Tasks of a property management: types of management and costs

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Overview
Overview

Definition: What is a property management company? 

A property management company is a company that takes care of the commercial, technical and operational management of real estate. The management can be carried out either by an individual (manager:in) or by a team. The real estate under management includes residential buildings, apartment complexes, condominiums as well as commercial properties. 

There are different types of property management, such as WEG management, rental management or commercial property management. As an owner, you should familiarize yourself with the different types of property management. Here is a brief summary: 

  • The WEG administration is responsible for the administration of the common property of an apartment complex or a residential building. 
  • In rental management, the manager takes over the management of rented houses on behalf of the owner. 
  • The condominium management takes care of the management of rented condominiums. 
  • Commercial property management refers to the management of buildings used primarily for commercial purposes.

It is important to understand the difference between common property and special property. Common property includes all parts of the building that belong to all owners in common, such as the staircase, the elevator, the roof or the common garden. The management of common property is the responsibility of the WEG administrator. In contrast, special property refers to a self-contained unit with a residential purpose, such as an apartment. Special property is managed by the owner himself or he can hand over the management to a third party as a service.

What are the tasks of a property management company?

The range of tasks of a property management company is extremely extensive and can be roughly divided into three categories:

  • Commercial administration: First of all, this involves administrative activities, such as the preparation of service charge statements, the administration of rental agreements or the organization of owners' meetings.
  • Technical management: The technical management of the property is also an important aspect. This includes, for example, the supervision and commissioning of tradesmen as well as the maintenance and upkeep of the building itself.
  • Legal tasks: financial management also plays a role, such as monitoring rental income and processing payments. A reputable and reliable property management company ensures that all tasks that arise are handled professionally and effectively.

In the following, we explain the three task areas in detail: 

Commercial management 

The activities of a property manager can be divided into three categories, the first of which includes commercial tasks. In this role, the property manager is responsible for the economic management of the residential building or complex on behalf of the owners and takes care of the following issues:

  • Collection of the house fees from the apartment owners
  • Ongoing accounting as well as auditing and payment of invoices from service providers
  • Preparation of the annual financial statement and preparation of the business plan
  • If applicable, collection and management of rent from tenants (in case of rental management).

What all comes with the prize at Ralph's: 

  • Ensure timely, complete, and proper bookkeeping
  • Consistent and regular reminder system for house payments
  • Payment reminder of a condominium owner to fulfill his obligations        
  • Preparation of the certificate § 35 a EStG household services
  • Collection of house money claims, special allocations and settlement results
  • Execution of all payment transactions
  • Annual liquidity planning for the entire community
  • Separate accounting of economic subcommunities
  • Preparation of operating cost accounts of rented common property
  • Review of annual accounts from the pre-administrator to the administrative takeover (upon request).
  • Collection and settlement of special levies 
  • Processing of VAT-optional objects
  • Preparation of separate statements for third parties (tax advisors)

Technical management: 

In addition to commercial tasks, a property manager also takes care of the technical aspects of the residential building or complex. The following topics are among the tasks of the property manager:

  • Assessment of the building condition before renovation work
  • Planning and coordination of construction measures
  • Control and monitoring of the progress of construction
  • Maintenance and repair of technical equipment such as elevators or electric gates
  • Regular inspection of the technical equipment.

What all comes with the prize at Ralph's: 

  • Establishment of a long-term maintenance plan
  • Obtaining offers
  • Regular object inspection with technical experts
  • Emergency service availability (by the specialist company responsible for the property, announced on the house notice board). Each property supervisor can be reached in case of emergency.
  • Monitoring / invoicing of maintenance work within the scope of the approved contract sum 
  • Monitoring of construction measures (plus flat administrative fee, depending on the extent of the work)
  • Processing of insurance claims (notification to the insurance company, inspection with experts, commissioning, inspection, acceptance of craftsmen's services, settlement with the insurance company)

Legal tasks

For proper management of a residential building, a property manager needs good legal knowledge. Especially when managing a homeowners' association, there are numerous legal pitfalls to consider. Knowledge of the WEG law is of great importance here. The legal tasks of a property manager include representing the owners' association vis-à-vis third parties, complying with legal requirements, and negotiating, concluding and reviewing contracts.

Not all tasks are carried out by the property manager personally, but he organizes and coordinates the various activities to ensure that everything is done properly. It is also possible to delegate necessary tasks to external experts such as architects or maintenance companies by resolution.

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What is a WEG management?

A WEG administration is responsible for the administration of so-called Wohn-Eigentümer-Gemeinschaften, where several owners jointly own a residential property, as defined in German residential property law. WEG administration takes care of the technical, economic and commercial management of the WEG as well as the creation and enforcement of house rules, with the WEG law forming the basis for proper administration. The administrator:in a WEG is appointed by majority resolution of the owners' meeting and assumes tasks such as the monitoring and collection of house payments as well as the preparation of an economic plan and an annual statement. The WEG administration is also responsible for determining needs, commissioning and supervising repair and renovation measures. The administration can offer an additional service of a janitor service, but this is not a mandatory task. 

