Property management is not a new concept, as many people believe. Instead, this service provided to property owners has evolved over a lengthy period. In fact, the first property managers started providing their professional help to landlords in the 1800s. We examine this field's origins, below.
The 1800s Style of Managing Properties
The first property managers in North America were the actual land, building and homeowners. In the 1800s, it was common for tenants to lease rooms from boarding houses or tracts of land for farming or development. It then became commonplace for people to own and lease apartments and homes, as the Americas' population grew. These first New World managers evolved from other types of landlord-tenant relationships.
An excellent example of landlord operations of the distant past is the longstanding arrangement of English estates with tenants who worked estate lands and paid rents to blue blood owners. The owners either fulfilled property management duties themselves or hired someone else to oversee the governance and economics of the estate.
Managing Properties in the 1900s
In the late 1800s to early 1900s, North America was rapidly changing and growing. Cities became industrialized, and populations surged with the increased economic strength this industrialization provided. Booming populations required more housing within the confines of limited geographies, which is when apartments became commonplace.
With apartment building ownership came many responsibilities for owners. But most of these owners saw this ownership as an investment, not something they wanted to maximize their time. So they employed caretaker managers. The managers typically lived rent-free in the buildings they oversaw and maintained, in exchange for collecting rents, keeping the peace and finding new tenants. In cities like New York, New Orleans, Chicago and San Francisco, many people who invested in apartment buildings and hired caretaker managers became rich or added to their wealth as a result.
In the middle to late years of the 20th century, property owners became more interested in maximizing their profits. To do this, they needed outside experts to come into their employment and implement proven rental practices. This was the boom for professional managers. With each passing year, property owners enjoyed less of a hands-on approach and more portfolio management from a distance, thanks to property managers handling the daily headaches of being a landlord.
Evolution of Tenancy
Initially, property management focused on turning profits, which meant tenants had few rights, if any. Landlords had a never-ending supply of potential renters and kicked problem residents out with little notice if any at all. As a tenant, apartment or rental house dwelling felt insecure and edgy.
Before World War I, North American regulators started working to improve tenant life. They developed laws meant to improve living conditions and residence stability. At the same time, as these changes enacted, a construction boom ensued. The market officially became highly competitive from a property ownership standpoint. The owners needed marketing-savvy professionals to aid in tenant leasing and retention. Because of the competitive marketplace, owners also had to start providing tenants incentives to choose their available properties and stick around.
In the 1920s and beyond, residential construction resumed its pre-war boom. Apartments for the middle classes and the rich became highly fashionable and chosen living arrangements for the travelling set. Wealthy families sought sumptuous apartments in the city instead of expansive single-family homes less convenient to all the city had to offer. These changing trends only served to add to the property manager's skill sets, providing opportunities for those able to meet discerning tenants' needs.
With the Great Depression came a short crash in the rental housing market, as for all other aspects of the economy. Banks repossessed tenant properties and had no idea how to manage these structures to maintain occupancy. They brought in experts to help. You guessed already who these experts were, property managers. It is in the 1930s that property managers gained recognition as niche professionals in the world of real estate. They were no longer just the caretaker-manager, instead being professionals who often lived offsite and managed multiple client properties.
Origins of Property Managers Improved the Real Estate Market
Building owners and tenants of today benefit from the work of professional property managers. A good manager suits the needs of both sides of the landlord-tenant relationship, satisfying both parties. They also help property owners maintain privacy as they focus on portfolio management and investment quality, versus the day-to-day work of managing a physical property and its people.