Property management: definition, tasks & costs

The property management company is responsible for various tasks that arise on behalf of the owners within a community of owners. In this article, we answer the most important questions about the services provided by a condominium management company. What management tasks and types of property management are there? How much does property management cost? What rights and obligations do condominium administrators have? We'll tell you.

Definition: What is a property management company?

Property management is an important part of the real estate industry, as it takes on the management, representation and organization of residential and commercial properties in the interests of the owners or landlords. A further distinction is made here between condominium management, rental management and commercial property management. Basically, property management ensures that properties are efficiently managed, maintained and administered.

What are the tasks of a property manager?

The tasks of a property management company, especially for the homeowners' association (WEG), are diverse and clearly defined by the WEG Act. According to WEG law §27 paragraph 1 and 2 WEG, the tasks of a property management company include in particular

• Correspondence with the apartment owners
• Management of the WEG account and thus WEG assets
• Proper accounting of all income and expenses
• Inclusion of the house money from the owners
• Control and processing of payment transactions as well as dunning in the event of late payment of house money
• Preparation of the year-end statement in the form of overall and individual statements for all owners
• Development of the annual business plan
• Preparation, convening and holding of owners' meetings
• Representation of the owners vis-à-vis third parties
• Negotiation and conclusion of contracts (insurance, utilities, janitor services)
• Monitoring and enforcing the house rules
• Processing complaints and violations of the house rules
• Monitoring compliance with legal requirements
• Initiating maintenance and repair measures

• ... and many other tasks

The property management tasks listed above are only part of the management tasks. Depending on the individual agreement and the needs of the homeowners' association, other specific services may be added and included in the management contract. The tasks may differ again depending on the type of property management. For example, a rental management company takes on different tasks than a property manager.

Basically, however, our list of tasks shows you how comprehensive the tasks of property management can be. The aim is always to maintain and increase the value of the managed properties and to ensure that the interests of all owners are represented holistically.

New WEG law fundamentally changes the management of WEGs

The WEG reform in force since December 2020 has changed the management of real estate and, in particular, common property. Since then, the responsibility for management lies entirely with the WEG, which has increased the tasks and duties of managers and the liability risk, among other things.

We have summarized the new rules and changes for you:

• Simple majority: Structural changes and modernizations can now be decided by a simple majority at the owners' meeting.
• Quorum: The owners' meeting always has a quorum, regardless of how many condominium owners are present. This prevents owners' meetings from being blocked due to a lack of participation.
• Virtual participation: It is now possible for owners to participate in the meeting virtually, which can increase the willingness to participate.
• Right to structural alterations: Every homeowner has the right to demand certain structural changes, such as measures for accessibility, e-mobility, burglary protection or fast internet access.
• Representation of the community: The management is now the unrestricted representative of the WEG vis-à-vis third parties.
• Independent decisions: The manager can decide on his/her own responsibility on certain measures, such as repairs and minor purchases, without having to obtain a resolution from the owners' meeting beforehand.
• Dismissal: The administrator can be dismissed easily and without giving reasons. The administrator contract ends no later than six months after the dismissal.

Property management vs. janitor: what's the difference?

Property managers and janitors take on two different roles that are often confused. Although both parties are responsible for the smooth running of a condominium complex, their areas of work and responsibilities differ considerably.

• Craft activities: Janitors are responsible for the maintenance and repair of the building as well as the upkeep of the outdoor facilities. Tasks include, for example, cleaning the stairwell, communal areas and outdoor facilities; winter maintenance, i.e. clearing snow and gritting paths, carrying out minor repairs in and around the property and maintaining green spaces, flower beds and trees.
• No administrative tasks: Janitors are generally not responsible for administrative or financial tasks.

However, both parties often work closely together. The property manager can assign certain tasks to the janitor or support him/her in fulfilling these tasks. The janitor in turn informs the property manager about necessary repairs or other incidents in the building.

Practical examples:

• The property manager commissions the janitor to carry out repairs in the stairwell.
• The janitor informs the property manager about a burst water pipe in the cellar.
• The property manager organizes the repair of the burst water pipe and hires a specialist if necessary.

Property management vs. condominium management: what's the difference?

There are two types of property in a condominium owners' association: separate property and common property. Special property refers to individual, rented apartments and certain components contained therein. These apartments belong to an individual owner who rents them out. Individual property management deals specifically with these rented units, while condominium management is responsible for the common property, such as the stairwell, the garden or the roof.

In order to clarify which parts of the building and property belong to common property or separate property, the declaration of division serves as the authoritative document. This specifies in detail which areas fall under the jurisdiction of the common property and which are therefore considered separate property.

Property management vs. rental management: what's the difference?

As the owner and landlord of a property, it is equally important to understand the difference between property management and rental management, as these two types of property management cover different areas of responsibility for the rental property.

