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The Best Property Management Is Free

There are many property management companies in the marketplace today. All companies have their own charges and fees that you must incur to contract their services. The truth is that the only management companies that you should hire with are the companies that are FREE.

I know everyone believes there is nothing that is “free” and this is true in general but not from every perspective. When I refer to Free property management, I am talking about a company that provides added value to the properties that it handles. A value that would be unlikely to be reached by the owner managing the property themselves. Let’s examine the value of good real estate management. Value can be expressed in many terms such as equity, lower turnover, higher rents, lower maintenance costs and most importantly, time. Time is the most important asset that exists. Simply put if you had all the money or goods in the world but you had no time to enjoy them, you don’t have much.

Many property owners have full time jobs, family obligations, and little time to manage the property they own to maximum efficiency. Some of these owners work long hours in an attempt to “save” money by not hiring a property manager. After we examine this practice we will see that in most cases the property owner is actually losing money, and more importantly losing time.

The old saying “Time is money” will be a cornerstone of our analysis. Let’s say the property owner in our example is an employee at XYZ Corp and is paid $20 an hour. A general price for property management is somewhere around 10% of collected rent. So we will pretend this owner owns a two family rental property and each unit rents for $700. That means the fee for professional management of this property will be in the area of $140 a month (10% of 700= $70 per unit, times 2 = $140). That equals 7 hours of income for the owner. So if managing this property takes more time than 7 hours a month, or the management of the property interferes with the work of the owner than the owner would actually be better off with a professional property manager.

The time analysis shows that there is not a lot of money to be saved by managing the property yourself, especially if you could use your time towards work you are paid for. However, the time analysis does not show the complete benefits of property management. If managing property was easy and predictable there would be no property management companies. We all know that real estate repairs can pop up seemingly out of nowhere and late tenants can turn into evictions at any time. The main cost occurs during these times, when you need to evict tenants, repair the property, advertise and attract new tenants, and lease the unit to get rental income again. These are the times when property owners with other obligations really lose time and money. You see if a property owner is unable to manage the issues efficiently and loses just one month of rental income, they would have lost enough money to pay for close to a full year of professional property management in many cases!

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Commercial Property Managers – What Skills Do They Need and Why?

In commercial real estate agency, the property management division is a key part of the agency performance. In real terms the successful division can bring in significant and stable income to the agency on a regular monthly basis. That being said, a good commercial or retail property manager is highly skilled and should be selected for the property management role based on key performance criteria and hands on experience.

Far too many real estate agencies have average or poor performing property managers. In real terms this is a real threat to the stability of the division income, and the quality of the service provided to the landlords. Unskilled property managers do not last in commercial or retail property; it’s that simple.

Cadets and Training Processes

There is a place for ‘cadets’ that learn the roles and the skills of complex property management. The process itself takes a couple of years during which time the person should be exposed to all property types and situations under the guidance of an experienced manager.

So what does a good commercial or retail property manager look like and what skills will they have? To a large degree they will need to bring to you as agency principal, the skills needed for the managed property type and local area.

If the property manager does not know much about managing the required property type, then do not let them manage it; the errors made can destroy your relationship with the landlord and ultimately the management appointment.

Different Skill Sets

There is a large difference in management style and skill required between retail, office, and industrial property; industrial property being the easiest to manage and retail being the most intense and difficult. The skills required in a retail property manager is diverse and deep; they are the best in the industry.

Generally speaking, retail shopping centre managers today are also the busiest in the industry. The role is very hands on and unrelenting in intensity. Here are some core skills of a well skilled and placed property manager:

The ability to read and understand leases and occupancy documentation for all property types.

The marketing of the property to the local community and customers will be a factor that is critical to retail property. It this way sales are encouraged for the tenants; this underpins the rental for the landlord.

Sound skills in financial analysis and reconciliation so a property performance tracking process can be set up for all managed properties.

Good communication skills are essential. Property managers must be accurate, confident, and decisive, in keeping with laws, legislation, and the instructions of the clients that they act for.

Attention to detail is required in all property negotiations and tenancy matters. Without good records and accurate information, the ‘wheels fall off’ the division and its services. Landlords soon see through mistakes and inaccuracy.

Marketing of vacancies happens all the time in larger properties; importantly the frequency of vacant space is minimised and the times without a tenant are lessened.

