INTRODUCTION

INTRODUCTION

Property management is a specialty in which real estate brokers manage homes and duplexes as well as large
projects such as office and industrial complexes, shopping centers, apartment houses, and condominiums.

Reasonable knowledge and understanding of the general principles and responsibilities relating to this field is
appropriate for all brokers and salespersons.

Knowledge of agency, contracts, fair housing, rentals and leases satisfies a considerable portion of property
management requirements. Additional knowledge is required in business administration, marketing, purchasing,
extensions of credit, accounting, advertising, insurance, repairs and maintenance, taxation and public relations.
The Institute of Real Estate Management (IREM) and the National Association of Residential Property
Managers (NARPM), professional organizations of persons involved in property management, are dedicated to
the improvement of the operational and ethical standards of its members.

Professional Organizations

In 1933, to foster professionalism and provide a source of management experience data, a group of property
management firms organized the Institute of Real Estate Management (IREM). To be a member, a property
management firm was required to certify that it would adhere to the following guidelines:

1. Maintain separate bank accounts for its own funds and for the funds of its clients, with no commingling;

2. Carry a satisfactory fidelity bond on all of its employees whose duties involved the handling of funds; and,

3. Refrain from taking discounts or commissions from purchases, contracts, or other expenditures of clients’
funds without full disclosure to, and permission from, the property owner.

Beyond the adoption of standards of practice, IREM also set fixed principles of qualification.

In 1938, IREM’s founders realized that the focus of professionalism must be on the individual because firms
and corporations could not be qualified as having “ability.” A firm, John Jones & Company for example, might
be qualified to manage property so long as John Jones was its administrative head. But when John Jones retired,
died or sold the firm, the character of its management might change completely. It was obvious only the “man”
or “woman” in management could be certified to be a qualified property manager.

Having agreed upon this fundamental thesis, the members of IREM undertook to reorganize into a truly
professional society, with membership restricted to individuals. Now, individuals meeting the educational and
experience requirements are designated as Certified Property Managers© (CPM©). A lesser degree of training
and on-site experience qualifies an individual as an Accredited Residential Manager© (ARM©). A firm that
meets IREM’s guidelines and utilizes at least one CPM© can be designated as an Accredited Management
Organization© (AMO©).

A younger organization, NARPM, was born in the late 1980’s out of a need for more education, validation,
networking and recognition for those individuals who were primarily fee managers of single homes. The first
national convention was held in November 1989, and annual conventions have been held continuously since
then. NARPM offers professional designations, including RMP (Residential Management Professional) and
MPM (Master Property Manager). The Association also offers a designation (CRMC – Certified Residential
Management Company) for firms that manage single-family homes, and one for support staff (CSS – Certified
Support Specialist).

Like IREM, NARPM promotes a high standard of business ethics, professionalism and fair housing practices.
NARPM’s Code of Ethics and Standards of Professionalism educate the membership on how a professional
property manager should conduct business so that all parties in the landlord-tenant relationship are satisfied.

Types of Property Managers

There are three types of property managers: the individual property manager, the individual building manager,
and the resident manager.

The individual property manager is a real estate broker who manages properties for one or more property
owners. The property manager may be a member of a small property management firm and devote full time to
property management; or, he may own his own firm; or, he may be one of a number of property management
specialists in a large real estate organization. Some property managers are asset managers and make the same

types of decisions that an owner would relative to change of use, refinancing and sale. Asset managers
frequently supervise other property managers.

The individual building manager may be employed by a property manager or directly by an owner, and usually
manages a single large property.

The resident manager may be employed by a real estate broker or a managing agent or an owner to manage an
apartment building on a part or full-time basis.

The training, experience and number of units managed determine the individual property or building manager’s
qualification for the CPM© designation. To qualify for the ARM© designation, size of the property as well as
training and experience are part of the criteria.

Functions of a Property Manager

The many and varied duties of a property manager require the skills of a business executive, decorator,
salesperson, parking lot attendant, gardener, housekeeper, information center, accountant, banker, doctor,
lawyer, social director, psychologist, marriage counselor, baby sitter, bookkeeper, rent collector, maintenance
expert, security officer, keeper of the keys, telephone operator, messenger service, and complaint department.
The manager must also be soft-spoken, fast-moving, poised, quick-thinking, non-tiring, ever-available,
mechanical-minded, all-knowing and never-ailing. This “expert” knows how to visit without visiting, sell
without selling, see without judging, hear without repeating - and all without having time for an uninterrupted
meal.

The property manager has a dual responsibility: to the owner or client who is interested in the highest return
from the property; and to the tenants, who are interested in the best value for their money, including reasonable
safety measures and compliance with fair housing laws.

The property manager must promptly rent the property/units at the highest market rent possible, keep
operational and other costs within budget, and preserve and enhance the physical value and prestige of the
property.