The oversight and management of residential and commercial properties can be an overwhelming task, which is why it’s crucial to have a strong understanding of what effective property management entails. The role of a property manager is to protect the property’s overall integrity while also generating revenue – they assist owners in budget creation, ads for rental properties, screen and approve tenants, and collect rent on the properties.
Here’s a brief look at understanding what a property manager is in charge of:
- Rent Collection:
Collecting monthly rent payment from tenants on a regular basis as per the lease agreement. Although various payment methods are accepted, it can be advisable to personally collect cash or cheque at the property to build a rapport with tenants or inspect the property.
- Tenant Management:
Dealing with tenants is a major responsibility of a property manager, from screening tenants to handling lease agreements, tenant complaints or other issues. Good tenants optimise property cash flow – if you want to avoid unexpected expenses and evictions while also having time to address all other property management issues, investing time in tenant management software is time well spent.
- Maintenance and Repairs:
Property management also entails ensuring that the property is maintained well and repairs take place when necessary. This can include arranging for routine maintenance tasks, such as garden care as well as reactive repairs, such as fixing plumbing or electrical issues. A property with a reputation for great maintenance also sees better tenant retention rates and satisfaction.
- Accounting:
Keeping track of accurate records of all income and expenses related to the property. From receiving rents to processing invoices and printing financials and cash flow statements, a property manager can choose from a variety of accounting software to make property accounting a seamless and easy task.
- Marketing and Advertising:
Property marketing and advertising are important when it comes to attracting potential tenants or people on the lookout to buy a new home. For new build developments or property resales, this involves branding, positioning, and promotional techniques and strategies. Digital marketing for properties is on the rise, with high-quality videos, aesthetic poster ads and virtual site visits taking centre stage.
- Legal Compliance:
Successful property management ensures that the property complies with all local, state, and federal laws and regulations. Some common compliance violations include trust fund violation, unlicensed activity and misrepresentation of facts. Having an effective compliance program ensures management of the property’s investment risks to a large extent.
- Budgeting and Financial Planning:
Property budgeting and financial planning are all about creating and managing a budget for the property and making financial decisions to maximize profits and minimize expenses. Real estate budgeting involves segmenting the money available for business development and operations and allocating it to financial obligations and activities that focus on meeting priority goals.
Property Management Metrics
And what’s property management without data that helps you optimise your spend and revenue? Figuring out and keeping track of your property’s Key Performance Indicators (KPIs) is crucial to achieving your long-term goals.
Property Maintenance Costs: A necessary cost of property management is property maintenance. To effectively assess a property’s profitability, it’s critical to keep track of maintenance costs and the most common maintenance problems.
Occupancy Rate: Knowing how many units of the property under management are currently occupied. A property manager must ensure that the occupancy rate percentage aligns with the market occupancy rate to gage overall performance – generally, it’s considered ideal to keep this number close to 100%.
Renter Turnover: This metric highlights the percentage of tenants who vacate your property in a quarter or year. Retaining existing tenants is always easier than searching for new ones. If the turnover is unusually high, it may be time to analyse your situation and take the corrective actions necessary to keep this KPI in check.
Net Operating Income: A highly insightful property management KPI, Net Operating Income is revealed through subtracting operational expenses from the revenue. This shows the property’s actual profit and helps property managers manage costs to optimise their performance.
Knowing the basics and honing your skills with regular work is essential to effective management – truly the best way to get ahead and keep your property in good shape for years to come. Stay updated on the latest trends in property management with Escala Realty.