Tenancy management focuses on the management of individual rented apartments and the relationship between landlord and tenant. The main tasks include

• Search and selection of tenants
• Conclusion and management of rental agreements
• Rent collection and monitoring of rent payments
• Communication with tenants
• Maintenance and repair of the rented units
• Settlement of ancillary costs of the rented apartment
• Termination management

The main differences between tenancy administrators and condominium administrators are based on the following aspects:

• Focus: Rental management concentrates on individual condominiums, while property management looks after entire residential complexes and communal property
• Client: Rental management works for individual landlords, while property management works on behalf of all owners.
• Legal basis: The tasks of tenant management are based on individual contracts. The tasks of condominium management are based on the Condominium Act and the management contract
• Obligation: Hiring a tenant management company is voluntary and can save you a lot of work as a landlord, while a condominium management company can be obligatory if a condominium owner requests it

As a property owner, you should decide what type of management you need for your condominium depending on your situation. If you rent out a single apartment, a rental management company may be sufficient. If, on the other hand, you own an apartment in a community of owners, a property management company is usually necessary to look after the entire community property.

Important: In condominium owners' associations (WEG), the appointment of a property manager may be mandatory if a co-owner requests this.

What are the costs of property management?

The costs of property management can vary and depend on various factors. It is therefore difficult to make a blanket statement about management costs. However, there are some guidelines and influencing factors that play a role in pricing.

For larger apartment buildings with many residential units, the average cost of professional property management is around 30 to 40 euros per month per residential unit. For smaller communities or two- to three-family houses, however, the costs per residential unit can be significantly higher. This is because the administrative workload remains relatively constant regardless of the number of residential units and is therefore spread over fewer shoulders for smaller units.

Administrative costs are influenced by these factors, among others:

• Location of the house: In urban centers and sought-after residential areas, the prices for property management are often higher than in rural areas.
• Age and condition of the building: Older buildings in need of renovation or with complex building structures generally require more administrative work and therefore lead to higher costs.
• Number of units to be managed: The more residential units a condominium manager manages, the lower the management costs per unit usually are.
• Type of management: Whether it is a WEG management or a tenant management also affects the costs. COA management is often more complex and time-consuming than tenant management.
• Scope of the agreed services: The more services the property management company takes on, the higher the costs.
• Conflict-ridden homeowners' association: If there are frequent disputes between the owners, this can significantly increase the administrative workload and thus drive up costs.
• Price differences between urban and rural areas: In urban areas, prices for property management companies are often higher than in rural areas due to higher demand and higher staff costs.
• Local market conditions and competitive situation: In regions with many property management companies, there is greater competition, which can have a positive effect on prices.

Some property management companies also offer percentage-based remuneration models that are based on the gross annual rental income. This can simplify cost planning for owners, as the costs are directly linked to the rental income.

Please ask Ralph about our property management costs

Future prospects: Digital property management as a modern solution for WEGs

In our opinion, the concept of digital property management provides THE pioneering answer to the challenges of the condominiums of the future. At Ralph , a digital property management company from Berlin, we achieve this by focusing on efficiency, transparency and user-friendliness. Digital property management like Ralph offers numerous advantages for our certified property managers as well as for all owners and tenants and is a decisive step towards modern and sustainable condominium management.

What is digital property management?

At its core, digital property management is based on a system that combines all aspects of condominium management on a central, digital platform. This online platform enables a variety of functions that make everyday life easier for managers, owners and tenants as follows:

• Online access to important documents: Whether house rules or invoices - all relevant documents can be viewed online at any time and from anywhere.
• Digital management of defect reports: Defects can be reported quickly and easily via the platform, which shortens processing times.
• Automated data and document management: The platform takes over the organization and storage of owner data, which saves time and reduces the error rate.

Advantages of digital WEG management

The advantages of digital property management are manifold and have a positive impact on the support and management of residential complexes:

• Accessibility and transparent services: Information is accessible around the clock and from any location, which increases communication and transparency between managers and owners.
• Increased efficiency: Automated processes speed up workflows and minimize manual errors in the management of the managed condominium property
• Cost savings: By reducing printing, postage and archiving costs, significant savings can be made in the management of the property
• Transparency: All processes and documents are clear and comprehensible, which strengthens trust in the administration.
• Environmentally friendly: The reduced paper consumption through digital document management contributes to environmental protection.
• Accelerated communication: Direct and fast interaction between property managers and homeowners ensures smooth processes and services

Do you already know Ralph?

Ralph is your modern, digital property management company from Berlin. At Ralph, we take care of all aspects of your property so that you can sit back and relax. Our experienced managers take care of the management, maintenance and support of your property - from tenant communication to optimizing operating costs and more.

Put your trust in our expertise and benefit from a comprehensive service that saves you time and stress. Contact us today for a free quote!