The last two years have arguably been the most chaotic time in real estate history. Various lockdowns and other restrictions led to an initial pronounced exodus from city areas, only to be followed by a moderately swift return as those restrictions have eased in many areas. The law of supply and demand, consequently, dictated massive price swings as these various relocations took place … and continue until today.
Seeing these large swings has prompted many new property owners to consider renting their own properties if they are among those located in advantageous areas; or perhaps even start building a larger real estate portfolio. Any time we see new entrants into a market, there is a learning curve that predictably occurs. However, trial and error is not the best approach to investing in general, and is doubly cautioned against when your property is on the line.
Amid the seemingly predictable routine of one’s principal home ownership, it is easy to forget just how much goes into managing the average household. For those who have taken the plunge into renting out a property, it can become particularly apparent why so many expert real estate investors advise to make sure you hire a full-service company to manage your property.
As one who has informally managed properties myself for several friends and family, I can assure you that the range of skills required for full-service property management is far beyond what even my standard real estate license could provide. Knowing this, I kept it fairly simple and I was clear in explaining that my services would be limited, but in order to provide peace of mind at a larger scale – and especially when providing a service to the public at large – it is valuable to know what responsibilities a property manager must typically fulfill.
Firstly, reputable property management companies typically provide a team of licensed professionals in each of the required areas, so it is unlikely that a single person will be responsible for every task. Your point person, however, will be able to call upon those who can seamlessly fulfill the requirements and requests that are likely to arise.
Solid property management often begins by marketing a property, which is a skill all on its own. Most people feel that if they know their own property inside and out, then surely they can properly describe it to the public. Sadly, this is most often not the case, because it’s not only a description of the property, but also comprises the research necessary to establish a correct price, which involves a level of research very few are capable of conducting on their own. It also can be extremely helpful to distance oneself from potential negotiations that will take place thereafter; personal attachment can be a hindrance in such discussions. Moreover, a knowledge of various contracts, fees, renewal processes and more is necessary. Credit checks, criminal background checks and other due diligence about previous rental history also gives peace of mind.
Then comes the maintenance aspect of property management. Some of our handier and more skillful craftsman might assume that they can handle these duties, and perhaps they can. However, even the handiest among us might not be trained in property inspection and other physical due diligence that needs to be conducted in order to legally protect oneself from potential issues. A full-service company also is frequently on call nearly 24/7 when issues invariably arise at the most inconvenient moments, and they have likely already vetted the best service companies in all of the various areas, as well as sourced the most competitive pricing. These scenarios can also potentially lead to tense owner/tenant relations and is yet another benefit to having a distanced and objective liaison to help navigate these moments and reach the quickest and most equitable solution for both parties.
Lastly, again, if one thinks for a moment about managing one’s own informal home finances, then imagine the added responsibility of legally being held accountable for accurate reporting to other individuals. This often involves having knowledge of the best accounting practices, as well as the proper software to make it as transparent and accurate as needed, especially considering tax implications. Knowledge of the countless laws and regulations (always changing), as well as the potential need for legal assistance and representation is an aspect that too many people overlook.
All of the above considered, is it a mystery why the “smart money” in real estate investing invariably seeks out the most reputable full-service property management companies?
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