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property management organization

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property management organization


This article relates to issues concerning marketing, human resources, technical resources, operations and financial management in the real estate management company.


Management of most companies means planning and organizing work of employees as we as control/ audit of their performance.

Real estate management is an activity performed often not only by a single manager but a specialized company, which should be organized and monitored itself.

Real estate management requires accessibility to market resources. Most significant are financial resources, human capital, and technology. Resources determine position and company’s strategy and certainly we can and should talk about marketing, personnel, processes, technical resources, financial and even knowledge management.

Following chapters are focused on issues connected with organization of property Management Company.


Product and services sales have significant meaning for the success of companies operating on markets worldwide. Property managers sell management services. Their performance and success is based on fulfilment of client needs and expectations in terms of real estate management.

Most managers tend to target their clients. Targeting enables them to focus on a group of potential services receivers, type of properties, as well as strategy.

Following the classification of property into residential, commercial, industrial, agricultural and special purpose real estate (churches, schools etc), managers often specialise in one or two types of them. Usually only major agencies specialise in management of all property’s types.

Property market can also be divided into private and public sectors, where real estate ownership type is used for classification. In some countries for example, most state owned properties have to be managed by licensed managers chosen on the basis of public procurement law. Segment choice is only a first step in marketing management. Next one is qualification of customer’s needs, as well as preparation of marketing mix in form of marketing plan.

Marketing mix consists of 4 Ps- product, price, place and promotion. In property management product means simply services offered and provided. Manager may perform his duties (administration, marketing and physical management activities) on a daily/ weekly basis, depending on mutual agreement with the property owner.

Next “P” is a Price. In case of property management it is the amount of money paid by the owner to the manager (salary). It is also a price of utilities and media that are covered by the owner or occupier as a result of contracts and agreements between property manager and electricity, water etc. providers.    Place, basically a location where a product or service can be purchased. It does not necessarily mean a physical market place; it may indicate a virtual store (like internet shopping). Choice of distribution channel belongs to the product/ service provider and is based on subject and object structure.   Subject oriented chain of distribution is defined by potential and current client (client oriented approach). Distribution chain focused on objects is described by procedures and activities performed in order to gain new clients and meet needs of current ones.  Services may be provided by the property managers personally or may be outsourced.

Last but not least is Promotion, which stands for communications that in our case property managers may use on the market. Some distinguish 4 forms of possible promotion activities such as advertising, public relations, word of mouth and point of sale.

Decisions concerning choice of marketing mix strategy are basic for any marketing oriented management style. They should be based on data, market and business cycles analyses.

Every market, including the real estate market, is under the influence of changing factors/ trends which cause so called business/ economic cycles.  Cycles refer to the fluctuations of economic activities of market participants in the long term. Cycle can be described by 4 major shifts: recovery, prosperity, stagnation and recession.

Property managers behave differently during 4 cycle stages. For instance during the prosperity stage market players are more willing to invest. In that case managers should be prepared to offer additional services as well as encourage property owners to invest in overhauls, facilities and so on. Recession or even already stagnation stage is a signal for managers to think about cost cutting solutions and maintaining property income on possibly high level.  Also price, place and promotion aspects of property management should be adjusted to the current economic cycle stage.

Loyalty programs are also a powerful tool in the hands of property managers (especially commercial and industrial). Well established relations between client and service provider play an important role during a recession stage and can encourage clients to continue cooperation.


Management is an art of meeting objectives by organizing work of others. Therefore without any doubt human resources management plays an important role in a company’s strategic plan.  An HR activity consists of two layers: company aims/strategy oriented and employees’ needs and development.

Human resources activities include recruitment, motivation and employee assessment. Recruitment process in the property management company depends on the kind of services which the firm is providing and price/ salary strategy. Activities profile determines who is needed and how many licensed managers will be employed. It is legally required that each property management company among all employees has to hire licensed managers.

Recruitment process in the management company is similar to processes in other companies. Most common are hiring recruitment/ headhunting companies to do the process or use the company’s HR department. First solution is mostly while recruiting upper level management.  But many operations of property management companies do not require involvement of upper level managers and (small) firms can actually run their business without them. However international corporations offering management, consulting and other services on the real estate market hire specialists not only from the property field but also financial directors, IT specialists and so on.  When a company decides to recruit on their own, usually HR specialists use so called world of mouth, newspapers ads or internet. Real estate industry attracts many potential employees, no wonder that separate job portals are created on the internet in order to address the demand and supply side of the labor market.

