Starting a business and earning an income is a rather tough subject for a lot of people. Many see it as a big investment that needs a great deal of capital. They also believe that having experience in handling businesses or great knowledge of money matters is needed. Property Management is just one of the ways to make money in real estate.
For this article, we’ll focus on property management.
What is Property Management?
According to Investopedia, property management is managing any type of commercial, industrial, or residential real estate property. This includes an apartment complex, single houses, warehouses, retail, offices, or shopping centers.
What happens typically is that the owner of the property asks a property management company to keep an eye on their real estate for them. That means the establishments they manage are not theirs most of the time.
Responsibilities of a Property Manager
If you’re thinking of going into the property management industry, you should know your upcoming responsibilities.
These include, but are not limited to, the following:
- Taking care of the rent – As a manager, you are entitled to set the rate to the best level in order to attract customers. You can also adjust the rent as time goes by. Usually, both of these need some final permission from the owner. You’ll also have to collect the rent when it is due.
- Handling tenants – This is the main job of a manager. No matter what type of real estate you’re managing, it is your job to find and screen tenants. You must know that they are capable of paying their rent through credit check history as well as their criminal background. You’ll also be handling the lease term, moving out, and even evictions. Most of all, it is your duty to take care of complaints sent to the management as well as emergencies.
- Maintenance and repair – The best managers preserve the estate to protect its value. Maintenance will be important along with much-needed repairs. It is your duty to schedule these and fix the problems as soon as possible.
Advantages of Property Management
Many choose to establish their own property management company because it is rather easy to get into. You will only need a limited capital that you can get from 6 to 12 months of your income.
When it becomes successful, it is a good way to earn a living and a stable source of revenue. Plus you can upgrade its value by succeeding as a business and sell it when the time comes that you want to retire.
Limitations
However, there are also limitations or the cons to choosing this as a business. For one, there will be a lot of competition, seeing as it needs low capital to start. That means the barriers to entry is low and anyone can get into it.
There’s also the perception that property management is seen as a commodity service. If you’re dealing with a commodity service or product, the pricing is normally lean. For example, a $5 to $10 million property will probably be 2% or 3% of the revenue or even less in some cases.
This approach may be slow, but it’s stable, allowing to regularly generate income from a reliable source. If you’re thinking about investing in property, it would be best to call a certified professional.
Here are some of the Top Property Managers of 2018 according to NMHC: https://www.nmhc.org/research-insight/the-nmhc-50/top-50-lists/2018-manager-list/
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