If we were to ask you how much you think the total value of all U.S. homes are, what would you answer?
A. $10 trillion
B. $20 trillion
C. $30 trillion.
If you answered A or B, sorry, you’re wrong. C is the closest – with the actual answer being a whopping $31.8 trillion!
Now, who would want to tap into that kind of market? The thing is, real estate property investments aren’t only about having money for making such large purchases. To succeed in this industry, investors need someone to manage their properties. This is where real estate property management services come into play.
But how exactly does professional property management work? Don’t worry. We’ll show you the ropes in this post.
So, keep reading to learn the value of experienced property managers and the difference they can make!
The Rise of Property Management to Stardom
To understand how partnering up with a qualified property management company can benefit you, it pays to have some background on this sector first. Here’s something to put things in perspective:
The property management sector is now worth $77 billion. It has shown a steady increase of 4.4% from 2012 to 2017.
Why do you think so?
For the simple reason that more investors are putting their money in real estate. But to make the most out of their investments, they need the services of professional property managers (a more in-depth explanation below). The dips in rental vacancy rates, which shows that demand for rental properties is on the rise, fueled this growth. In fact, a Pew Study showed that the number of residential property renters grew to 36.6% in 2016. At the time of this writing, the latest Census Bureau report shows that owner-occupied households in the U.S. stand at 64.2%.
Indeed, homeownership is still a major part of the American Dream. Many individuals, however, find renting more cost-effective. That goes for both residential and commercial (offices) consumers.
It’s for these reasons (and more) that real estate property investments continue to grow. At the same time, the heightened competition (for investors like landlords and commercial property owners) highlight the need for effective property management.
The Core of Property Management
The role of property management services is to basically oversee all aspects of managing a piece of real estate property. Be it residential or commercial, an apartment or a 5-bedroom house, a condominium unit or an entire office building. Simply put, the property management company acts on your behalf – as the owner – to retain the value of your asset. At the same time, help you generate a steady stream of income. The responsibilities of property managers don’t just begin when you already have a tenant. They can even help you with this task. They’ll ensure that you get into a contract with only respectable renters.
Where Effective Property Management Starts
Say your property is all “Ready for Occupancy” (RFO). Now, all it lacks is a tenant. To find the right tenant though, you need basic marketing skills and knowledge. After all, you’d have to advertise your property and make people want to live or work in it. You also need to have knowledge of federal, state, and local property laws. What “reasonable” rental prices are. As for how long you’ll find a tenant, there’s too much variation. Consider this though:
A credit check for prospects alone can already take up to 10 days. Combine this with your other tenant-hunting tasks (like advertising, interviewing, etc.), and you’re looking at weeks of finding a potential renter.
Even if you do find a prospect, your search shouldn’t end with a phone call from a single applicant. You need to screen your potential tenants first.
As the property owner, you have many other things on your mind, such as looking for more assets to invest in. You want to find a tenant ASAP, but locating the right one takes a lot of time. But you can’t just bind yourself to a contract with the first prospect.
Remember, the quickest way to see your investment property’s value is to let bad tenants occupy it.
They can neglect or modify it without your permission. They can even use it for unlawful activities. They may also be constantly late in their payments.
Worse, they can just leave without paying their delinquencies or the rest of the lease!
This is where one of the many other benefits of working with expert property managers come into play.
With their skills and knowledge of both the market and tenant behavior, they can help you locate the best tenants. Tenants who’ll not only pay their dues on time but take care of your property like their own.
Dealing with the Hard Part of Turning down Applicants
Just as hard as verifying source of income, checking credit, and reaching out to references of an applicant is turning unqualified ones down. You have every right to say no to an applicant who doesn’t meet credit standards or has a history full of payment delinquencies. But what’s more difficult is knowing when it’s legal to turn them down. Remember, there are laws surrounding fair housing, and you can face legal consequences if you fail to comply.
From Rental Collection to Property Inspection
Property managers won’t just help you find the right tenant. They’ll also ensure timely rental collection. Yes, hiring a seasoned manager helps you prevent getting into a contract with habitual late payers. But there are some situations wherein payment defaults can still occur. Don’t worry though. The property manager will still take full responsibility for dealing with the delinquent tenant. He/she will also assess late fees and interest as indicated in the contract. Property managers also carry out inspections before tenancy, as well as during and after a tenant leaves. During tenancy, it’s normal for them to conduct inspections at least every six months.
Ready to Benefit from Professional Real Estate Property Management?
All the above-mentioned benefits of working with real estate property management professionals is for your own peace of mind. With these experts’ help, you can rest assure your tenants aren’t damaging your property. That it maintains its value, or better yet, appreciates.
So, if you’re ready to reap all these benefits and more, feel free to connect with us. We’ll be more than happy to provide you with quotes and answer your inquiries about effective property management!