Property management is an efficient way to make passive income from real estate. However, proper management of the property is necessary if you want to make high returns on your real estate investment. It’s not just about fixing things when they break.
Property managers, especially first-time landlords, wear many hats. From dealing with tenant issues to negotiating contracts for janitorial services, garbage removals and groundskeeping, property managers handle multiple jobs.
Before you consider property management, with franchising options even, make sure you’re ready for the job.
Here are some property management tips to keep in mind to ensure smooth sailing.
An Introduction to Managing Your Property — The Right Way
Property management is all about communication, transparency and hard work. At the end of the day, it’s important to have set the right expectations and ensuring that you open clear lines of communication between you and your tenants and partners. One of the easiest ways to fail in property management is to set the wrong expectations and unclear communication.
For instance, short-term rentals come with features that aren’t available in all properties. You might have made the mistake of not informing potential tenants. But if you fail to inform them about your mistake on time and let the problem worsen, you could experience more serious damage in the future. Hence, communication is important. Every complaint can be resolved with clear communication and planning.
If you need help managing your property, you can work with another property manager to take some burden off you.
How to Be a Better Property Manager
Get to Know Your Property
When you first buy a residential or commercial property, your first order of business is to learn more about the home and its systems. Each system has a certain lifespan and specific service interval. The last thing you want is for these systems to fail and compromise your tenants’ experience.
Fortunately, services like Breezeway and Home Manager help property managers to track their home systems and implement preventive maintenance plans. You can also use property management software to learn more about your property.
Find the Right Tenants
Setting your commercial property up for success begins when you look for new tenants. Take the time to interview tenants to determine who is most likely to stay (and will not cause you headaches in the future!). Ask for references from their previous landlords to establish the type of tenants they were, as well as their rent payment history. Just to be sure, require a background check to see their criminal record, credit history and/or any evictions.
This may seem like a time-consuming process but finding the right renters protects your cash flow by keeping turnovers low.
Set Policies and Protocols — And Stick With Them
One of the best ways to eliminate miscommunications and problems with tenants is to set strict protocols and policies. All property policies for tenants should be written down. You must also provide a copy for both you and the tenant upon lease signing.
Also, it’s important to set protocols in case of different situations. For example, if a tenant doesn’t follow parking policies, it’s up to you to implement policies. Have their car towed or issue a warning (if this is their first offense).
Create A Financial Plan
Much of your home or commercial property will generate revenues depending on three factors:
- Size of the property, as well as its amenities
- Level of luxury of the property
- Property’s specific location
For instance, vacation rental management companies use these factors to accurately estimate a property’s revenue. If you don’t have access to the data, you’ll need to scour websites and research rates. However, don’t depend on advertised rates since the predicted revenue isn’t always accurate.
In line with financial plans, it’s equally important to maintain organized financial records regarding property and tenant expenses. Other important expenses include employee payroll, maintenance expenses and trash removal. It’s important to know where your money is coming and going. If you don’t have the capacity to manage your finances, hire a qualified bookkeeper.
Know the Law
There’s no substitute for an intimate understanding of real estate and rental laws from the beginning. Both your contractors and tenants expect you to have the answers to a variety of dispute concerns and maintenance repairs. Take the time to study eviction notices and tenancy agreements. Also, avoid working with unlicensed contractors for plumbing and electrical work to legal trouble in the future.
Property management is no smooth walk in the park, but once you’ve navigated this park, you’ll reap the benefits of a high return on your investment. As long as you manage your property properly, you’ll continue to walk the path to success.