If you are only getting started in real estate or beginning to consider investing in property, you may not be familiar with the concept of property management, or perhaps you think it is a luxury you don’t need. However, while investing in property is generally regarded as a sound move, it is also a very large investment. There are many factors that can affect how much money you actually make from your property, some of which you may not even be aware of. Depending on the type of property you wish to purchase and earn passive income from, there are local regulations, zoning, tax considerations, and much more industry-specific knowledge that will impact your investment (and your return rates) directly.
Property management services are a great tool for property owners to really make the most of their investment while remaining free from the daily nitty-gritty of managing their property. A good property manager can also advise you before you even purchase the property, help you get it ready and occupied, navigate the local red tape, and much more.
If you think that all property managers do is collect rent and change the odd lightbulb, let us tell you more about the many different types of work a property management company could do for you, to make the most of your investment and maximize your passive income.
The many aspects of property management
Residential Property Management
Oklahoma City, like most large cities, has lots of rental properties. Residential property management takes a lot more than just collecting rent and mowing the lawns. A property manager will start by researching local rental rates to help you set a fair and attractive price for your rental – not too high that you won’t find a tenant, but no lower than what is fair in the neighborhood. Residential property must be staged, marketed, and shown to prospective renters – did you know this is something property managers can do for you? A good property manager will already have interior decorators and photographers in their team, to make your rental look its best for showings and make it stand out in listings with professional photography and good copy.
Once the ads and listings are out, and inquiries start coming in, a property manager will handle showing your property, either one-on-one or by staging an open house (or both.) After some offers come in, property managers can also help you qualify the applications to decide who will be the best tenant and stay the longest time.
If you are not familiar with legal language, your property manager will assist you with drafting rental contracts, and welcome renters into the property while explaining the rules and expectations to them. Finally, if you have problems with a renter and need to evict them, professional property managers can handle that for you too.
Commercial Property Management
Commercial property management is different and requires an engaged property manager who is on top of maintenance and preventative checks since the heavier use and foot traffic will deteriorate the property faster, and since an accident or a service disruption could cause financial losses for the tenants, who may consider legal action.
Commercial property tends to be rented for longer periods of time, which means there will be less showings and application evaluations, but there are also zoning laws and restrictions you need to be aware of before renting out a commercial space, so you don’t get in trouble with local authorities.
Condos, gated communities and residential neighborhoods usually have a management team or HOA (homeowners association) who set guidelines for decorations, lawn care and trash; and who also manage common purchases and enhancements to shared spaces (think of gyms, playgrounds, grills and pools).
Depending on the size of the community, the HOA may want to outsource some of its work to a property manager. This might involve taking care of tasks such as collecting HOA fees, overseeing maintenance, getting seasonal decorations installed and removed, inspecting that the rules are being met and issuing warnings to those residents who are not keeping up with expectations, and more.
Vacation Property Management
Then there is vacation property management: if you bought a condo, boat or villa, make money from it instead of just keeping it closed for most of the year and actually spending money in security and upkeep. A property manager can make your vacation property generate income for you, keeping it occupied with short term rentals and looking after the cleaning and maintenance of your property.
However, short term rentals are becoming very popular, and guest expectations have increased. It’s no longer enough to just leave a key for your guest – high-end properties that command top money treat their guests as a hotel would, with personalized attention, a welcome spread of fruit and wine, a guide to local amenities and the like. It’s more work, but it pays off in good reviews, a higher occupation rate and better rental prices. This is one of the clearest cases where you can see that the cost of property management is actually an investment that pays for itself and then makes you some money.
Also, if your vacation property is very far from where you live, you will have a very hard time dealing with emergency repairs and customer emergencies – consider having a local team who can manage those situations for you quickly and efficiently.
What a Property Manager Can do for You
Property managers are not just about renting property and looking after tenants. If you are considering investing in real estate, an experienced property manager can advise you on which is the best investment property for you. Property managers stay informed and educated on property trends and values, as well as local legislation and urban planning, which makes them the ideal advisors.
Whether you already own rental properties or are beginning to consider investing in real estate, give us a call – we will be happy to advise you.