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Commercial vs Residential Property Management: What the Difference is?

Commercial vs Residential Property Management: What the Difference is?

  • Posted: Jul 12, 2017
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by Author Donatas Kazakauskas 

There are many differences between commercial and residential property management.

Usually, new property managers start with residential buildings, because of its simplicity. But if one wants to jump into commercial property management, there are many things to learn. In this blog, I will cover the key points.

sfpma1. Tenant expenses. In addition to the base rental fee, commercial building tenants need to pay some or all of the expenses related to real-estate ownership. These expenses (can be called “three nets” or NNN) consist of property taxes, insurance and maintenance fees. There are several types of commercial leases, such as:

a. Triple net – requires the tenant to pay the net amount for all three types of costs (real estate taxes, building insurance and common area maintenance (CAM) fees).

b. Modified net – a compromise between gross lease and triple net. The property manager and tenant usually agree to split the maintenance expenses, but the tenant pays for the real estate taxes and insurance.

c. Gross lease – In this case, the landlord collects the fixed rental fees and pays for all the expenses out of them. These contracts usually have many clauses that may increase the rental fee to cover increased taxes or insurance for the landlord.

d. Percentage lease – mostly used in shopping centres and retail malls. It typically requires a lessee to pay the base rent and on top of that amount, pay a percentage of their sales volume.

These leases are much more complex compared to residential leases. In cases where you collect a fixed amount for CAM fees every month, you need to do an annual recalculation based on what you have received vs actual expenses. Residential rental rates are typically a fixed amount per month or other price period plus the utilities payed based on consumption. Does your software allow you to deal with all calculation situations and easily calculate the correct amounts for the tenants? Soft4RealEstate does.

2. On-Site manager and maintenance. In large office centres or shopping malls, it is necessary to have on-site managers who can deal with tenant requests or take care of other issues. In some countries or US states, this is even defined by law. To track all the requests and work orders, you need to have a system that is easy to use for both the manager and tenant. It should be easy for the manager to track all ongoing tasks, view the work schedule, and change statuses. On the tenant’s side, it should be clear when and what will be done, and when any work can be expected to be finished. While renting apartments, you can have maintenance vendors and tenants usually deal directly with them without property manager interruption.

3. Responsibilities. This point is an advantage for commercial properties. Tenants of commercial buildings have a greater amount of responsibilities than residential tenants. With residential tenants, you’re agreeing to a habitable residence, and the laws weigh most heavily on the tenant when it comes to evictions, habitability, etc. Commercial properties are for business use, and the scope of landlord responsibilities is lower. What is more, most commercial buildings are only used during the daytime, so you won’t receive midnight calls for fixing a toilet, leaking pipes or complaints about loud music from neighbours.

4. Leases. It is easier to rent residential property. Moreover, the rental agreements are usually shorter in length and easily renewable, while commercial leases are more complicated. They are much longer, might have difficult extension options, rent is reviewed annually and prices are commonly increased by the CPI or some other fixed index. Commercial lease agreements are harder to break because of many termination clauses.

Even though the processes seem similar: you have tenants, you have contracts, and you have units to lease, maintain and manage, so commercial property management and residential property management are not the same. You need to take all the things mentioned above into consideration in order ensure the best results for every situation. Not every residential property manager can manage commercial properties without any preparation. Once you start doing commercial property management, make sure that you not only have the necessary knowledge, but also the tools, such as software, to make it work. Sometimes Excel seems good enough to do the work, but the day may come when you need to say goodbye to it. When?



Tasks property managers commonly perform for owners

Tasks property managers commonly perform for owners

  • Posted: Jul 09, 2017
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Evaluate the property and determine an accurate rental rate

  • Perform detailed documentation of the interior and exterior including photos
  • Offer recommendations on repairs and cosmetic improvements that maximize monthly rent while providing good ROI.
  • Gather data on rental rates in the area and work with owners to determine the optimal rental rate. Rent research will vary, but should include looking at the recently rented comparables according to size and type.
  • Discuss with owners the pros and cons of different policies such as accepting pets, allowing smoking etc.
  • Install a lock box