The main tasks of a WEG management include the following services: 

Accounting and economic plan 

The duties of a property manager include not only monitoring incoming payments from owners, but also checking, paying and correctly posting expenses. All disbursements must be stored unalterably and supported by a detailed invoice. A classic income statement is usually sufficient to provide an overview of incoming and outgoing payments.

Before the beginning of each year, the property manager prepares an economic plan that forecasts the expected payments for the coming year and assesses the anticipated house payments. This involves calculating the funds required on the basis of contracts and experience from previous years and allocating them to the individual owners in accordance with the declaration of division and the agreed apportionment formula.

After the end of the business year, the final account is drawn up on the basis of actual invoices and payments. Differences between the business plan and the statement of account are settled by means of a corresponding additional payment. If more money has been paid in than estimated in the business plan, the money can be added to the reserve or paid out to the owners.

Maintenance and refurbishment

Another important area of WEG management is the technical care of the property. However, it is important to note that property management does not automatically include a janitor service. Some administrations do offer this additional service, but it is usually billed separately.

The actual task of a property management company is to determine the need for repair and maintenance measures, to commission them and to monitor them. To do this, the management must regularly check the condition of the property and pay particular attention to hidden damage or future problems. Should a problem arise, it is the responsibility of the administration to find a suitable craftsman and commission him to carry out the repairs. In the case of major renovations, the project is put out to tender to determine the best offer with the best price-performance ratio. It should be noted, however, that repairs that need to be done quickly should be distinguished from refurbishment, modernization or renovation measures that require longer preparation.

Forward-looking management also draws up a long-term renovation plan listing measures that need to be carried out on a regular basis. These plans also form the basis for calculating the WEG's reserves.

Owners' meeting 

The annual owners' meeting is an important part of the WEG administration and must take place once a year. All owners of the community are represented at this meeting and also appoint the administration by means of a corresponding resolution. If an administrator has already been appointed, he/she will also take care of convening the owners' meeting in due time in the following years.

During the meeting, it is the responsibility of the WEG administrator:in to take the minutes, to ensure that the meeting is chaired and that everything runs properly. However, the administration has no voting rights during votes, but is solely responsible for recording the resolutions and voting ratios. Any major renovation, modernization or refurbishment of the building must be presented at the annual meeting and approved by the majority of the owners. Once a resolution has been passed, the management must implement it.


What is a WEG management?

A WEG administration is responsible for the administration of so-called Wohn-Eigentümer-Gemeinschaften, where several owners jointly own a residential property, as defined in German residential property law. WEG administration takes care of the technical, economic and commercial management of the WEG as well as the creation and enforcement of house rules, with the WEG law forming the basis for proper administration. The administrator:in a WEG is appointed by majority resolution of the owners' meeting and assumes tasks such as the monitoring and collection of house payments as well as the preparation of an economic plan and an annual statement. The WEG administration is also responsible for determining needs, commissioning and supervising repair and renovation measures. The administration can offer an additional service of a janitor service, but this is not a mandatory task. 

The main tasks of a WEG management include the following services: 

Accounting and economic plan 

The duties of a property manager include not only monitoring incoming payments from owners, but also checking, paying and correctly posting expenses. All disbursements must be stored unalterably and supported by a detailed invoice. A classic income statement is usually sufficient to provide an overview of incoming and outgoing payments.

Before the beginning of each year, the property manager prepares an economic plan that forecasts the expected payments for the coming year and assesses the anticipated house payments. This involves calculating the funds required on the basis of contracts and experience from previous years and allocating them to the individual owners in accordance with the declaration of division and the agreed apportionment formula.

After the end of the business year, the final account is drawn up on the basis of actual invoices and payments. Differences between the business plan and the statement of account are settled by means of a corresponding additional payment. If more money has been paid in than estimated in the business plan, the money can be added to the reserve or paid out to the owners.

Maintenance and refurbishment

Another important area of WEG management is the technical care of the property. However, it is important to note that property management does not automatically include a janitor service. Some administrations do offer this additional service, but it is usually billed separately.

The actual task of a property management company is to determine the need for repair and maintenance measures, to commission them and to monitor them. To do this, the management must regularly check the condition of the property and pay particular attention to hidden damage or future problems. Should a problem arise, it is the responsibility of the administration to find a suitable craftsman and commission him to carry out the repairs. In the case of major renovations, the project is put out to tender to determine the best offer with the best price-performance ratio. It should be noted, however, that repairs that need to be done quickly should be distinguished from refurbishment, modernization or renovation measures that require longer preparation.

Forward-looking management also draws up a long-term renovation plan listing measures that need to be carried out on a regular basis. These plans also form the basis for calculating the WEG's reserves.

Owners' meeting 

The annual owners' meeting is an important part of the WEG administration and must take place once a year. All owners of the community are represented at this meeting and also appoint the administration by means of a corresponding resolution. If an administrator has already been appointed, he/she will also take care of convening the owners' meeting in due time in the following years.

During the meeting, it is the responsibility of the WEG administrator:in to take the minutes, to ensure that the meeting is chaired and that everything runs properly. However, the administration has no voting rights during votes, but is solely responsible for recording the resolutions and voting ratios. Any major renovation, modernization or refurbishment of the building must be presented at the annual meeting and approved by the majority of the owners. Once a resolution has been passed, the management must implement it.


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