After the recruitment process is completed next challenges occur. Human resources management is responsible for employees’ motivation on the way to achieve a company’s goals. Depending on the company’s profile and size it can involve face to face sessions, group workshops, and salary level increase. It also involves so-called corporate culture, which includes bonuses, personal development paths, team building events and so on.

Motivation systems require employee and progress control. While property management companies offer services, clients’ satisfaction is probably the best factor indicating managers’ performance. Clients can share their opinion in questionnaires, interviews etc.

Another way of progress control is possible within the company. Turnover, contract aims and audit are just examples. Every firm has tools at their disposal to make sure if employees are performing their job on the possibly high level.

Another important area is the personal development path. It is believed that job satisfaction is a key to better performance of each worker. Development and needs fulfillment is closely linked with employee motivation and loyalty programs. Examples of HR activity in this field are internal and external training, workshops, also “on the job” training while new activities are learned during performing duties and work shadowing- observing others performing their job.

Training in the form of seminars or workshops are usually treated as a quick way to share condensed information and knowledge with the audience. Their role is also to motivate listeners to start new projects, share ideas with others and so on.

On the other hand trainings alone are only ways of communicating issues, passing theories. Without will and practical steps will not bring any change. Implementation and enforcement of new methods after trainings by supervisors seems to be an imperative.  Other form of is coaching, directing and training of workers. It may include motivational speaking, supervised practice. Usually a coach is a person who is an expert in a field explored by the worker. Coach offers advice and support to the younger team player and most often is not the employee’s supervisor but a person with job seniority.

Also personal career paths and promotion possibilities play an important role in the motivation programs for workers, who want to be in charge of their development within a company.


Concept of management does not only concern workers, teams, but also resources. One of the resources in property management are technical resources, which are technical devices used by managers and building users during day by day operations.

Important in technical resources management is ownership of these resources. They may belong to the owner of the building, owner of a company which is renting a space or may be provided by the managing firm, also rented, leased. It depends on strategy, costs, importance and kind of resource and many other factors.

For instance, clearing snow from building facade which usually requires having duty equipment. Equipment may belong to the building’s owner, building’s occupier, property management company, also rented. Another option is to outsource the entire “clearing of service”. Every single solution (except the last one) requires the property manager to hire a person to actually do the “clearing off job”.

If a property management company decides to own technical resources used in building operations, it needs to be ready to manage them also. Usually this means hiring additional specialized managers (or even a couple of managers) to take care of the stock.


Management does not only concern human and material resources, but also processes that take place and knowledge as well. In every company operations like information and documents circulation, skills development programs, strategies to win new clients, should be well established, practiced and managed.

Important factor in day to day management is a proper definition and documentation of a company’s operations (also called know how). Procedures are important, especially in case of large companies where many workers carry out similar duties. Gathered and shared knowledge saves time and money. New employees do not waste time to create procedures which are already well established among other co-workers; also knowledge is secured and will not disappear when a worker is changing jobs.

Documentation of procedures used within a company alone is not enough and does not guarantee a success. Implementation of structures, constant monitoring and up-dating are very important factors.

Work of property managers on a daily basis consists of a number of recurrent activities like rent calculation and collection, building operations management, and so on.

Important is to create frames for all activities and to improve their effectiveness on one hand, on the other to assure constant flow of gathered knowledge among employees.


All in all company’s finances includes processes connected with gathering, managing and spending of financial resources. They may be in the form of initial capital, income, also loans, and credits and so on. Outflow of financial resources is caused by expenditures on day to day operations, salaries for employees, loan commitments etc.

Financial management consists of several areas like book- keeping, managerial accounting, financial analysis, and internal audit. In most cases financial management rules and requirements are similar in each sector, as well as in property management. For example financial reporting or taxation and accounting.

Nevertheless companies (and property management also) often approve and use their own procedures, especially when internal issues are concerned, like documents flow, expenditures acceptance, audit and control of amounts due. This area, even though being a part of financial management in general, is very specific and individual for each firm. Often no other than a financial manager is a person responsible for efficiency and liquidity by providing and interpreting financial data, forecasting, or even formulating long-term business plans.

Crucial factor is property management is a budgeting issue. Preparing a property management plan manager also prepares a budget, which indicates level of expenditures on services required and planned to be bought.

Manager also needs to make a forecast about possible profit and include it in budget calculations.

Managing property’s budget and level of commitment in budget execution is a key to success in financial management. First step, like in any other management process, is aim determination. Financial aim may be presented in absolute or non absolute value.

Profit in absolute value terms may be counted as a profit earned by the real estate management company from all property management activities or from each property separately. This measure, although very clear and simple to understand, is not used very often, while not useful when effectiveness needs to be determined.   Financial managers often use a non absolute value concept instead.  In real estate management, it is important to predict and measure a possible transaction price per square meter.    Profit generated and presented in the form of per square meter price helps to specify if a company actually gains or loses while engaging in new deals and managing more space.

