Have you been weighing your options and considering if investment property management may work for you? There are many specific and complex aspects to consider, and comprehension of the entire process is crucial to successful investments.
The property management industry is currently seeing over $88 billion in revenue, so don’t you want to get your piece of that? Our guide to property services and other important information can help you get the start you deserve. Check out this property management article to learn more!
What is Investment Property Management?
Investing your funds into property management involves overseeing any residential, commercial, or industrial locations you purchase. You can even buy properties like apartments, detached homes, condominiums, and even shopping centers.
Typically, someone other than the investor manages the property. Still, the property manager acts on behalf of the owner to maintain the property’s value and generate income.
Before committing to an investment property, it’s crucial that you understand the local property and real estate laws, so you make the right move.
What Does a Property Manager Do?
When you get started as an investor or a property manager, it’s helpful to enlist expert realtors or real estate brokers who understand the legal requirements of an efficient property. Professional guidance can be beneficial when you’re starting, and hiring a trained property manager will be more than just collecting rent checks and renting out spaces.
Property managers are generally in place to protect your investment funds and maintain a steady flow of passive income. They fulfill a wide range of roles for your properties that are specific to the type you own, but it can be anything from getting a broken appliance fixed to keeping up to date with legal changes that may affect your units.
A Property Management Guide for Beginners
Understanding what property management guides can do for your business starts with being aware of what you don’t know. Some of these quick tips may seem familiar, but it’s essential to understand the full process before investing any of your funds to a new property or hiring on management.
Open Up Your Investment Opportunities
Investing outside of your geographical area is tricky, but having a foothold in your targeted region can help you stay up to date with available opportunities and specific details you may not consider on your own. You will also benefit from having someone onsite who can maintain your building, advertise open spaces, and notify you of status changes.
Understand Local Laws and Regulations
While you need to understand laws before making your purchase, maintaining the landlord-tenant rules will quickly become overwhelming when taking on multiple properties in several different areas. Property managers will monitor local laws, ordinances, and regulations to save you from legal issues.
Emergency Maintenance Requests
Renting to multiple tenants means that your quantity of maintenance requests will increase. Appliances break, bulbs burn out, and leaks happen; but with a team devoted to keeping your place in top shape, you won’t need to learn how to do it all or manage the repair schedule yourself.
On the flip side, there will be regular maintenance of each part of your property’s exterior and interior that you will want to ensure meet inspection requirements. Your property management can create a periodic maintenance schedule that will prepare you for each new season.
Marketing, Tenant Interview, Payments, and Paperwork
While you may want to help with some of these tasks, your property manager will be on sight to keep your spaces rented to capacity and ensure you follow legal requirements. Tracking payments, background checks, inspection checklists, and more items can be handled behind the scenes.
5 Things to Know Before You Start Managing Investment Properties
To understand what you need to do as the investor, start by following a timeline of how these different pieces will play into your purchasing process. As the investor, your approach is higher-level, whereas the property managers are responsible for the day-to-day functions. These five steps will vary depending on the number of properties you own, but this will help you start with confidence.
1. Buy and Repair Your Property
The first, and most crucial step in the process, is finding an investment property you can purchase. Ideally, the location will be in good shape, but if it isn’t, you will need to work and spend to make sure it’s ready to rent.
2. Set Your Prices and Contract Expectations
Understanding the local area is crucial to setting a fair rental price for your property. Conducting market research or working with real estate professionals in your targeted area will help you understand what price range is reasonable and can suggest contract additions to make sure you’re covered.
Some contract additions to consider are:
- Specific income range
- Smoking or non-smoking
- Employment status
- Credit score minimum
- Rental history
3. Renting Out Your Property
Finding tenants for your property starts with adequate marketing, web presence, accurate photographs, and lists of available amenities. Having a timeline in place of necessary tasks before moving into the rental can help maintain order and avoid any tenants who may try to push the boundaries.
4. Collecting Rent and Understanding Evictions
If you don’t have full property management in place, it will fall to you to ensure you collect rent on time and follow protocol when spaces aren’t paid. You will want to have a schedule for raising rent based on current market trends and have specified late fees before they’re needed. Additionally, you will need to have eviction steps in place should you need to remove a tenant.
5. Accounting and Long Term Financial Success
Taxes and account information need careful management year after year to make sure you’re covered. You can hire an accountant to help, but ultimately you need to understand where everything is going and your properties’ financial climate. Inaccurate accounting or misfiled taxes can cost you significantly if not done correctly, so set yourself up for success!
Where to Start
Are you ready to get started and find your perfect investment opportunity? Start by connecting with real estate experts in your area to see what properties are currently available.
Once you choose a site, study the legal requirements, or connect with a property manager that can help you progress through the process smoothly. Create documents that specify what you expect from your tenants and lay out what will happen should they break their lease agreement.
For more information about real estate and insightful articles about owning a home, check out our blog!