Income optimisation and expenditure controls are at the centre of property financial performance. The manager must know what is happening and why in all managed properties, when it comes to the cash flow and reporting to the landlord.

All reporting processes and communications to the landlords we act for today must be detailed and accurate. Property compliance and maintenance, energy consumption, lease and vacancy matters, tenant and landlord lease covenants, outgoings performance, and environmental matters are just some of the factors that are controlled and reported on each month.

Computer technology needs are increasing in the available property performance and management systems today. The property manager must be familiar with, and comfortable learning more about all the software and computer based technology that is used in the industry.

Work hard and with focus each and every day. The hours that a manager will put in the job are long and intense; however they are the experts and should recognise the value that they bring to the job.

Maintenance decisions and controls are made daily and should encompass the instructions of the client and the laws of property ownership and function. The manager needs to know what is required and should competently handle the decisions and communications with contractors, tenants, landlords, and fellow employees.
So how do you find one of these highly skilled people? They are out there and should be carefully sourced. They will be an asset to your agency function and performance.

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The Real Property Management Issue Is Education

The Conundrum of Investment Properties

Investors seeking diversification have frequently turned to a rental property or a collection of rental properties to even out and spread risk across their investment portfolios. As with any investment people should consider all of the issues, problems, and pitfalls along with the potential returns. Unfortunately, a lot of investors aren’t aware of the potential problems and do not take the time to investigate these issues before they close escrow. A property management course and a course in basic real estate investment would be great investments of time for someone considering rental properties as a source of investment income and long-term investment. Some of the problems and concerns are discussed below.

Inexperienced Agents and Uneducated Investors Make a Deadly Concoction

Rental property investors often utilize the services of an unseasoned realtor who does not fully understand rental properties, who does not fully understand return on investment, and who does not fully comprehend what cap rates are. Most of the time these investors just turn to their friend ‘the realtor’ or use any realtor they are familiar with or are comfortable with to purchase these types of properties sad as that may sound.

The fact is most real estate agents are not savvy enough to understand rental properties, cap rates, return on cash, return on investment, leveraged investing, and the common terms associated with investment properties. To compound this fact most investors initially are equally inexperienced and lack the proper expertise to locate and purchase a high performance investment property. No one needs to look further than this question: Why would an owner be selling a high performance investment property? That question should be the first of many asked by both the agent and the investor. One problem is that some investors are just so excited to get into a property they look beyond the truth and the numbers and just want to get control of the property. Oftentimes this is a flawed approach because most agents will hesitate to stop the eager purchaser for fear of missing out on a healthy commission.

The Property Management Profession is an Equalizer

After an investor has closed escrow, if the inexperience agent hasn’t offered to ‘manage’ the property for them, many of them decide to manage the property themselves (only licensed real estate brokers can manage rental properties). When these unsuspecting owners are faced with the subtleties of Fair Housing laws, Equal Opportunity issues, civil rights issues, anti-discrimination issues, bad tenant screening issues, notice of default issues, eviction issues, and finally collection issues many times they turn to a professional property manager or property management company to help rescue their sinking ship.

If rescued timely a professional property manager can turn around an investment property and help make the investor’s decision pay dividends. With a competent property manager the return on investment can actually be realized and the owner actually can have time to enjoy the investment, not dote on it or worry about it. The property management company will take care of the investment, the maintenance, the tenants and all of the concomitant issues associated with the property.

Property Management Education Course

Educating both inexperienced real estate agents and beginner investment property owners about prudent property management is critical for maximizing the investor’s return on investment. It is rare for an owner to successfully manage their property or properties and make the maximum possible return available in that particular marketplace. The reason it is rare is because the typical manager-owner is not utilizing the latest and greatest property management techniques, software, screening procedures, and most importantly is not keeping up with the ever changing landlord-tenant laws. Each January there are several seemingly ever increasingly tenant-debtor favored laws enacted which most people are not aware of. When a new law takes effect that is another potential pitfall for the lone-ranger owner to violate and end up on the wrong side of the complaint.

The sure-fire way around this potential issue is to hire a property management company to manage and protect the owner’s investment, and most importantly maximize the return on investment. One other way around this problem is to have every owner take a property management course and learn the profession from the ground up without going through the hard knocks of experiencing tenant problems first hand.

