The global property management market has registered tremendous growth in the past couple of years, with the industry bouncing back in the wake of the COVID-19 pandemic. The United States remains one of the top countries to invest in real estate properties.
According to industry projections, the U.S property management market is poised to grow at an impressive compound annual growth rate (CAGR) of 7.5% by 2027. That’s some excellent news for aspiring realtors. But for real estate owners, the decision to engage property management services is always a tough call.
The reality is that property management companies have their benefits and drawbacks. Landlords must weigh the pros and cons of investing in such companies before hiring one. Besides, there’s usually the challenging aspect of honing in on the best property management firm.
Read on as we dissect everything there is to know about property management, focusing on how these companies work.
What Is Property Management?
Property management refers to the day-to-day operation, control, maintenance, and oversight of real estate properties by third-party contractors.
The property could be residential, commercial, or industrial. It could also be land real estate.
The concept of property management is near-similar to that of business management. In a nutshell, the property owner and manager must agree upon specific key deliverables before signing a contract.
What Is A Property Management Service?
A property management service is simply an independent company that manages real estate property on behalf of a landlord.
Most professional property management services are duly-registered companies with a sizable workforce and functional systems.
Not only will a professional Nashville property manager point you in the direction of a potentially lucrative real estate investment. They’ll also perform due diligence to ensure the property has no outstanding caveats or disputes. This can offer peace of mind knowing you’re investing in a piece of property that no one else claims.
How Do Property Management Companies Work?
Property management companies may be engaged in two scenarios – before or after investing in real estate.
Consulting a property management firm before acquiring real estate can help you determine the suitability of investing in a given property before taking the plunge.
Most professional property management services work with decorated realtors whose experience can help you choose whether your purchase of the real estate in whichever location and at specific periods makes perfect economic sense. These professionals understand the often-shifting dynamics of the real estate industry, where unpredictable factors can suddenly burst the bubble of a booming market.
If engaged after the fact, the role of property management companies would mainly entail overseeing the daily operations of a building or land.
Some critical functions here include maintaining a property’s curb appeal, managing tenancy, and ensuring all land rates and associated tax obligations are fully paid in time. The realtors may also undertake routine evaluations to ensure any financial benefits accruing from rental properties are in line with the economic dynamics within the property’s locality.
What Are The Roles And Benefits Of Hiring A Property Management Company?
As indicated, a property management company can help you make the right real estate investment decision. Their in-depth understanding of industry dynamics can come in handy when choosing the type of land or building to invest in.
The following are other notable benefits of hiring a property management company;
Keeping track of the occupancy of your rental properties can prove a bit of a challenge, especially if you have more than a couple of rental complexes. That’s where real estate managers come in.
Property management companies can help advertise your rental properties and screen applicants to find the most suitable tenants. They then draw up a lease agreement, conduct move-in inspections, and collect the monthly rental income on your behalf.
And when a tenant needs to vacate, a property management service would need to conduct move-out inspections and possibly surcharge the vacating tenant for damages. If all looks good, they’ll prepare the complex and list it as vacant.
Handling Tenant Disputes
Not every tenant is civil and neighborly. Some will snap at the slightest provocation.
Property managers ensure that inter-tenant conflicts do not escalate to physical fights or wanton property destruction.
They typically maintain official contact numbers where tenants can channel their grievances for fair arbitration.
Maintaining Property’s Structural Integrity and Curb Appeal
A real estate property must be structurally sound and aesthetically appealing to tenants, visitors, or potential lessees. This is another core mandate of property management firms.
These companies undertake routine inspections to uncover the potential areas needing urgent attention. Typical areas of repair and maintenance include;
- Lawn and landscaping areas
- Patios and driveways
- Garage doors
- Electrical fixtures
- Plumbing fixtures
- HVAC systems
- Walls and floors
- Roofs, ceilings, and gutters
- Malfunctioning appliances
Bookkeeping is a critical aspect of property management, especially if you have several real estate investments.
A property management company can handle all bookkeeping and invoices, allowing you to keep track of your rental income and tax obligations.
Some landlords would instead hire a separate bookkeeper in addition to engaging a property management company. However, it would make more economic sense if you sourced a property manager whose package includes bookkeeping services.
How to Hire a Property Management Company
A lot goes into choosing the exemplary property management service.
First, you’d want to determine the type of property manager you’re dealing with. Ideally, property management firms fall into four main categories, depending on their specialization. They include;
- Residential property managers
- Commercial property managers
- Industrial property managers
- Special-purpose property managers – Manage notable real estates, such as learning institutions, theaters, sports arenas, palliative care facilities, and worship places
Next, ask questions about the management services you’re looking for. For instance, you’d want to know the company’s tenant screening processes, how they handle move-ins and evictions, how regularly they perform repair and maintenance works, etc.
Once that’s taken care of, check for feedback from some of the company’s previous clients. A property management firm that has been in operation for a considerable duration should have racked up plenty of positive customer reviews.
The last (arguably most important) step is to insist on a fully-trained and duly licensed company. Ask for certifications to be sure you’re dealing with a professional who’s truly worth their salt.
In the final analysis, choosing a suitable property manager comes down to your requirement. So, when scouting for a property management company, insist on service providers that appeal to your personal needs.