The Property Management Bucket List

Whenever I am out and about talking about real estate investing or teaching on property management, someone always asks the age old question. What does it take to be a good property manager? There are four distinctive skill sets required to manage property effectively that I call the four buckets of property management. Each one of these buckets requires very different personality traits and proficiency. A property manager or management company must have the “right people, in the right seat on the bus” to insure your success as a real estate investor.  Property Managers use two basic business models.  One is “Departmental Management” where you have a team approach and different members handle the different aspects of the management. The other is “Portfolio Management” where one person is assigned a portfolio of properties and manages all aspects from start to finish. There are advantages & disadvantages to both models. Let’s take a look at the four buckets I referred to and you decide which model better suites your needs.

The Four Buckets of property management:

1. LEASING: Leasing is the front end for the whole management operation. It clearly is the starting point for which your property will perform; good or bad. In order for a property to lease quickly, three main things that must line up. They are; advertising, condition of the property, and the rental price. You may think once these are in line, anyone can lease the property; this is far from the truth. Using a licensed real estate agent will insure compliance with the multitude of regulations such as fair housing & fair credit reporting, just to name a few. Only licensed agents have access to supra lockboxes to track traffic through your home to increase security. Only licensed agents have access to Georgia Association of Realtor (GAR) forms that are widely accepted in court. I prefer to hire the best & choose to work with Realtors. These are licensed agents who take their career serious enough to be a member of the National Association of Realtors. I also recommend managers who are members of NARPM, the National Association of Residential Property Managers. These experts understand the market place, effective advertising, rental condition of properties, tenant screening and most important – landlord tenant law.

2. MANAGEMENT: (Enforcing the lease) Contracts in property management define everyone’s relationship. Once the property is leased, the property manager’s main role is to enforce the lease. This person must understand federal, state and local laws and regulations that landlords must comply with. A good manager will decrease the gross operating expenses and maximize the net operating income for the owner.

3. ACCOUNTING & LEGAL: Accounting and book keeping is a fundamental support of all business operations. How the accounting is managed on your property will make or break you at tax time. Professionals use sophisticated software & provide monthly & yearend statements. It’s the law that a person who manages property for others holds security deposits & owner’s rent in an escrow account or put up a bond. Licensed brokerages must register these accounts with the GA Real Estate Commission and adhere to strict guidelines. To see if your manager is licensed by the commission, visit http://www.grec.state.ga.us and select “find a real estate licensee or company”.

4. MAINTENANCE: Maintenance is key to maintaining the long term value of your property, not to mention the long term relationship with your tenant. It is also the most litigated area of property management. This is one area you want to be sure you have documentation to support all work orders & service calls. An experienced maintenance team, familiar with rentals, will be extremely valuable. They will determine the cause of any damage & charge back the tenant when appropriate. They will also assess how the property is being cared for & note any undisclosed pets or tenants. Property managers must know the tenant landlord laws in order to avoid being taken advantage of by their tenants and stay out of court.

As you move forward on the selection of a good property management company for your investment property, take a good look at how they manage their bucket list. A Portfolio Manager will be familiar with all aspects of your property. A Departmentalized Team will focus on their area of strength. When I started my career, my wife & I wore all the hats. We now prefer to delegate. As long as you have professionals who know the ends and outs of all four buckets, you’ll be in good hands.