There are varying levels of property management, and it does not have to be full service. While 20 percent of the market opts to select a company to take over their management, you are with the majority of investors if you select a different solution.
In fact, there are some well known real estate investors, for example Ben Leybovich, who are adamant that real estate investors can't afford a property manager.
But before you dismiss management all together, you must answer the below questions:
- What are your real estate investment goals?
- What tasks would you like to be involved in?
Second, you need to understand that a full service property manager with reduced fees will be a poor decision. You pay for what you get. And, if you want to be completely hands off with your management, then a full service manager is the right solution for you.
If you want an affordable property manager, you need to take over some of the management yourself. There are solutions out there to fit your property management needs. You do not necessarily need to do the administrative work nor do you need to relinquish management control. There are virtual managers and real estate agents to perform some tasks, while allowing you to perform other tasks.
Understand the cost of a manager
Headcount will be the most expensive item. Regardless of your solution, you should be mindful to automate many administrative tasks. And, your management staff should do the following:
- When addressing an urgent item, they should also address non-urgent items (list of small repairs that have been requested, inspection of the property’s appliances and systems, etc.)
- When showing a property, they should optimize the schedules to avoid constantly driving to and from the property. It is better to show the property to multiple prospects at the same time.
- When finishing repairs and renovations at the property, have your contractor take videos and photos to avoid having another person inspect it.
Understand software increases your bottom line
The best investors understand the importance of intelligent software. It doesn't matter whether they have one or 100 properties.
I get frustrated when people ask dumb property management screening questions such as “What is your properties to employee ratio?” A property management company could have 5 properties for every agent, but those agents are the most ineffective property managers, performing everything manually.
Make sure that your solution has the following software processes in place:
- Marketing to multiple rental listing websites, with one click (increase the number of leads)
- Automatic reminders to prospects on property showings (decrease no shows)
- Quick responses to prospective tenants’ emails (increase leads’ interest)
- Follow up with tenants on the application (increase interest through constant engagement)
- Reminders on lease renewals and other tasks (reduce risk)
- Automatic rent collection and late fees (reduce manual data entry and tracking)
There are things that humans can do better than software. But, there are other things software can do better than humans.
Most importantly — understand your needs
Whatever your goal is, your property management solution should meet it.
If you enjoy attending property showings but do not want to schedule the showings, then use a solution that schedules property showings and informs you on when to be there.
If you enjoy selecting a tenant but do not want to perform the move-in inspection, then use a solution that allows you to approve the tenant and use an agent to do a one-time move-in inspection.
Resources — affordable management
You will want to start with online research. A couple of things to consider in your solution:
- Software - online service offering both leasing and management
- On ground support - licensed agent willing to be available when you need them for specific tasks
- Remote support - a tax accountant and an admin to answer the telephone (if needed)
This process will provide you with an affordable solution to property management. It is transparent and cost effective, yet still provides boots on the ground when you are traveling or remote.