Real Estate Expert Nick Statman shares Property Management Tips for Entrepreneurs.
If you’re an entrepreneur, you’re no stranger to hard work. You know there is so much work that is done behind the scenes that leads to both personal and professional success. Entrepreneurs are also always looking for ways to work smarter, not harder, which is why many gravitate toward property investment.
Part of passive and profitable property investment is understanding property management. Whether you hire a property management company to handle the day to day responsibilities of your investment or do it yourself, these are the four things all entrepreneurs need to know about successful property management:
Get To Know Your Property
Property management starts with knowing the ins and outs of your property, understanding the systems and appliances in the home, and having an in-depth knowledge of the inner workings of your investment. Spend time getting to know the features of your property that make it unique, the areas that can be improved, and any issues that may send red flags to potential tenants. A property investment is something you can eventually step away from and earn a passive income but at the beginning, it’s important to get to know the property and understand the best ways to maximize your ROI.
Keep Up With Maintenance
While the draw to property investment is the ability to generate passive income, property management is a very active and important part of the investment strategy. If you’re going to do the upkeep yourself, it is important to be realistic about how much time and money it takes to handle the most common rental property repairs. If you plan on hiring a property management company, ask questions about their maintenance procedures. Ask about if they handle maintenance in-house or if they hire an outside company to take care of it. The key to a profitable investment is being proactive in taking care of it.
Understand What Causes Tenant Turnover
The best way to avoid tenant turnover and extended vacancies is to understand what causes them long before you invest in property. Some of the most common reasons that tenants leave a property include not being able to afford the property, needing more/less space due to changing life circumstances, or moving or relocating because of work.
Avoiding inconvenient and expensive turnovers starts with an intentional and thorough tenant screening process. It can be tempting to breeze through this part, but not screening tenants can end up being more expensive in the long run. Spend time checking the tenant’s background, financial history, and rental history. Check references and do an online search. You can avoid many of the most common turnover issues through careful screening.
Vet Property Management Companies
Owning a rental property can be a full-time job. It can involve late-night emergency calls, plenty of home repair and maintenance, and money and time spent on tenant screening, rent collection, marketing, and accounting. If you were hoping for a more passive investment strategy, you may want to hire a property management team.
This team of professionals can serve as extra eyes and ears on your property while you’re away, and take care of the responsibilities so that you don’t have to. But not all property management companies are the same. Some offer a flat rate for their services while others work based on a percentage of your rental income. Some do all of their work in-house while others contract the work out. Interview and vet multiple property management companies before deciding on one. Your success depends on how well they do their job, so it is important to take the time to find a team that can meet your needs.
If you’re an entrepreneur interested in property investing and generating a passive and low-risk stream of income, make property management a top priority. The better you take care of your property, the easier it will be to maximize your ROI.
More resources from Nick Statman.