Owning residential or commercial rental properties is an excellent way for individuals to build wealth. And it’s popular, too: as many as 77% of small multifamily properties are owned by individuals rather than institutional landlords.
However, owning rental property comes with plenty of obligations. Some individuals self-manage their properties, but doing so can be a significant time commitment. Many individual investors may not have the capacity or desire to take care of these responsibilities independently. Landlords often rely on others to take care of upkeep, cleaning, staging, marketing, tenant relations, financial reporting, and more.
One question that comes up somewhat frequently among those just getting started in owning rental properties is this: what’s the difference between property management and property maintenance? Or are these merely two terms for the same basic set of tasks?
The short answer is that the two terms are very different in meaning, and it’s important to understand this difference. Below, we’ll outline the differences between the two terms and help clear up any misunderstandings you may have.
Property Maintenance Explained
Property maintenance usually refers to physical tasks needed at the property. These may include lawn care, maintenance tasks, repairs, appliance upkeep, painting, HVAC, plumbing, locksmith needs, electrical work, and even flooding emergencies. In colder climates, snow and ice treatment is typically included.
Most property maintenance firms offer 24/7 on-call access for emergencies. These companies have contracts with specific vendors (electricians, plumbers and so forth) for issues that go beyond what the maintenance company’s general technicians can handle.
While property maintenance is essential for any residential or commercial landlord, it’s limited in scope. There are many property-related tasks and services that you may need help with which are not included in a property maintenance agreement. Most of these are included in the broader term, property management.
Property Management Explained
Property management deals with a much more comprehensive set of responsibilities on behalf of the property owner.
On the commercial side, responsibilities include negotiations with commercial tenants, understanding the commercial real estate landscape at any given point, financial reporting, CAM and bank account reconciliations, handling accounts receivable and accounts payable, and marketing. Tenant, vendor, and investor relations are typically included as well.
Residential property management typically includes all the relevant items mentioned above, with an understanding of the differences in the residential market. Residential tenants operate quite differently than commercial ones, so the techniques and tactics of managing those relationships are different.
Marketing is a massive differentiator between property managers and property maintenance firms. A quality property management firm will actively market your property, helping to find either business or residential tenants for your units. Maintenance companies won’t do this in any kind of formalized way. It’s important to choose the right property management company that has the experience and skill to take some load off your shoulders.
One point of confusion is that some property management firms include property maintenance in their suite of offerings, while others don’t. Before contracting with a property manager, make sure you know whether maintenance is included, is available for an extra cost, or must be secured from another vendor.
Here at Strategic Properties Group, we keep a maintenance division that you can contract with to care for your property, allowing you a one-stop shop for all your property maintenance and management needs.
The Difference Between Property Management and Property Maintenance
To sum up, property maintenance and property management are similar terms with markedly different meanings. The first simply refers to maintenance tasks of all sorts that may be needed around the property. The second refers to all kinds of management functions, from marketing to financials to accounts receivable and accounts payable and even relationship management.
Property management can include property maintenance (but doesn’t always do so). Property maintenance never includes true property management — although this distinction brings up a critical pitfall to avoid.
A Common Pitfall
One common pitfall that can cause headaches for property owners is the overzealous property maintenance company. One real estate manager in Canada outlines these concerns well. Property management is much broader in scope than property maintenance, and it’s more costly as a result. This reality leads to two contrasting problems.
First, some companies that started as property maintenance firms and have grown a bit may claim to do it all. They may be slowly branching out into various aspects of property management, but they aren’t truly full-service. They know there’s more revenue to be had if they market themselves as property managers, but they just don’t have the chops to get the job done.
Beware of a “property management” group like this that lacks the depth and experience to provide all the management tasks and services you need.
The other side to this pitfall is the cost-conscious property owner. An overzealous property maintenance company may promise to take care of a few management tasks for you, and the discount rate is attractive. It might seem like a “good enough” service, given the rate. But expecting a company like this to do everything you need is a recipe for frustration, trouble, and vacant units.
If you need real property management, not just glorified property maintenance or “property maintenance plus,” then you need a full-service firm. Look for one with property management as its main focus, not as an optional add-on.