All owners want their properties to have increased income and so increase in value during their period of ownership. The first-rate property will command the highest price when it is sold. To achieve these goals, income property must be properly managed. The major error that can be made by an income property owner is saving money by self-management. Enhanced value usually comes from professional management.
Since professional management teams have experience and training in the field, they will usually increase revenues and cut costs. Since the value of a building is based on the condition of the property and the cash flow, this management should increase the value and keep it at its highest potential. The difference is the professional’s ability to define and execute management duties.
The key management duties are: tenant relations; maintenance and protection of the investment. To handle these duties, the professional management company will do the following:
- Plan the rent schedules
- Find the tenants who can meet this rent schedule
- Qualify these tenants by a thorough credit investigation
- Prepare the lease or rental agreement and have it executed
- Prepare specifications for decorating, securing estimates, awarding the contract and supervising the work
- Purchase all supplies needed for the operation of the building
- Audit and handle payment of bills
- Advertise and publicize vacant space through the proper media and in cooperation with other brokers
- Plan alterations and modernization programs
- Inspect vacant space in the property
- Keep abreast of competitive market conditions so rent schedules will be correct at all times
- Maintain a complete system of records available for immediate reference
- Prepare accurate and periodic financial statements and a complete accounting of funds handled
- Pay insurance premiums and taxes and recommend tax appeals when warranted
To put this into the simplest terms, real estate management means someone’s efforts to maximize income and value by:
- Preserving the physical desirability of the property (checking for ways to prevent physical deterioration; studying and anticipating functional obsolescence; being alert to interior and exterior maintenance needs); and
- Maintaining high standards of service to tenants (being conscious of tenant and public goodwill; valuing the reputation and appearance of the building; being alert to extending services that will attract reliable tenants).