Usually the economy of scale rule applies also to property management, and when a firm decides to administer more space, fixed costs are divided between income from already managed properties and new ones (net profit per square meter increases).

Property management companies sell services, in this business people are the key to success. Often while expanding operations and hiring more staff, the firm counts on an increase of net profit per employee.  More employees can carry out a number of additional projects which usually increases profitability.

After financial goals for the company are set, the next step should be creation and implementation of internal audit procedures. Financial reporting, book- keeping should not only meet principles of accounting but also be a source of clear and reliable information for decision makers- managers.

Financial accounting standards are the result of law and tax requirements, which should be met by every company, also property management ones.  Managerial accounting supports decision makers while setting future goals. Useful in this process is the description of “profit centres”. For property management company profit centre will be a building, buildings complex which brings profit (profit and loss statement).    Profit centre analysis helps managers to define which building (property) brings highest / lowest income. It may be a basis for future corrections in managed properties portfolio, such as cost cutting, investment, and tenants overturn or manager replacement.

From the management point of view, audit of results seems to have a significant meaning. Monitoring of actual situations and counteracting against deviations in a real time are forms of audition and correction use not only by property, but all managers.   If for example profit from a specific property is dropping or is simply lower than predicted, while security costs are higher property managers should be able to catch a difference and take necessary steps to prevent further losses.

It may be a change of security system, search for additional sources of money etc. Solutions depend on managers’ abilities to adjust projects to new situations.

On the other hand even audit and monitoring processes will not cover all risk areas within the property management. Uncertainty is always a part of every business activity. One can and should prepare to face it, but in some cases it is simply impossible to predict and overcome adversities. Every business activity is exposed to risk. Depending on the business nature, the type of risk will vary: operational risk, financial risk, investment risk, credit risk, liquidity risk, tax risk, legal risk, occupational risk, interest rate risk etc.  For property managers the first two have a significant meaning.

Operational risk is affiliated with loss resulting from inadequate or simply defective internal processes, people, systems, or external events. In property management this could be loss of tenants, withdrawal of major clients, economic slump on the property market, drop of prices per square meter, etc. Second significant in the real estate market is financial risk, which is associated with use of any type of financing and source of risk lies in loans/ credits coasts. If costs of external financing are higher than the company’s income, the risk that the firm will not have adequate cash flow to fulfil all financial commitments occurs.


Personnel recruitment is a part of property management office organising. Skills required from recruited staff and workplace solutions may vary depending on the type of properties managed by the company.

In case of residential properties an important part of business will be service provided to a single occupier, who is an end user. Individual clients usually require face to face contacts while addressing questions concerning use of premises or rent collection. Therefore the physical presence of a residential property manager is required. Most often the manager acts as a building administrator and performs the job on premises on a daily basis (or as agreed).

It is always important to appoint a person within a property management firm responsible for contact with tenants, especially when rent payments and terms are concerned.

In case of offices managing a significant amount of residential properties, usually an accountant is a person responsible for monthly billings and sending information by mail, e-mail, and fax to tenants. Then the building administrator holds responsibility for distributing information about changed rates.

Smaller property management agencies usually combine the roles of accountant and administrator, and this person is fully responsible for building operations as well as contact with tenants and rent collection. Rent settlement may take place in administrators office, which is located on premises or it may be in the head office of management.

A first option is more convenient to tenants. Second one for property management. In firms taking care of more than one building second solutions is more common. Integrated system of rents collection, income and expenditures helps managers to control operations and is a significant source of information for each of them. On the other hand integrated accounting system requires separate/ additional space, which in case of small firms generates costs difficult to cover due to low profitability in comparison to large companies.    Commercial and industrial properties tenants have a bit different expectations. Building administration and rent collections is only a part of the manager’s duties, also protection of the owner’s investment and maximization of the owner’s return is a part of the manager’s job. Therefore in commercial and industrial sectors property management is performed by large companies, hiring a number of licensed specialists.

In case of commercial properties, especially business properties, including office space, shopping centres, hotels, external and internal design and building layout has a high priority (often prestige indicator). For industrial properties manager (warehouses, factories) accessibility (infrastructure), stock security is the main issue.

Nowadays many commercial and industrial buildings operate 24/7. Role of property manager is to provide a service when needed, in the real time, which often requires his personal assistance even after so called office hours. To sum up, property management office organization is based on client’s expectations and needs, also on management (managers) abilities to perform duties on the profit & loss basis.

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