Investing in property management can be highly rewarding, but it requires careful consideration of its potential risks and rewards. Nevertheless, it provides property owners with a dependable source of income over an extended period.
Effective property management is pivotal in achieving success in real estate investment. As you continue reading, you’ll gain deeper insights into property management, its essential functions, the advantages of enlisting a professional property manager, and more.
What is property management?
Property management is preserving the value of properties, such as residential, commercial, etc., via daily supervision by a third-party contractor or company. A property manager or company handles this role, and property owners or investors often delegate it.
These end users are often assigned tasks that include managing and maintaining a property’s daily operations more efficiently. With property management, property owners can handle collecting rents, marketing their rentals, responding to customers’ complaints and many more. The property management market is estimated to reach USD 26.48 billion by 2026. Increasing at a CACR of 8.8% from 2019 to 2026.
Despite the current inflation, about 44% of property owners still hire property managers to manage their properties due to real estate investment profitability, such as gross profitability, net profitability, cash on cash, returns, and cap rates.
Critical Roles of Property Management in Real Estate Investment
Talent acquisition and retention
One of the core services of property management includes attracting and screening the right tenants with a good income source and no criminal history. Retaining these kinds of tenants would never be a problem, which also contributes to low turnover rates.
Appreciates property value
Adequate property management contributes to appreciating the value of a property such that it remains attractive to potential tenants and buyers, which impacts its appreciation worth and cost value. Of course, when a property is maintained, it appreciates.
Higher rental income
A well-managed property can generate higher rental income because of its optimal market rate, which aligns with market changes. In doing so, property owners can create more income from their real estate investment.
Reduces vacancy periods
Vacancy is when a property remains unoccupied with no tenant living. During the vacancy period, the property owner does not receive rental income. Property managers would maintain the property, advertise it using digital and traditional channels, and swiftly coordinate move-ins. Leading to a more consistent stream of rental income, which impacts profitability.
Quality legal compliance
Property management ensures tenants and landlords are up-to-date with the landlord-tenant law to avoid costly penalties, providing property owners save money and maintain a positive reputation.
Benefits of hiring a professional property manager
There are several benefits to hiring a property manager who is competent at maintaining and managing a property. They include:
I. Marketing expertise
An experienced property manager can leverage various channels, such as social media, website, SEO, etc., to expose a property to the right tenants.
Ii. Peace of mind
Hiring a professional property manager with a formidable track record can alleviate stress and anxiety. Providing you with peace of mind and confirming that your property is safe.
Iii. Local market knowledge
A seasoned property manager would have insights into local market trends, enabling them to be ahead of the competition regarding market rates and make adjustments where needed.
Iv. Tenant relations
The right property manager would act as an intermediary between the property owner and tenants, ensuring all concerns are addressed and fostering positive relationships among tenants.
What are the characteristics of a good property manager?
- A good property manager is responsive and is open to chatting the course about up-to-date changes in a property.
- They have built a positive track record proving they are credible. Thereby increasing their chances to manage the property of other property owners.
- You can trust a good property manager to look after your properties. Providing them the opportunities to take on many responsibilities from other property owners to manage their properties.
- Their customer customer service skills are excellent. It enables them to meet the needs of their tenants and landlords, ensuring they can resolve any issues that may arise professionally.
Who needs a property manager?
The following is a category of people who need a property manager;
Busy Landlords: Individuals who own several rental properties but don’t have the time or know-how to look after them and deal with tenants. Property managers step in to handle all that work.
Hands-Off Owners: Property owners who want to own rental properties and make money from them without getting their hands dirty. They hire property managers to do all the property work for them.
Owners of Vacation Homes: Property investors who own a vacation home but live far away. Property managers will ensure everything is in order when you’re not using these homes.
Real Estate Brokers: Sometimes, real estate agents who help people buy and sell houses also manage rental properties. For example, they might help people find rentals and take care of them for the owners in vacation spots.
Should you hire a property manager? Well, it depends.
Managing properties can be a lot of work and cost you time and money. If the money you pay to a property manager is less than what you could make by doing something else instead of managing properties yourself, then hiring one is a good idea.
But here’s the thing: The decision to hire a property manager differs for each person. It’s like a math problem that everyone needs to solve for themselves. You have to figure out if it’s worth it for you.
Wrap Up
In summary, property management is vital to real estate investment, offering numerous benefits such as talent acquisition, property appreciation, higher rental income, reduced vacancy periods, and legal compliance. Hiring a professional property manager can enhance these benefits and give property owners peace of mind and local market expertise. The decision to hire a property manager should depend on individual financial considerations. At Errotts Homes, We wholeheartedly embrace managing every facet of your property, alleviating you from burdensome tasks. To get started, visit our website HERE.