Third-party management

Third-party management refers to the hiring of an external, professional property management company to handle the financial and technical management of a property-in contrast to self-management, where the owner handles all administrative tasks personally. It is common for apartment buildings, condominium complexes (WEG management), and commercial properties, and relieves owners of operational tasks, but requires careful selection and oversight of the property manager.

Responsibilities of an External Property Management Firm

Depending on the scope of the contract, a professional property management firm handles the following:

Commercial Management:

• Rent collection and dunning
• Preparation of utility and heating cost statements
• Bookkeeping and annual financial statements
• Communication with tenants and authorities

Technical management:

• Coordination and hiring of tradespeople
• Monitoring of maintenance schedules (heating, elevator, fire safety)
• Damage management and insurance claims processing

WEG management (condominium owners’ association):

• Preparation and conduct of homeowners’ meetings
• Preparation and management of the budget and maintenance reserve fund
• Implementation of HOA resolutions

Costs of outsourced property management

In Bavaria, the typical costs of property management are:

• Rent management: 20 to 40 euros net per unit per month
• Condominium management: 20 to 35 euros net per unit per month
• Additional services (e.g., maintenance coordination exceeding thresholds) are often billed separately

For rental properties, management costs are tax-deductible as business expenses. For owner-occupied condominiums, condominium management costs are included in the monthly maintenance fee.

In addition to the ongoing base fee, owners should also review the additional items when signing the contract: Some management companies charge separately for owners’ meetings, collection calls, locksmith coordination, invoice verification for contractors, or the hiring of specialized trades. A transparent scope of services with a clear base fee and defined additional services is the most important feature of a reputable management contract.

External Management vs. Self-Management: Pros and Cons

	External Management	Self-Management
Time required	Low	High
Costs	Ongoing management fee	Only self-management
Expertise	Professional	Own knowledge required
Control	Indirect	Direct
Suitable for	Multiple units, change of residence	Single properties, local owners

Self-management is usually only realistic if the owner lives near the property, has a basic understanding of handyman work, has sufficient time, and is familiar with the legal requirements-particularly in tenancy law and the German Condominium Act (WEG)-or at least keeps themselves regularly informed. As the number of units increases, professional third-party management becomes the more economically sensible solution.

Quality Characteristics of Good Property Management

Not every property management firm offers the same quality. Owners should look for the following characteristics when making their selection:

• Professional Qualifications: Certified property managers (IHK) or comparable training
• Association Membership: VDIV (Association of Property Managers in Bavaria) or DDIV sets quality standards and mandates continuing education
• Financial loss liability insurance: Protects owners in the event of management errors
• Transparent accounting: Separate accounts for each property, timely billing
• Availability and response times: Clear procedures for emergencies (burst water pipes, heating failure) outside of office hours
• Digital infrastructure: Online owner portals with access to documents, statements, and resolutions

Practical tip for owners in Nuremberg and Franconia

There are numerous property management companies in Nuremberg and the metropolitan region-however, quality and prices vary greatly. When purchasing investment properties, we recommend that our clients assess the quality of the existing third-party management before making a purchase: Current statements, minutes of owners’ meetings, and the status of the maintenance reserve provide quick insight into the quality of the management work to date.

Especially for properties with neglected reserves-a common situation with older buildings in Nuremberg-we recommend developing a renovation plan and a realistic capital requirement before purchasing. While it is possible to change property managers after the purchase, it involves significant effort: the handover of all documents, accounts, and contracts must be carefully documented. Upon request, we also assist our clients in selecting and switching property management firms-our network includes several recommended managers in Nuremberg and the districts of Erlangen-Höchstadt, Roth, and Neumarkt.

Frequently Asked Questions

As a condominium owner, can I terminate the external management company?

Yes, but only by a majority vote of the condominium association at an owners’ meeting. The termination must comply with the contractually agreed notice periods. A new management company must be appointed before the old contract expires or immediately thereafter to avoid gaps in management. In exceptional cases-such as serious administrative failure-extraordinary termination for cause is possible.

Is the property management company liable for errors?

Yes. A professional property management company is liable for errors made in the course of its management activities. These include, for example, incorrect billing, neglected maintenance tasks, or unlawful disposition of the condominium association’s funds. Reputable management companies have professional liability insurance. Owners should explicitly insist on the existence of this insurance in the management contract.

How do I find a good property management company in Nuremberg?

Look for membership in professional associations (VDIV Bavaria, DDIV), proven professional experience, transparent service specifications, and clear contract terms. Recommendations from other owners or local real estate agents are often the most reliable way. Ask for examples of properties they manage and inquire how many units the management company oversees-experience shows that an overburdened management company with too many properties tends to provide less thorough service.

What should a property management contract cover at a minimum?

A good property management contract includes: precisely defined services and additional services with prices, notice periods, provisions regarding power of attorney for bank accounts and their limitations, liability provisions, reporting obligations to the owner, and provisions regarding handover upon contract termination. Sample contracts from VDIV Bavaria provide a good basis for negotiation.

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