Market the property for rent

  • Prepare home for rent
    •  Clean home and optimize interior appeal
  • Create ads tailored to the property and advertising medium. Some of the mediums commonly used are:
    • Paid and free rental listing websites
    • Print publications
    • Signs
    • MLS
    • Fliers
  • Work with other realtors and leasing agents to find a tenant
  • Provide a 24-hour hot-line where prospective tenants can listen to detailed information about the property
  • Field calls from prospects for questions and viewings
  • Meet prospective tenants for showings throughout the week and weekend.
  • Provide prospective tenants with rental applications that are legally compliant with fair housing laws
  • Collection applications with application fee

Tenant Screening and Selection

  • Perform a background check to verify identity, income, credit history, rental history, etc.
  • Grade tenant according to pre-defined tenant criteria
  • Inform tenants who were turned down

Tenant Move In

  • Draw up leasing agreement
  • Confirm move in date with tenant
  • Review lease guidelines with tenant regarding things like rental payment terms and required property maintenance
  • Ensure all agreements have been properly executed
  • Perform detailed move in inspection with tenant and have tenants sign a report verifying the condition of the property prior to move-in.
  • Collect first months rent and security deposit

Rent collection

  • Receiving rent
  • Hunting down late payments
  • Sending out pay or quit notices
  • Enforcing late fees

Evictions (A Great website for Eviction Information is: )

  • Filing relevant paperwork to initiate and complete an unlawful detainer action
  • Representing owner in court
  • Coordinating with law enforcement to remove tenant and tenants possessions from unit


  • Advise in the event of a legal dispute or litigation
  • Refer owner to a qualified attorney when necessary
  • Understand and abide by the latest local, state and federal legislation that apply to renting and maintaining rental properties.


  • Perform periodic inspections (Inside and outside) on a predefined schedule looking for repair needs, safety hazards, code violations, lease violations, etc.
  • Send owner periodic reports on the condition of the property


  • Provide accounting property management services
  • Make payments on behalf of owner (Mortgage, insurance, HOA dues, etc.)
  • Detailed documentation of expenses via invoices and receipts
  • Maintain all historical records (paid invoices, leases, inspection reports, warranties, etc.)
  • Provide annual reporting, structured for tax purposes as well as required tax documents including a 1099 form
  • Advise owner on relevant tax deductions related to their rental property
  • Provide easy to read monthly cash-flow statements which offer a detailed breakdown of income and itemized expenses

Maintenance, Repairs, and Remodeling

View the Associations MEMBERS DIRECTORY: Find top companies that work with the Management Industry.

  • Provide and oversee an in-house maintenance crew
  • Establish a preventative maintenance policy to identify and deal with repair needs
  • Provide an network of licensed, bonded and fully insured contractors who have been vetted for good pricing and good work that is up to code.
  • Assign jobs to different parties (in-house employees, handyman and professional contractors) based on who will do the best job for the best price.
  • Maintain outdoor areas
    • Leaf and snow removal
    • Landscaping
    • Removing trash and debris
  • Maintain and monitor a 24 hour emergency repair hot-line
  • Larger renovation or rehab projects
    • Provide recommendations on how the project can maximize rental income.
    • Prepare preliminary cost estimates
    • Get multiple independent bids for the work
    • Act as general contractor overseeing the work

Tenant Move Out

  • Inspect unit and fill out a report on the property’s condition when the client moves out
  • Provide tenant with a copy as well as estimated damages
  • Return the balance of the security deposit to the tenant
  • Forward any portion of the owner’s portion of the tenant deposit to the owner or hold in owner reserves for repairs.
  • Clean unit and perform and needed repairs or upgrades
  • Re-key the locks
  • Put the property back on the market for rent

This isn’t intended to be a comprehensive list of property management services, but it should give you a fair idea of the scope of a property management company’s activities

SFPMA Members work with HOA, Condo, Multi-Family, Single-Family, when you are ready to have your property Managed by a Professional and take the time to enjoy your life.

Find the right Management Company on our Members Directory.


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What are the Property Management requirements in Florida

What are the Property Management requirements in Florida

  • Posted: Oct 12, 2016
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As more investors are heading into becoming owners of rental properties the questions arise about requirements. There are questions that you need to know the answers to and SFPMA has you covered.


Must a Florida property management company have a real estate broker’s license?

YES. Key components of property management (renting and leasing) are considered a real estate activity under existing Florida real estate licensing laws. A property manager needs broker license if he or she is paid by commission, and is handling rentals and leases for others. No license is required for managing personally owned properties. There is not a “Property Manager” license or certificate. Also, certain rental properties need a license through the Div. of Hotels and Restaurants.

