Many first-time-landlords are not sure who to turn to when they take on the task of managing an income property in Orange County. For those planning on hiring someone to manage their newly acquired asset this article will discuss some of the ins and outs of picking a competent Orange County property
Whether it is a rental house, a fourplex, or an apartment building many new landlords ask the advice of their real estate agent about property management services. Due to the economy and the state of the wallets of many real estate agents many have been recommending their own property management services. So the question remains does real estate brokerage experience qualify one to manage properties?
If they are managing only a couple properties they may do a fine job and their shortcomings are easily hidden. To manage a large portfolio of properties requires other skills beyond those mastered in the brokerage field, which is primarily a sales and marketing position. Effective property management boils down to doing four core competencies: leasing, rent collection and disbursement, maintenance, and communication. No matter what product type effective property management is the same, the systems to achieve the proper results may differ but the core competencies are the same.
How does a real estate agent handle leasing? This is where real estate agents feel at home and where they may do a fine job. Real estate agents when they are not chasing larger commissioned deals they can be very effective in leasing. However, when push comes to shove if they have a listing presentation or a lease showing the listing presentation will win out 100% of the time. Leasing consists of sales and marketing but it also requires effective underwriting to ensure a consistent income stream throughout the lease. Underwriting is not something that agents worry about on the for-sale side of real estate; this function is limited to the lender in a sales transaction. When determining what group or individual will be managing your property it is important to understand their approach and criteria for underwriting applicants and make sure that you are satisfied with their approach. Doing proper due diligence on potential tenants can save owners thousands in lost rent and avoidable expenses. Finding a management company that is focused strictly on property management will ensure that your manager is not neglecting the management of your property to chase larger sales commissions when the opportunities present themselves.
Money in, money out. In managing a real estate portfolio there is a lot of money coming in and a lot of money going out. With this wave of money rushing in and out sound accounting serves as the keystone of any stable property management company. Systems and processes must be in place to handle the rent collection, accounting, disbursement and reporting. The handling of clients’ funds and the proper reporting of those funds tends to be a weakness of many management companies. Property management is more of an accounting business than a sales business. The management companies that fail in their accounting will ultimately fail in the rest of their operation. It is vital that when choosing a property management company that the rent collection, accounting, disbursement, and reporting are solid otherwise you are placing a significant investment in uncertain hands.
Maintenance is necessary to preserve the value of the asset and to appropriately maintain customer service among current tenants. If the maintenance is done correctly it can result in longer tenancy and higher rents. This core competency needs to be systematic so that necessary repairs are not left undone and that each repair is made in a timely manner. On a small scale this is not an overwhelming task, however, when dealing with a large number of properties the navigation of this task proves to be more difficult. In selecting a manager dig a little deeper on the maintenance and make sure that the organization and the process of dispatching vendors and completing work is well addressed. A real estate agent may struggle to stay on top of a myriad of maintenance when also striving to please their listing owners, potential buyers, and the constant self marketing required to be a listing agent.
Most issues that arise can be solved by open communication between property owner, property manager and tenant. Real Estate owners want to stay informed about their property; whatever the news good or bad, property managers need to communicate effectively with their clients. A major part of keeping tenants happy is communication whether it is setting expectations, explaining the lease, or quick response on maintenance requests. A property manager serves as the liaison between the tenant and the owner and is constantly relaying pertinent information between the two parties. When selecting a management company call them, see if they pick up their phone, if you leave a message how long does it take for a return call or email. Make sure you are comfortable with their ability to communicate and process answers to your questions. The problem of hiring a single individual to manage is that most just do not have the time to properly service their clients. This is a volume business and one person can only do so much.