Most property owners and investors seek to grow the property’s value and increase the return on investment (ROI). The best way to accomplish that goal is to hire a professional property manager to oversee the investment and manage the day-to-day operation complexities that few owners have the time or expertise to handle, including the all-important interface with tenants. Here are some key benefits an experienced property manager offers that will help boost the ROI on your investment property.
Avoid Rental Prices that are Too Low or High
Even in a market with more demand than supply, overpriced rental properties will sit empty. Or, tenants in dire need of space who agree to the high monthly lease fee will seek the shortest lease possible and look for an alternate space at the first opportunity. Both situations represent a cost to the owner: no income or the expense of frequently having to ready a space for a new tenant. Alternatively, underpriced space is equally undesirable as it means less owner profit.
Every market has an optimal price point that maximizes ROI without deterring long-term tenant leases and provides a steady income stream. An experienced property manager will know the price point for the local market and asset class or undertake the necessary market analysis that an owner cannot, factoring in current economic trends, expenses and opportunities for cost efficiencies to boost the ROI further.
Better Tenant Screening and Acquisition
Selecting the right tenants can increase property value and ROI by minimizing potential losses associated with unpaid rent, property damage and expenses related to eviction proceedings. Professional property management firms have thorough tenant screening processes, including credit checks, employment verification and reviewing applicants’ rental history to ensure that only quality tenants lease a property. Property management firms also have systems to handle late payments, enforce lease terms and address non-payment issues, helping maintain a steady cash flow.
An owner might be tempted to shortcut the screening process, thinking that any tenant is better than no tenant. However, leasing to bad tenants is worse than having vacancies. Bad tenants often equate with unpaid rent and costly property damage, including repairs associated with minor issues that could have easily been addressed if promptly reported by a responsible tenant.
While experienced property managers can often “sense” a likely problem tenant, they are also familiar with local landlord ordinances and laws and The Fair Housing Act (for residential rentals), which helps ensure the owner will not be liable for discrimination.
Proactive and Efficient Repairs
Finding qualified and price-competitive contractors to handle preventive maintenance critical to enhancing the value and ROI of a property is challenging for any property owner. Now add to that tenant turnover maintenance and time-sensitive repairs. Due to their ongoing work in property management and a potential large portfolio of managed properties, property managers have established relationships with reputable maintenance providers, contractors and other service vendors. Large firms may have in-house teams to manage maintenance, typically leading to faster service and lower rates, saving money and boosting ROI. In-house or outsourced, a property manager will be the liaison for all work.
Plan for and Reduce Vacancies
Vacancies mean lost income. While the occasional short-term vacancy is expected (think tenant turnover and time needed to prepare the space for the next tenant), a professional property manager will anticipate and plan for such vacancies to minimize their impact on the bottom line. Strategies include targeted marketing to prospective tenants and an extensive network of contractors and suppliers available on short notice for a fair price. There are online platforms to market tenant-ready spaces, but most are unavailable to individual owners.
Better Tenant Marketing
Experienced property managers can effectively market rental properties to sustain maximum occupancy, maintain a steady income stream and boost ROI. They know how to write compelling listings and use professional photography to emphasize appealing property features. They also have access to marketing platforms to reach the broadest possible audience and effectively match spaces to tenants. While there may be a cost associated with these services, they ensure a faster ROI for the owner.
Scalable and Streamlined Management
Owners’ and investors’ time is valuable, and property management is time-consuming, especially for multiple properties or when the owner resides elsewhere. A property manager responsible for multiple residential units (even if owned by others) enjoys significant economies of scale, passed on to owners, increasing the ROI of any given property and offsetting the management fee.
Hiring a professional property manager ensures someone is available 24/7 to address any issue that might arise, contributing substantially to tenant satisfaction. Satisfied tenants are more likely to renew their leases, which helps maintain the property’s value. Fully occupied properties are especially valuable when the owner wants to sell.
Avoid Unnecessary Fines and Expensive Contractors
A skilled property manager can save owners thousands of dollars in fines and legal fees for violating property ownership and leasing laws. Such laws go beyond those previously mentioned regarding tenant screening. Among the most common are eviction laws, which often favor the tenant. An experienced property manager knows the law and the proper steps to remove a tenant legally and as expediently as possible. Other legal considerations pertain to local building codes, which are critical for the comfort and safety of tenants. Regulatory compliance eliminates potential fines and legal costs and adds to a property’s value.
In-depth and Comprehensive Financial Reports
Property managers provide detailed financial reports that keep track of income, expenses, taxes and other financial details and assist with documentation for tax filing or sale purposes. Such reports also offer important insights into the property’s profitability and overall financial health and help owners make decisions about future investments and investment strategies. Owners and investors can ensure their investment thrives long-term by regularly reviewing a property’s fiscal performance and adjusting strategy as necessary.
Financial reporting is also essential to risk management. Owners can identify potential monetary risks early on, allowing a timely change in economic strategy or undertaking mitigation actions, such as property upgrades, preventive maintenance, growing a reserve fund or selling a property.
Expert Knowledge to Increase Profitability and ROI
Commercial or residential, maximizing a property’s ROI requires strategic and financial planning, market awareness and insight and a hands-on approach to building operations and tenant relations. It also demands staying on top of the day-to-day complexities, which is difficult for most individual owners. The right property management firm can relieve owners and investors of the burden of being a landlord and streamline operations.
An experienced property management firm adds expert knowledge and insight to increase profitability and ROI. While owners pay a management fee, the benefits of professional management generally outweigh the cost, especially for investors looking to scale or minimize hands-on involvement.
Building owners come to GNP Realty Partners for professional service and adherence to high standards of excellence in property management. Our seasoned team of professionals understands the issues and opportunities associated with residential and commercial properties and how the economic climate impacts value. We have extensive experience identifying solutions to meet the ROI goals of owners and investors.
GNP Realty is an Accredited Management Organization®—one of just 700 elite firms worldwide—proof that we possess the strategic know-how and are well-equipped to maintain and enhance the value of your property.
