Being a successful property investor is really all about effective management. Unlike stocks, real estate relies on the input of the investor to be profitable. For the property investor, most of the work begins after they have acquired the asset. The performance of the investment is almost entirely dependent on how well the investor is able to manage it.
Managing an investment property is a skill in its own right. A lot of expertise is required to manage the different dimensions of a property and make it profitable. To become successful, a property investor must become savvy in the following three areas:
- Tenant management: This includes everything from advertising apartments and residential buildings, screening tenants, collecting the rent on time, enforcing the lease terms, responding to tenants’ complaints, and evicting problematic tenants.
- Property management: This is everything you have to do to maintain the physical structures of the building. Building maintenance is one of the most time-consuming aspects of managing an investment property. It is also a huge factor in the overall profitability of the investment.
- Financial management: The investor’s ability to keep a careful eye on the financial implications of every decision they make is the most critical aspect of managing an income property. Managing the finances of a rental property is about balancing income with spending in order to make a consistent profit.
Tying all these different aspects of managing a rental property together takes a lot of expertise. But most importantly, it takes a lot of time. This is why a rental property is not considered a source of passive income in the same way that stocks are.
In many ways owning rental property is very similar to a job. A lot depends on the investor’s input of time and energy. The only way to change this and make a rental property a fully passive source of income is to hire a property manager.
What is a property manager?
A property manager is a third party to whom the owner of an investment property outsources the day-to-day work of operating the property. Property managers are competent at overseeing all aspects of an investment property. In most cities, they have to be licensed.
A property manager makes it possible for real estate investors to own properties while avoiding the work of overseeing those properties. By hiring a property manager, an investor does not have to learn how to advertise for tenants or do physical maintenance of their building.
Below are 8 reasons why hiring a property manager is one of the best decisions property investors can make:
- Freedom: A property manager gives property investors the freedom to do other things with their time. As an investor managing your property by yourself, you often have to deal with late-night calls from tenants and emergencies on a weekend. With the property under the care of a property manager, you can go on vacations without worrying about your investments.
- Consistent cash flow: A property manager will help you set the most competitive rental rate for your property and also help you determine the best time to increase rents. Furthermore, the manager knows how to collect the rent on time to make sure there is always sufficient cash on hand to operate the property.
- Marketing your property: From experience, property managers know the best kind of renters to advertise the property to and where to find those renters. This means the property manager will be able to fill vacancies faster and is more likely to know how to find quality tenants who will stay for the long term.
- Efficient tenant screening: The success of a rental property often hinges on your being able to do thorough background checks on potential tenants before leasing to them. It is less costly to keep bad tenants out of a rental property than it is to evict them and property managers are adept at doing this.
- Efficient property maintenance: From many years of managing buildings, property managers know the kinds of problems to expect, the best people to handle those problems, and how to save money on repairs. Property managers know how to do repairs in the best way possible within the shortest time.
- Overseeing evictions: Evictions are one of the unpleasant realities of owning rental properties. But beyond the ugliness, evictions can cost property owners a lot of money if they are not well-handled. Property managers know how to manage evictions to minimize their impact on the performance of the property.
- Ensuring compliance with regulations: Most municipalities have a myriad of laws regulating rental properties. Without competent guidance, it is very easy for a property investor to take the wrong step. Property managers help to keep investors out of legal hot water by making sure that they comply with all laws.
- They let you invest from a distance: Without a property manager, you would not be able to take advantage of property investment opportunities in far-off locations. By hiring a property manager, you remove this limitation; you can buy properties in any part of the world without needing to be in close proximity to those assets.
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