they hold and the organization or company they work for, as well as the type of real estate they manage.
Specific jobs within the broader field of real estate management generally fall into three categories:
- Resident or site management
- Property management
- Real estate asset management
These are broad descriptions of the positions available in the field of real estate management. At the property and asset manager level, many job responsibilities overlap. In addition, the job title and duties given to real estate managers will vary greatly depending on the type of organization and the kind of property being managed.
The resident or site manager. Most site managers deal with residential properties (apartments, cooperatives, condominiums, and homeowners associations) and, if they reside on the properties they manage, they are known as resident managers. Site managers form an essential link between the residents and the property manager. The site manager is on hand to oversee the day-to-day operations of a property. The site manager deals not only with technical operations, such as mechanical and electrical systems, but also with current residents and potential residents. This can include meeting with lease applicants and colleting rents. Strong communication and “people” skills are required to perform effectively as a site manager. The site manager is the key to maintaining accurate records of the property's income and expenses, which enables the property manager to chart the financial performance of the property.
The property manager. The property manager functions as the liaison between the property owner or owner’s agent - frequently an asset manager - and site personnel. The property manager is primarily responsible for the tangible asset that the property represents and focuses on managing the physical property - overseeing the day-to-day operations of site managers and other site personnel or work being contracted out by the management firm. The property manager develops and follows a management plan that has been approved by the owner to manage the property. This plan governs all aspects of the physical plant, financial operation, tenant relations, market positioning, and community image building. Property managers are directly responsible for maintaining and creating value in properties. This is mainly carried out by improving the net operating income of a property, which is accomplished through efficient operating procedures and optimization of rental and other income.
The real estate asset manager. The real estate asset manager, who represents the owner, focuses on managing real estate as a financial asset and making decisions that govern the financial performance of the property. The emphasis is on managing the property as an investment, focusing on activities that will add value to each property under management. Operational functions are left to the property and site managers. The asset manager always has an eye toward long-term appreciation of the property as well as short-term cash flow. In many cases, performance goals for the property are established by the asset manager then implemented by the property manager. Asset management is still being defined within many organizations, and the responsibilities an asset manager holds may vary greatly from one professional setting to the next. Overall, when performing asset management functions, the manager progresses through the property's life cycle and may become involved in acquisition, day-to-day management, and sale of the property. This requires the asset manager to pay careful attention to changing market opportunities, economic factors affecting tenancy, and financial developments that can lead to alterations in the physical or financial structure of the project itself.
Types of Properties Managed
Just as the work of a real estate manager varies with the position held, it also varies with the type of property being managed. There are a wide variety of property types, each with its own peculiarities and demands on the manager of that real estate. Nevertheless, all types of properties need the services of a real estate manager to at least some degree.
- Condominiums and cooperatives
- Community and homeowners’ associations
- Rental single-family homes
- Office buildings
- Retail stores
- Shopping centers of all sizes
- Industrial properties
- Public housing
- Federally assisted housing
- Facility or corporately owned properties
- University facilities
Organizations that Employ Real Estate Managers
Real estate managers are employed by a number of different organizations.
Property management firms. These are companies that specialize in providing real estate management services to individual and institutional owners of real estate in exchange for a fee. For this reason, these managers often are referred to as "fee managers."
Full-service real estate companies. These companies provide a full range of professional real estate services with real estate being one of them. Their management departments function in the same way as fee managers.
Development companies. Real estate managers on staff at development companies are managing company-owned properties. These property managers are involved in many aspects of property development, including renovation and marketing properties to prospective investors.
Commercial banks. Banks have moved beyond their traditional role of providing clients with a source of mortgage money for investment properties and may act as equity participants in properties. Property and asset managers are on staff to manage the banks' portfolios of investment properties, as well as properties held in trust by the bank. They also take over management of properties that have been turned over to the banks as a result of foreclosures.
Real estate investment trusts. Real estate managers provide expertise managing investment properties for groups of investors who pool their funds together to purchase a portfolio of properties through real estate investment trusts (REITs).
Corporations. Many large corporations have property and asset managers working in their in-house real estate divisions. They are responsible for managing the companies' owned properties that are used for conducting their business. A corporate real estate manager, sometimes known as a facilities manager, is involved in determining the best use for corporate property and the terms for buying, selling, and leasing real estate occupied or owned by the corporation.
Government agencies. Real estate managers are on staff managing government housing and development programs through municipal, state, and federal housing authorities and nonprofit sponsors.
Insurance companies, pension funds. Property and asset managers get involved managing investment property owned directly by insurance companies or in portfolio management of investment properties for large institutional investors and pension funds.
Mortgage brokerage firms. Real estate management services are provided in connection with financial lenders as well as marketing properties to potential investors.
Real Estate Management Skills
Real estate managers work closely with both tenants and property owners - as well as with the property itself - and many skills are necessary for the successful performance of the real estate manager's duties. Diplomacy is essentially to effectively negotiate matters that may arise between tenants and owners. Knowledge of advertising and business promotion are needed, as are familiarity with the market of the property being managed - and its competition - is critical for maximizing the financial return from the property as well as its occupancy. Understanding of economics, accounting, statistics, and valuation calculations is essential to set realistic rents for the present and future and ensure a healthy economic life for the property.
Education is vital qualification for the professional real estate manager. Every property is unique, and economic, social, and political changes will affect each property differently. A manager who is trained in these areas is generally able to isolate these different factors, determine how they affect the property, and create a program to respond to them appropriately.
A real estate manager can gain many of the skills required to manage properties successfully by obtaining a professional credential. The true value of a professional credential in real estate management is the credibility it registers with property owners who want to be confident that they are selecting competent and ethical managers to handle their real estate investments. Throughout its history, IREM has recognized the value of professional recognition and has been awarding its professional credentials - the CPM designation and ARM certification - to those site managers, property managers, and asset managers who have achieved professional standards of excellence through education, experience, and ethical conduct.