Property vs. Project Management:
What Every Rental Property Owner Needs to Know

Property management and project management are both crucial aspects of the real estate industry, but they serve distinct purposes and require different skill sets. Understanding the differences between these two functions is essential for anyone involved in property or project management. Let’s explore the core functions of each along with some examples to gain a clearer understanding. 

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1. Property Management Explained 

Operational Oversight

Property managers handle the general day-to-day operations of real estate properties. For example, they ensure that rental properties are occupied, handle maintenance requests, and oversee property inspections.

Financial Management

Property managers are responsible for managing the finances of a property. For example, collect rent, handle expenses such as repairs and maintenance, manage rental arrears, lodge bonds etc.

Tenant Relations

Building positive relationships with tenants is key. For example, property managers address tenant concerns, handle complaints, and ensure that tenants are satisfied with their living arrangements.

Maintenance and Repairs

Property managers are in charge of ensuring that properties are well-maintained. For example, they schedule regular maintenance and handle standard, simple repairs promptly.

Compliance

Property managers must ensure that properties comply with all relevant laws and regulations. For example, they ensure that properties meet compliance standards and adhere to safety (e.g. smoke alarms, pool, etc.).

2. Project Management Explained 

Planning

A project usually involves more than 1 person/trade and costs over $2,500. You are now into a project that requires some planning. Project managers plan the scope, timeline, and budget of a project. For example, they define project goals, create a project plan, and identify the resources needed for the project.

Execution

Project managers oversee the execution of more complex work. For example, they coordinate with team members, trades, and other stakeholders to ensure that tasks are completed on time and within budget.

Monitoring and Control

Project managers monitor the progress of the project and make adjustments as needed. For example, they identify and address issues that may arise during the project to ensure that it stays on track.

Risk Management

Project managers identify potential risks to the project and develop strategies to mitigate them. For example, they anticipate and address potential issues that may arise during the project to minimise their impact, therefore protecting upcoming tenant/guest satisfaction.

Communication

Project managers communicate with stakeholders throughout the project. For example, they provide regular updates on the project’s progress and address any concerns or questions that stakeholders may have.

Legal

Resolving disputes between landlords, tenants, and other stakeholders may also become a project involving preparation for hearings with the New South Wales Civil and Administrative Tribunal (NCAT). Project managers may also need to address contractor agreements, resolve legal disputes, and ensure all legal documentation is in order.

4. When Property Management Becomes Project Management 

Property management becomes project management when a specific task or set of tasks requires a more structured approach, involving planning, coordination of resources, and monitoring of progress to achieve a specific goal or outcome. This transition typically occurs when a property management task goes beyond the scope of routine operations and requires a focused effort to address a particular challenge or opportunity.  

Examples of situations where property management may evolve into project management include: 

1. Major Renovations or Repairs: When a property requires extensive renovations or repairs that go beyond regular maintenance, property managers may need to coordinate a project involving multiple contractors and stakeholders to complete the work.  

2. Proactive Improvements: Restyling and decluttering can evolve from routine property management tasks into full-scale projects. For example, refreshing the look of a rental property by updating furniture, decluttering spaces, or enhancing décor can boost guest satisfaction. By tackling these improvements as part of a project, property managers ensure the property remains competitive and continues to generate revenue. 

3. Legal or Compliance Issues: Dealing with legal challenges or ensuring compliance with regulations may require property managers to coordinate a project to address these issues effectively.  

4. Tenant Turnover or Evictions: Managing tenant turnover or evictions can be complex and may require a structured approach to ensure a smooth transition and minimise disruptions to other tenants.  

5. Emergency Situations: In cases of natural disasters, fires, or other emergencies, property managers may need to coordinate a project to address immediate safety concerns and restore the property to a habitable condition. 
6. Insurance Claims: Handling insurance claims, especially after property damage or unexpected events, often requires more structured coordination. Property managers may need to liaise with insurance companies, assess the extent of damage, gather evidence, and manage contractors to repair the property. This process can evolve into a project management task as it involves overseeing multiple stakeholders and ensuring that repairs are completed according to insurance guidelines. 
7. Legal Proceedings: When a property becomes involved in legal disputes, such as tenant eviction cases or breaches of lease agreements, property management can quickly transition into project management. Handling these legal proceedings requires coordinating with legal professionals, preparing documentation, and ensuring compliance with tribunal requirements like NCAT. This adds layers of complexity and requires careful planning and communication with all parties involved. 

5. Cost Differences Between Property and Project Management 

The cost difference between project management and property management can vary significantly depending on various factors such as the scope of the project or property, the location, the size of the property or project, and the specific services required. However, in general, project management tends to be more expensive than property management due to the additional planning, coordination, and oversight involved in managing a specific project.  

While property managers oversee the basic day-to-day functions of property management, certain tasks may require labour beyond this scope, such as professional cleaning, steam cleaning, pest control, window cleaning, air conditioning servicing, gutter cleaning, locksmith services, or repeated property visits to assess conditions and plan action. In these cases, additional labour requests may be required to ensure proper execution.

Property management costs are typically based on a percentage of the property’s rental income, with the average ranging from 8% to 12% of the gross rental income. This fee covers services such as rent collection, tenant relations, maintenance, and financial management.  

On the other hand, project management costs are usually calculated based on a flat fee or a percentage of the total project cost. The average project management fee can range from 5% to 15% of the total project cost, depending on the complexity and size of the project. This fee covers services such as project planning, coordination, budget management, and risk management.  

6. Deciding Between Property and Project Management  

When the scope of work expands or evolves from Property to Project Management it is appropriate for an agency to look closely at the agency’s personnel and their associated capabilities and competencies. In doing so, it is recommended to take a moment to decide if the agency is best suited to take on the project and what is a fair and reasonable cost to do so. In these situations, property managers must take on the role of a project manager to effectively plan, execute, and complete the task at hand. This often involves additional responsibilities such as budget management, timeline coordination, and stakeholder communication, which are characteristic of project management.  

In conclusion, property management and project management are both essential functions within the real estate industry. Each comes with its costs and serves distinct purposes, requiring different skill sets. Understanding their core functions can help property and project managers excel in their respective roles. 

At Property Providers, our core purpose is “Helping People Live Better”.  As Sydney’s most flexible residential rental agency, we are focused on Property Management and renting “Your Property, Your Way”. We have designed 6 different rental services covering all facets of Long-Term Leasing and Short-Term Stays. Unlike franchise real estate agencies, we see the value in pragmatism and flexibility. Whether you want to rent your property furnished or unfurnished, for 6 months or 5 years, we will manage your property, your way. Our bespoke marketing strategies deliver discerning international tenants who understand quality and are prepared to pay for it.  If you would like to learn more please visit our website or call us on +61 2 9969 7599

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