Finally, an owner could hire a property management company that in addition to all of the typical staff also has a real estate lawyer on staff who can solve and answer all of the legal questions that seemingly end up front and center. This would be a truly educated decision and an easy one for the owner to make.

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Should You Hire a Property Manager Or Not?

Using a property manager has both pros and cons. There are no hard and fast rules regarding whether you should hire one or not. You have to evaluate the answer based on your own situation. The following are some considerations to take into account before you jump to a conclusion.

Time Commitment

A lot of real estate investors have a full time job so they do not have enough time or energy to manage properties. Especially if the house is situated remotely, many investors might feel they cannot manage on their own or do not want to travel. If fact, you can manage on your own.

Cost Benefit

If you have several properties or an apartment complex in one area, using a property manager to manage all the property may be economic. The manager will be able to combine expenses and costs. For example, they can purchase maintenance materials in bulk for all the rental units. If you don’t have several rental units in one area, but together with your friends’ or families’ rental units you do. Then you can afford to hire a professional dedicated property manager.

The Nature of the Rental Market Where your Property is Located

If your rental property is located in an area where renters mostly check out the rentals through the local property management companies, then you have no other choice but to hire the company. This may happen in small towns where there is only a handful of management companies.

Tenant’s Characteristics

Some tenants are not easy to deal with. You may find some tenants that are constantly paying late, asking for a lot of unnecessary repairs, complaining about everything, or having difficulty keeping up the premises. A property manager may handle the situation better than you as you might be emotionally attached to your property and less likely to handle many issues impartially. What’s more, the tenant might try to take advantage of you. They may take it more seriously if they are dealing with a professional property management company instead of an individual.

Does your Property Need Frequent Repairs or Maintenance?

If your property needs frequent repairs due to its age or other reasons, having a property manager may help you if repairs are a burden. Usually the property management company either has its own in-house repair service or contracts with outside vendors. In any case, you should ask about it before hiring them and understand how much they charge.

What Kind of Service do you need from a Property Manager?

Do you need a full service property management, which includes placing tenants and ongoing management service? If the condition of your property is good or new and not much repair is anticipated, you may save your money on the ongoing management service part. If you already have a tenant but you are moving out of that area you can use a local property manager to collect the rent and do the maintenance work.

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Careers in Property Management

Have you ever considered a career as a property manager? This career path is definitely not for everyone, however it is a solid career choice in a growing field. This means that once established, property managers have a good level of job security as well opportunities for growth and advancement. Jobs are usually easy to find and secure for qualified individuals with a degree, experience or both.

Property management carries some unexpected challenges. It also has a variety of unique benefits. The right individual will find this career rewarding and will be well equipped to handle the variety of tasks that property managers are required to complete. Before considering a career in this field an individual should carefully examine the position and its requirements to be sure that this job is a good fit. The many demands of this job can prove overwhelming some individuals. The right individual will be able to complete a variety of diverse tasks and will be available all hours.

What exactly is a property manager?

Basically, a property manager takes care of a property. This means that they manage all vital elements of this property including: maintenance, finances, tenants, customer relations, and emergencies. While all tasks are not necessarily completed by the property manager directly, the manager is required to oversee and coordinate these and other needed tasks for the property.

Property managers are often employed by apartment complexes, rental agencies, and businesses with extensive property holdings. Sometimes they oversee one singular property while other property managers will have stewardship over multiple properties. It all depends on the size of the property and level of care desired.

What type of education and training is required?

Managers generally are college educated and have a degree. A degree however is no way a requirement for the position. Experience in related fields can compensate for a lack of education. Any experience in management, finance, repair or related subjects will prove useful to a property manager as they undergo daily tasks. Much job training will come on the job. Some property managers take courses in addition to on the job training to further hone their skills.

Many property management professionals begin their career as assistant manager and learn the field while helping a current property manager with their daily tasks.

There is potential for advancement in this field. Many managers start in the field in smaller, lower-paying jobs. However, as experience grows they are able to secure more complex positions and manage more expensive properties. This generally results in an increase in compensation and associated benefits.

What is the schedule like?

This job is a job that knows no schedule. Emergencies will happen at all hours, and a manager will need to be available to fix them. This field is likely not a good fit for someone who would be unable to wake up in the middle of the night for a problem. Potential tenants will typically work a traditional schedule and will require property showings during evening and weekend hours. Repair and maintenance crews typically work during the day. This complex schedule will result in very non-traditional hours.

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