Investment Property Management: Everything You Need to Know in 2018
Acquiring your own property is a thrilling business venture. If your building is in tip-top shape, and you’ve managed to fill it with tenants, you can earn a lot of money by renting out units.
Initially, it may seem like a good idea to manage this property by yourself. This way, you can have total control over the costs, rent collection, and handling tenants. However, self-management can be very taxing mentally - not to mention time-consuming! If the plumbing system has an issue or one of the tenants is late in making payment, you shoulder the responsibility of addressing it.
If you would rather not deal with these reoccurring problems, hiring third-party property management is a better alternative. This is particularly true for owners looking to grow their investments over time.
But just how much do you know about investment property management? This article sheds light on this concept while also highlighting scenarios that warrant hiring third-party property management.
What is Property Management All About?
In a nutshell, the main priority of an investment property management company is to act as an intermediary between the landlord/property owner and the tenants. This firm also ensures that the property is maintained to the highest standard.
Property management is a very diverse sector. It can include a ton of functions, such as taking part in the pre-tenancy requirements for scheduling maintenance and emergency repairs. When you hire a property manager, they are responsible for handling all issues related to tenants.
When Should You Consider an Investment Property Management?
If you are fully involved in the real estate business, such as purchasing and selling different properties, then you can also self-manage these properties as you see fit. However, if you are in any one of the following scenarios, it might make more sense to outsource these management functions to a professional.
If Property Investment is Your Game
If you don’t work in the property rental market round-the-clock, then we suggest hiring a property management company for day-to-day operations. This way, you have time to concentrate on your full-time job and still earn profits by having another firm take care of your properties. However, if you’re investing in property, then self-management is a better option.
If You Lack Housing Management Expertise
Investors and owners don’t necessarily need to manage their own properties if they have zero experience in this field. For instance, when it comes to building and leasing affordable housing units, there are many compliance issues and regulations to follow.
Also, you can’t just rent out your property to any tenant. You need to screen them and ensure none have a criminal background. If you don’t conduct tenant screening, you could end up dealing with disputes and complaints from other tenants. For such situations, property management is best handled by a third-party company.
If Your Properties are in Different Markets
Another situation that warrants hiring an investment property management firm is when you have multiple properties that are all located in different neighbourhoods. Even though it’s tempting to save that 7–8% of the management fee, there are numerous tasks you’ll have to handle if you choose to self-manage.
You’re likely to spend your time on the road, travelling from one property to the next. Aside from that, you also have to ensure that the properties are in good condition and that all the tenants feel comfortable in their personal space.
If You’re Planning to Scale Your Investment Business
If your plan is to grow your property investment portfolio, then you shouldn’t self-manage your property beyond two years. After this amount of time, your time is better served researching and consulting with experts rather than repairing taps and solving simple tenant disputes. By outsourcing the management function, you will have more time to research the best geographic markets for your next property investment project.
What Skills Should You Look for in Investment Property Management?
Strong Communication Skills
One of the core functions of your property manager will be communicating with potential tenants. Research shows that communicating effectively with clients can literally make or break a deal. Even if you have one of the best properties in the neighbourhood, it’s the way that the property manager interacts with people that will seal the deal for most clients. Ensure that your potential property manager knows how to communicate with people before you hire him or her.
Another characteristic you should look for in a property management company is their organisational skills. The property manager ought to be a highly organised individual. For instance, you wouldn’t want to receive complaints of a leaky roof because the property management firm skimped on maintenance or the annual inspection process.
Exceptional property managers go beyond their scheduled functions. They look for patterns and ways to improve your property investment. To avoid that leaking roof, a property manager can recommend more thorough or more frequent maintenance checks.
Know the Basics of Marketing
Another attribute you’ll want to look for in a property manager is a profound understanding of the basics of marketing. Nearly every property manager is skilled in property maintenance, yet few of them have extensive marketing knowledge and experience.
Essentially, the property manager should be a well-rounded person. If you have a website or need to advertise your property, the property manager should be capable of writing a superb description that attracts clients. They should have basic knowledge when it comes to explaining the amenities of the property and the surrounding area.
The Bottom Line
The diverse role and multiple responsibilities of property managers are what allows them to attract property owners and investors. Property management companies help owners take care of their properties by marketing them, screening potential clients, managing budget and arranging maintenance.
Although outsourcing this management function costs the owner more money upfront, it’s the most feasible choice if the owner invests in property, has properties in different markets, lacks housing expertise and if they are looking to develop their property investment portfolio.
Posted: November 7, 2018