Typical  activities in managing a real estate include:

 

" Collection of rental along with assessing penalties in the event of late payment

 

" Accounting services including creating monthly financial statements, preparing annual tax statements and pay out rental proceeds

 

" Management of the lease including lease enforcement, tenant qualification and collection of security deposit

 

" Performing day to day fixing and upkeep activities including providing twenty four hour necessity services

 

" Monitoring and managing vacancies which includes aggressively marketing vacant units (based on market rentals) to potential tenants and coming up with publicity plans
 
As a real estate owner you should be  concerned about the way management firm structures its process including the collections  system.

 

The majority of the management companies combine their collections from all the numerous properties they manage into one single bank account.

 

 All the properties' general expenses are taken care of from that individual bank account.

 

 As a property owner you would not want to employ a management company which draw from a common account as this can lead to lots of confusion and financial mix ups. 

 

You should hire a management company that creates separate checking accounts for each property.

 

 The bank account is usually used to deposit all the rent collections.

 

 Once all the bills are paid, if there is any balance left it belongs to the property and its owner(s).

 

Also another important point to consider is whether the owner would have authority to sign all the checks and approve all the operating cost.

 

Another substantial aspect of management company's operation is its price structure. 

 

The management price should be plainly mentioned in the contract.

 

Usually, management charge is determined as percentage of effective gross income (after accounting for vacancy and credit loss).

 

Generally, management charge is between four to six percent for smaller properties and between two to four percent for bigger properties.

 

Normally, residential properties have higher fees than commercial properties because they entail relatively more work.

 

In addition to the above mentioned responsibilities, management companies also carry care of supervision of building work and capital improvements made to the real estate.

 

The management firm is responsible for reviewing plans and proposals, negotiating bids with various contractors and vendors and for supervising the building and cash improvement process.

 

Generally, the fee for this kind of work ranges between five to ten percent for jobs under $twenty,000, and from three to five percent for jobs above $20,000.

 

Real estate management companies also make cash by getting leasing compensation.

 

They are accountable for either renewing old leases or getting new leases. Usually the lower fee is charged for rental renewals and a higher one for new leases.

 

These lease commissions are usually shared with a leaser agent - an agent who is representing the leaser in finding the space. 

 

Property owners are accountable to pay back some overhead to the property management company.

 

These overhead include but are not restricted to mailing expense, credit union and banking service charges, and travel expenses etc.