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If you don’t hire someone to field these inquiries, you’ll have to do it yourself.

If you don’t hire someone to field these inquiries, you’ll have to do it yourself.

  • Posted: May 24, 2016
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Vacation Management managers can be found on Vacation listing websites help you book renters but they can take up to 30 percent in commissions. While this may seem high, remember that each booking can involve dozens of inquiries for each renter. If you don’t hire someone to field these inquiries, you’ll have to do it yourself. You probably don’t want to rely on a listing website alone for your marketing. If you do, you may be costing yourself a lot of rented nights each year. Here are some relevant facts from the Vacation Rental Property Marketing Blog about vacation rental owners’ marketing expenses: Vacation rental owners spent an average of $1,150 per year marketing their properties in 2011. Half of all vacation rental owners only use listing sites to market their properties. This group experiences annual average occupancy rates of 54 percent. Vacation rental owners who combine listing sites with their own websites bump their occupancy rates up to 76 percent, on average. 94 percent of all vacation rental owners believe they could be doing more to promote their properties. Let us help by listing your Vacation Rental Company with us:  SFPMA has a Directory used by Thousands of Clients looking for the management services you provide….

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Avoid the property management roller coaster

Avoid the property management roller coaster

  • Posted: Oct 07, 2015
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Avoid the property management roller coaster by heeding expert advice.   We’ve learned a lot along the way as property managers ourselves, running our business, listening to others, and what they did, then doing our own research and offering this information to all of our fellow property managers. South Florida Property Management Association was started with the goal of bringing together Florida’s property management professionals uniting our industry learning from one another. Helping our industry grow, through information and communication with one another. Many of our goals have exceeded our expectations this year: Not only did we bring many property managers and companies together, we started bringing into the association vendors and business professionals, these hard-working Florida companies that do work in our buildings and our communities.  We will aid the managers by sales and specials service and business companies run every day.  Note that every one of these service and business members save you money off the final bills to members.  Many of the service members have got work through membership, Some are now the only companies that the community association’s and Condo Board managers use. That was another goal we exceeded and this is ongoing forming relationships within the association. This year brings many new and exciting improvements to our association, we are asking not only the buildings members but the residents living in the buildings they manage: if they need work in their homes, condos they can use companies on the directory through your management’s membership, Our service members will benefit from the addition of the owners ability to find and use the repair services members provide. The next time one of the owners in the condo’s needs work you can tell them to choose through your membership one of the service and business companies on the directories.   Here are the questions we have answer’s to on the associations website:  When investors are looking for management for the condo, new properties, vacation rentals, investment properties, they come to SFPMA.COM. We let them learn and choose one of our members for the management they need.   What Legal Status Should You Have? Does Your Team Have Proper Licensing? Will You Become a Member of at Least One Real Estate or Property Management Association? What Property Management Fees Should You Charge? How Do You Track Income and Expenses? How Many Properties Should a Property Manager Manage? How Much Should a Property Manager Get Paid? What Will Your Company Culture Look Like? How Will You Provide Amazing Customer Service? How Will You Market Your Company? How Will You Handle Property Inspections? What Vendors Will You Need? Should You Hire an Accountant and a Lawyer?…

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Failure to communicate can lead to a manager’s failure

