Once you’ve taken the dive into the real estate investment market, you’ll be faced with a number of questions regarding management of the property. Since the “quick flip” strategy has soured given the difficulties in property values and financing in recent years, you’ll most likely find yourself managing property, including tenant relations, to earn a solid profit on your investment.
A key to success in property holdings is to outsource everything that you can do profitably. One of the areas that can provide the biggest benefit to you as an investor is to select a good property management firm. when seeking out a firm, look for a company that has a track record of providing direct management services, with experience in the specific market segment that you are familiar with, whether it is commercial or residential buildings.
Since each type of market has its nuances, it’s quite important that your property management company has direct experience. The key to picking a company is to limit your day to day involvement so you can focus on growing your business.
You will essentially be forming a partnership with the company, as their job is to keep existing tenants happy, so you can keep up occupancy rates to earn a solid return. Tenants today expect a lot from their property, so you’ll want to make sure the management company is up to the task 24/7.
Just as you have to compete for tenants actively, so should you hold your management firm up to high standards, especially in a business environment. If you’re managing a complex corporate site, such as an office or a retail space, then you’ll likely get constant in-bound demands, which will require you to be flexible in your service.
The last thing you want is a management company that says, “is that in our job description?” Simply: you are hiring them to keep the tenants happy, and they need to have the personnel and skill sets to get the job done right, the first time.
While it might seem like finding the right property management company is the panacea to all of your problems, this isn’t always the case. A number of urban investors have found that even with the sharpest managers, having a diverse portfolio of holdings can make keeping you r investment up quite difficult, especially as you have to keep costs reasonable given tenant demands (see Wall Street Journal).
The lesson to be learned here is that you want to keep your investments consistent around a core area that you can master and apply a property management company to apply those best practices on a scaled basis.
Let’s be clear: investing in rental property is hard work, even when you outsource much of the day to day management because you ultimately have to make the decisions that will determine whether you can stay profitable in the long run. Make sure your potential management company is fully on board as a partner in the venture, and wants to build a long-lasting working relationship in everyone’s mutual interest.