If you’re thinking of taking the plunge into commercial or residential property investment, the maintenance and administrative tasks ahead of you can be overwhelming, especially if you have more than 1 property. That’s why you need a property manager.
Property managers oversee all aspects of running, managing, and maintaining your properties. With the right person in charge, you can even see an increase in your investment’s profitability.
What Is Property Management?
To understand the importance of hiring a reputable property manager, real estate investors should first understand the services available. These include:
1. Setting the Right Rental Price
Property management professionals conduct thorough market research to determine the best rental rates. That way you, as the client, will notice a balance between maximized monthly returns and maintaining a low vacancy rate.
2. Rent Collection
Collecting the rent can be challenging for many landlords, especially if you have a difficult tenant. Property management firms use tried-and-tested systems to efficiently collect rent and maintain accurate records, saving you from having to deal with annoying rent defaulters.
3. Marketing the Property & Advertising Availability
Vacancies do happen, and when they occur, it means less money coming into your pocket. If your property is unoccupied for an extended period, it could even mean significant financial loss.
Property managers have established networks, media platforms, and marketing strategies to advertise your property as soon as it becomes vacant. Most agencies only get paid once a property is tenanted, so it’s in their best interest, as well as yours, to have someone move in as quickly as possible.
4. Finding Suitable Tenants
Property management firms also have established tenant screening processes. They will conduct credit checks, contact references, and draw up lease agreements. They will also conduct routine rent inspections on your behalf, including end of tenancy cleaning to prepare your property for the next renters.
5. Managing Relationships with Contractors and Vendors
Most real estate managers have agreements with preferred contractors, maintenance workers, suppliers and tradespeople. This will come in handy if there’s an emergency at your property which would usually take days to fix. By calling on the right people, your house or office space can be repaired faster and to a higher quality.
Depending on your preference, you can ask your property manager to get your approval before conducting any work on their house, or authorize them to arrange maintenance as required and send you the bill.
6. Managing Compliance Issues
Working with an experienced real estate manager helps to ensure your property is up to date and compliance regulations. This is especially important for commercial investments like office buildings or retail spaces. A good property manager should be familiar with all local, state, and federal real estate regulations.
7. Allowing You to Invest from Afar
Spending a week in the countryside or touring the world for 6 months can seem like a pipeline dream when you have to worry about collecting the rent, repairing that leaky tap, or finding a new tenant. If you do go on vacation, you can spend half of your time on the phone solving problems with your property investments.
A prudent property manager will not only handle any issues that arise while your away, but should also have their ear to the ground when new investment opportunities arise. If you’re relaxing on a beach in Hawaii and decide to pull the trigger on that newly built 4×2, your property manager can make it happen.
How To Choose the Right Property Manager
The quality of real estate management services you receive depends on the firm you hire as well as on the individual person in charge of your properties. When selecting a property manager for your investment, consider these tips:
1. Network with Other Investors
Ask your friends how happy they are with their property managers and if they can make any recommendations. If you don’t know other investors, attend meetings held by local and regional real estate investment associations or networks. Other attendees, or even the event organizers themselves, should have viable property management recommendations.
2. Ask for Existing Client and Property Numbers
Before hiring a company to manage your property, find out how many clients they currently have and how many properties they are managing. Also ask how many employees are in charge of these proper. A good property manager should be able to oversee around 40 units simultaneously.
Ideally, you want to find an agency with enough properties and experience to suggest quality, but also with enough capacity to give your properties the attention they deserve.
3. Hire Managers Who Communicate Effectively
You want to work with professionals who keep you posted about your investment. When you find an agency you want to employ, try to get a feel for their communication practices. You want someone who will email you regular updates, call in the case of emergencies, and also respond to your queries and concerns in a timely manner.
4. Discuss Contractual Terms
Remember that you’ll be entering into a contractual agreement with your real estate management company or agent. Like with any other contractual agreement, read through and discuss the terms and conditions before signing. Pay special attention to your ability to terminate the contract and any penalties involved if you decide to take your property elsewhere.
5. Ask About Service Rates
Most property managers charge monthly service rates between 8% and 12%, plus expenses. Try to negotiate a good price, but remember that you get what you pay for. If you lower the fees to much, your agent may also lower their quality of service.