Failure to communicate can lead to a manager’s failure

  • Posted: Jul 12, 2015
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Since I work closely with management professionals, one of the more difficult questions I routinely face from community association leaders is how the community should go about the process of selecting a new community association manager. It causes me great concern when I first hear that a community is thinking of changing managers as most of them I know are conscientious and hard-working individuals who truly give their all for their clients. My first reaction is to ask the board members why they are even considering changing managers. Among the more common answers I hear are:   Too many residents complain of the manager not getting back to them after an issue is reported Projects aren’t getting done on time This manager is charging us too much for the service provided It just isn’t working out The follow-up comment I usually get is to “please not tell the manager” that we are looking to replace him. While I understand this sentiment, the secrecy between board and community association manager highlights the much larger problem to me. Quite simply, there has been a failure of communication between all parties involved. Unfortunately, it is often the association manager who becomes the scapegoat for this communication failure and will lose not only a client but also valuable income for years to come. That is why it is in every association manager’s best interest to be proactive in his managed communities’ communication efforts. A well-informed client is a happy client.   Communicating with board members is simple enough. Association managers already attend numerous board meetings, annual meetings and even committee meetings. However, with the exception of those homeowners who attend the annual meeting, most residents are largely unaware of the professional who manages their association. Worse still is that the only communication some residents ever receive from their association manager is a notice of a rules violation or a fine. That is why communication tools such as letters, e-mails, newsletters, community websites and even social media are vital to helping association managers properly communicate with the vast numbers of residents whose communities they manage.   Of course, there are numerous other advantages to establishing and maintaining great communications within the communities you manage. Better informed residents tend to be better behaved residents. You can use your communication efforts to build civic pride and create a better sense of community. Perhaps, most importantly, successful communication efforts create loyal clients. Wouldn’t you rather have the board come to you to discuss management shortcomings such as those listed above instead of going out shopping for a new manager behind your back? Of course, you would!   Taking the time to produce great communications is not always at the top of a busy manager’s “To Do” list. Understandably, there are numerous distractions and emergent matters to deal with. However, if you neglect a community’s communication needs, don’t be surprised to learn your clients have been secretly looking to replace you. You can avoid that disappointment by making communications a top priority. If you need help telling your story, don’t be afraid to seek out an expert. Communicating with your clients is the best way to assure they will stay loyal to you for years to come.  …

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10 Real Estate things agents should know and do.

10 Real Estate things agents should know and do.

  • Posted: Jul 12, 2015
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1. Immediate Response: As a real estate agent you need to make your response time, when your prospective buyer calls or emails, as quick as possible. If the buyer doesn’t find you available then he may call somebody else. Buyers want instant response and will not wait for you to call them back or respond to mails only when you are in office.


2. A person he can trust: An agent needs to tell the buyer the truth even if it means losing the sales. While you speak volumes about the virtues of a home, you need to point out the possible defects as well so that the buyer can think twice and not be blinded by only the positive features. The buyer should feel that you are on his side and fluff and untruth will make him lose his confidence in you.


3. Keep learning on the job: A person is smart when he hires people smarter than he is (Henry Ford). A buyer wants to use your education and experience in order to feel that he has employed the right person to do the job. You should come across as an expert in the field. The best and only way it is done is through constant learning. This can be through trainings and also reading relevant stuff. You should have a ready knowledge about the property that you are highlighting.


4. Good communication skills: You need to be extremely good at handling your communications. There are all kinds of buyers and while some prefer an e-mail others may like you to call them. The best course is to ask them their preferred mode of communication. Always remember to promise less and deliver more.


5. Professional and friendly: Being friendly and at the same time maintaining professionalism is the best way, although a bit difficult. Friendliness is preferred by most buyers as you give out the vibe that you are on their side. At the same time they also want you to be assertive and professional. They want you to handle anything that may come up while they are probably viewing the house or saying €no’ to a particular seller.


6. Information about the neighborhood: When you are trying to sell a property in a particular neighborhood you should have good knowledge about it in terms of amenities and facilities. Your buyer may be interested in knowing about train stations or bus stops that are close by. The interest could even be a park for children. Make a search and find out all you can about areas where most of the properties that you deal in are located.


7. Price guide: You need to be the professional who has inside information about the price. The client may be interested in your opinion so prepare yourself well. You need to be careful that you do not quote a price that is too low or too high. You need to be ready with market trends and facts for the particular area and similar properties. Guide them to make an informed decision.


8. A good inventory: When a buyer visits you he wants to know about as many properties as he can. He expects a wide inventory and you need to be ready with one. Since you cannot predict the kind of home each buyer requires as buyers buy for their own reasons, you need to have all kinds of properties ready. The choice of properties should take care of a wide arena of needs and requirements.


9. Dedicated time: When a buyer comes to you he expects you to devote all your time to him until he leaves or makes a decision. Remember you may be selling 10 houses in a week but for him it is one single home that he may be buying in a lifetime. You need to show your enthusiasm and zeal and help him to decide on the perfect home. Try and focus on him and the transaction he is going to make and leave all work aside for the time being.


10. Time saving transactions: The modern real estate buyer is hard pressed for time. He wants the transaction to be fast and take up as little time as possible. And he would like you to handle things in such a way that the total time is cut down and he can proceed with other things. So do your homework and be prepared to save time, both his and yours.


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