Importance of Property Management on Returns

Let me be clear: Your property management team is the linchpin that can either make or break a real estate investment. Brokers might dazzle you with their presentations, but how many of them stick around a decade later to check the accuracy of their projections? I'd venture to say, not many. That's why your property management team is paramount. But here's the catch: Most investors are clueless when it comes to choosing the right property manager or management team. Drawing from my early career experience in property and asset management, here's what I've got to say: 1. Seek a property management team dedicated solely to property management. There's a sea of brokerages out there with property management divisions, whose primary aim is just to break even or make a modest profit from property management. Their real hope? That they can win your leasing or sales business in the end. 2. Recruit a property management team that treats your property as if they own it. Some firms out there do the bare minimum for minimal pay. If you're hands-on, that might work. But if you want your property to appreciate in value, you need a team that's invested in its growth. The ideal scenario? Link their compensation to the property's success, not just occupancy rates. 3. Choose someone who knows the ins and outs of property management. In today's real estate market, struggling brokers often add property management to make a quick buck. They might not have a clue about effectively running a property. Just because they can lease it out doesn't mean they can manage it. Look for a firm with someone sporting years of experience, education, and credentials like the Certified Property Manager (CPM®) from @The Institute of Real Estate Management. Seek out certifications and designations that are grounded in real-world experience. 4. Opt for expertise in your property type. Different property types come with different needs and expectations. What flies in the industrial sector may not work in multifamily. If you want your property to be managed to its fullest potential, you need someone who's an expert in the nitty-gritty specifics. So, property managers out there, what's your take? Did I miss anything crucial?

PROPERTY MANAGEMENT...IT'S THE KEY Owning real estate is only half the battle; managing it effectively is what truly determines your success as an investor. Good property management can maximize your rental income, minimize your expenses, and ensure your properties appreciate over time, making it critical for funding your retirement. Tenant Screening: The foundation of successful property management starts with choosing the right tenants. Thorough screening processes, including background and credit checks, can help you select reliable tenants who pay rent on time and take care of the property. This reduces the risk of late payments and property damage, ensuring steady income. Maintenance and Repairs: Regular maintenance keeps your property in good condition and prevents costly repairs down the line. Address issues promptly to keep your tenants happy and protect your investment. Creating a maintenance schedule and setting aside a reserve fund for unexpected repairs can help manage these responsibilities effectively. Rent Collection: Consistent rent collection is vital for maintaining your cash flow. Implementing an efficient system for collecting rent, whether through direct deposit, online payments, or property management software, can streamline the process and reduce late payments. Legal Compliance: Staying compliant with local, state, and federal regulations is crucial. This includes everything from fair housing laws and lease agreements to health and safety codes. Keeping abreast of legal requirements can prevent costly fines and legal disputes. Professional Property Management: If managing properties becomes too overwhelming, consider hiring a professional property management company. These companies handle tenant screening, maintenance, rent collection, and legal compliance on your behalf. While they charge a fee, their expertise can save you time, stress, and potentially increase your overall returns. Technology and Tools: Utilize modern property management tools and software to streamline operations. These tools can help with everything from listing properties and screening tenants to collecting rent and tracking maintenance requests. Investing in the right technology can significantly enhance your efficiency and effectiveness as a property manager. Effective property management ensures that your real estate investments remain profitable and less stressful, allowing you to focus on other aspects of your retirement planning. In the next post, we'll explore the benefits of diversification in real estate investing and how it can further secure your retirement. #harvestpropertiesgroup #realestateinvesting #passiveincome #viveequity #cashflow #wealth #financialfreedom #vivepropertymanagement #makinmoves #barbaricyawp

This one detail makes or breaks your rental market choice…and most people miss it. Why? A great deal with a bad property manager is a terrible deal. I see a lot of new investors obsess over numbers, cash-on-cash return, cap rates, appreciation potential. They run endless calculations and analyze every property their agent sends them. But they completely ignore one of the most important factors in their success: The property manager. If you’re investing out of town (95% of my portfolio is out of town), choosing your property manager is mission critical. A bad property manager will: - Place terrible tenants that trash your property and don’t pay rent. - Ignore maintenance requests until they turn into expensive problems. - Overcharge for repairs, siphoning your cash flow. - Disappear when things go wrong, leaving you to clean up the mess. A great property manager, on the other hand, protects your investment and keeps your business running smoothly. I tell every one of my students: Before you buy a rental property, you need to know exactly who is going to manage it. Don’t make the mistake of buying first and figuring it out later. That’s how investors end up hating real estate. Vet your property manager like you’d vet a business partner: Call references Ask tough questions Make sure they align with your investment goals The wrong choice could make or break your deal. -- I’m Scott Bowen, sharing stories, insights and lessons I've learned over 27 years as a real estate investor. Join my FREE weekly email (in featured section) for lessons learned along the way.