Active vs. passive property management

Geoff Roberts
Geoff Roberts | 5 min. read
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Published on September 21, 2009

At the heart of it all, property management involves dealing with people. If you own your own property, you’re working with tenants, potential tenants, contractors, and real estate agents on a regular basis. And if you’re managing someone else’s property, you’re dealing not only with this cast of characters, but with the property owner as well.

Like properties, property owners come in all shapes and sizes, with a wide spectrum of expectations for the property managers they hire. To complicate matters, these expectations are sometimes unspoken—which means it’s up to you to figure out what makes your boss tick and how you can best meet his needs. With this in mind, one of your first property management tasks is determining whether you’re working with an active or passive property owner. For the purpose of this blog, active property owners are those who are very interested in the day-to-day operations and happenings of their investment property. Passive property owners take a more hands-off approach and will likely be in far less regular communication with you, whether by choice or due to circumstantial factors (i.e., living in a different area or state).  Following are some tips for property managing with both active and passive property managers in mind.

Record Keeping
Organization is a critical aspect of property managing, whether you’re dealing with an active or passive property owner. Make sure to keep careful, easily accessible records available for things like rental income, bill payments, rental applications, repairs, complaints, and other administrative data.

Active: An active property owner will likely be interested in reviewing any and all of these records frequently. Provide him with an online organization system login so that he can check records whenever he wishes. Also make sure to demonstrate how your record-keeping program is navigated so he can move around and check things out as he pleases. Finally, whenever you feel that important records have been added or changes have been made, shoot off a quick email to alert him.

Passive: A passive property owner is unlikely to be interested in detailed records. This means that you will have to organize and verify them all the more carefully—after all, you won’t have a second pair of eyes to catch those omissions and errors we’re all privy to. Provide him with a login so that he can check the status of things as desired, rather than being bombarded with a series of phone calls and emails.

Tenant Selection
Carefully screening and selecting tenants is obviously one of your more important functions as a property manager, no matter what type of property owner employs you. (Not to mention, you’ll make your own job much easier in the long run by putting in the work to qualify tenants ahead of time.) However, you may want to execute the process differently according to property owner type.

Active: Keep your property owner in the loop throughout the entire unit-filling process. Let him know where you are advertising and what sort of interest you’re getting. When applications come in, see if he wants to take a look at the tenant pool before screening begins. And once screening is complete, let him know what the best options are, allowing him to take part in the actual tenant selection if he so desires.

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Passive: Chances are a passive property owner will be concerned solely with finding a reliable tenant to fill an open unit. Carefully complete your due diligence throughout the selection process and when you’ve found the perfect tenant, shoot the property owner an email letting him know who will be renting out the unit and providing basic lease details.

Repair Work
As we’ve previously discussed on this blog, getting any necessary repair work done as efficiently and proactively as possible is imperative. When it comes to repairs, though, there are often options in terms of what steps can be taken and what sort of fix they provide (i.e., short-term or long-term).

Active: Present your property owner with a detailed explanation of the problem at hand and available options for resolution. This should include the technical details of the repair as well as quotes and time estimates. An active property owner may well want to make the final decision.

Passive: Collect as much information as possible and perform any research necessary. If a repair will amount to a significant expense, make sure you give the property owner a heads-up. For the most part, however, this decision will likely be yours. Make it in an educated manner taking cost, time, and long-term effects into account.

In the end, a good property manager will always be organized, pragmatic, and educated on the issue at hand. Essentially, when it comes to active versus passive property owners, the difference lies in dissemination of information. One final word of advice though: No matter what type of property owner you’re dealing with, if you’re ever in doubt, err toward providing too much information rather than not enough.

Like this post? It’s one of the many posts collected in the free ebook, All Things Property Management: Getting Started. Click here to download your copy now!

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Geoff Roberts

Geoff is a marketer, surfer, musician, and writer. He lives in San Diego, CA.

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