How do you manage rent collections issues in your accounting system?
What are your risks as a property manager with lease agreements?
How do you price your rentals based on seasonality?
What are your risks as a property manager with lease agreements?
The questions keep coming and you keep wondering whether this is a segment from ‘Who wants to be a millionaire?’ Unfortunately (or fortunately), it is not. Neither is it a questionnaire put forth to determine your MBTI (an approach to personality typing, where people are categorised based on their traits etc.). Rather, these are a string of questions that individuals involved in property management often encounter and fall in trouble for because they have never been briefed about the property management manifesto.
Is there a manifesto as such? Perhaps there is not just one, but many, stacked neatly in corner shelves of bookstores. However, for the ones who don’t have access to such manuals, the only lifeline could be to ‘call a friend’. And this article could be just that: a friend in need.
But what is property management?
It refers to the process of overseeing and taking care of real estate or valuable assets. This includes various responsibilities such as maintenance, monitoring, and ensuring that the property is used effectively. It is similar to how management functions in a business, where there is a need to ensure things are running smoothly and efficiently.
However, it must be noted that property management is not just limited to real estate; it also involves managing personal possessions, equipment, and physical assets that are used to create, fix, and maintain the final products or outcomes. The whole lifecycle of these acquired assets is managed, which includes acquiring them, controlling their usage, being accountable for them, taking care of their upkeep, making sure they are utilised properly , and eventually deciding how to dispose of them when their usual life ends. In essence, property management involves all the processes, systems, and people required to handle these assets from start to finish.
The do’s
While knowing the inside outs about property management’s definition is a good place to start, it does not guarantee you proficiency in how it is (or isn’t) done in the real world. Irrespective of whether you are an amaetur who is just starting out or a well seasoned property manager who knows the trade like the back of their hand, understanding the do’s and don’ts of property management is paramount for maintaining a good rapport with both tenants and property owners.
We engage in an occupation mainly because of two things. It is because you love what you do and as blunt as this may sound, to earn a few bucks. Therefore, if you are looking to make some money by managing property, do your research. In other terms, educate yourself thoroughly.
For individuals interested in entering the world of rental properties, it is important to understand that real estate investing is far from being intuitive.You can’t do ‘what seems right’ and just roll with it. Merely jumping in with a strategy to learn through trial and error is not advisable. This approach could lead to numerous mistakes, potentially causing you to lose faith in the viability of real estate investment.
Achieving success in this field hinges on having a solid foundation of knowledge right from the start. Seek help when learning about relevant laws and optimal strategies. Property related laws can differ from region to region and it is highly advisable that property managers are constantly in the loop. That is, everytime a law or regulation is rephrased or updated, they need to adjust what they are doing accordingly.
Once you have pulled all nighters learning the As and the Zs of property laws and rules, you move on to effective communication. While this has been said in many ways and many times, it is in everyone’s best interest to know that clear communication is the cornerstone of successful property management.
Mastering effective communication can yield various advantages, including heightened tenant contentment, enhanced property upkeep, and on-time rent collection. On the contrary, inadequate communication can result in significant drawbacks and legal conflicts.
Effective communication does not mean mere chit-chats about the weather, but it is about being upfront with the tenant about the property, payment methods and everything under the sun (related to the property). For instance, ensure transparency in your property listing regarding its current tenant occupancy status, and be willing to provide information regarding the existing lease agreement. This will help potential buyers understand the circumstances fully before making a decision.
What tenants love more than transparency is regular property inspections and swift maintenance and repair. Systematic and consistent check ups help detect maintenance problems before they worsen. Small roof leaks can be fixed before the entire house floods and you need Noah’s Ark for the rescue mission. Additionally, inspections ensure compliance with safety rules. Hazards like faulty wiring or trip risks can be spotted and repaired immediately. Therefore it is clear that timely inspections curb property damage and safeguard the owner’s investments as well.
The don’ts
If you thought familiarising yourself with the do’s were important, engraving the don’ts in your mind is much more important. The reason being, while do’s gives you space to improve because you are starting from the bottom, don’ts push you from bad to worse and you do not want to go there.
One of the biggest reasons for pitfalls in property management is inadequate tenant screening. Do that background check. Managing property will have your hands full, you will have enough on your plate without having to deal with clients who are troublesome.
If you are short on time, you might consider renting to anyone, but caution is advised. Before leasing your home, screen tenants by reviewing their credit score, criminal record (if any), rental history, and income. Ideally, their monthly income should at least be thrice the amount of your rental figure. However, this does not mean that you can set a rental price that rips off the tenants. That would be unethical.
Last but not least, and the most important one of them all, is do not, by any means, try to do everything by yourself. If you are the owner of your home, it is advisable that you consult a property management company that will hold down the fort for you. They will know what needs to be done without you having to scramble to make ends meet.
Taking on everything alone can backfire in an uncountable number of ways. You will be the main tenant contact, who should be available 24/7, even for minor issues such as lost keys or sink leaks. By putting on a one man (or woman) show you might dig your own grave.
Property management teams on the other hand are equipped and skilled for 24/7 availability. They have the expertise of handling emergencies and tough tenant situations, professionally.
Having a front row view of the big picture of property management will make people understand that it is never wise to underestimate what is required when dealing with it.
Owing to the fact that it is a dynamic field that is ever-evolving, even after falling into the rhyme and rhythm of managing property, you can’t expect a smooth sail. Being vigilant and on your toes at all times is the key to longevity and efficiency in property management.
(Sandunlekha Ekanayake)