Property management can be quite complex as it deals with operational procedures, financial accounting, rental collection, locating and qualifying tenants, paying bills associated with the property, repairs, and maintenance. An unexperienced property manager can no only lower your yearly ROI by not handling these items properly, they can lower the value of your property all together through excessive wear and tear as well as renting to unqualified tenants.
Managing a property on your own can be a very daunting and frustrating task being that first off you must know the real estate and fiscal laws of the country your property resides In. Many owners think they are saving money by managing their investment property on their own, however the exact opposite is the truth. Being an owner of an investment property does not make you an expert in qualifying potential tenants, negotiating the highest rent possible, or maintaining your property correctly.
By outsourcing this task to a proven property management company not only do they take care of your property correctly, you save an exponential amount of your own time to be able to focus on making more money through your employment to be able to invest into another property.
Tenants and Occupancy
• A neat property attracts neat tenants
The goal of a property owner is to put your rental property into the type of condition that would match the type of tenant you are looking for. Look at the condition of your property and ask yourself, what type of person would live in this property and is it the type of person THAT I WANT renting from me? A good property management company will inspect your property and give suggestions as to how to freshen up the place to attract the most qualified tenant for the highest rent possible. This normally includes, a new coat of paint, a deep cleaning of the property, and adding accessories and flowers so that the tenant can imagine themselves living there.
• Focus on the right target group
When advertising your property, add professional photos and and a well thought out description with focus on the type of tenant you would like to have in your property (Buyer persona). If you are looking for foreigners for example, put your ads in English, focus on the distance to public transport and the Malls. If you are looking for a family with children, then talk about the schools and playgrounds in the neighborhood. If you are you looking for students, describe the proximity of educational institutions and public transportation to your property.
• Use social media to find tenants
Property Management companies use Social media with billions of users on platforms like Facebook, Instagram, LinkedIn, etc. that enable the company to advertise your property to countless amount of people instantly. Any good property management company will use paid advertising to promote the property and bear the cost.
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• Tenant Qualification
Prior to agreeing to a showing of your property, the tenant must be qualified properly so that you do not waste your or their time proceeding with the showing. Some of the qualifying questions could be: Please tell me about your employment. Where do you live now? Are you able to pay the required down payment to obtain this property? When do you need the property for? There is a long list of qualifying questions that your property manager should be an expert in. Proper qualification eventually will lead to a better tenant with much less frustration.
• Meet interested tenants face-to-face
Even if a tenant looks great on paper, take the time to meet them face to face to get a real feeling for who they are and how they will treat your property. If your gut feeling says something is off after meeting them in person, go with your gut.
In an ideal world, the tenant will pay voluntarily within corresponding time stated in the lease agreement, through cash, check, or wire transfer, and send you a receipt upon payment. However, we all know this is not a perfect world and tenants will often pay late if no person or company is on top of them. A property manager should have an automated system that will send reminders to the tenant that rent is either due or late. As well, someone on the management team will do a follow up by phone and email letting the tenant know the rent is due.
One of the most practical and easiest ways to speed up the payment process is to offer several methods of payment, for example:
Tenants can schedule an automated bank transfer that sends the rent every month on the same day that corresponds to the payment date on the lease agreement.
Another option is the use of credit card charge forms (not many property managers use this method but some of the large companies do) that allows the property manager to charge the card on a timely basis every month without having to follow up with the tenant.
Eviction of a tenant for any reason can be a tricky process to handle. Most of the time, a good property manager is able to get a nonpaying tenant out of the apartment without having to go through the legal process and courts which can be a lengthy and costly battle. As an owner, one of the most annoying and frustrating parts of renting out a property is having to chase a renter for rent or even worse having to try and evict them. If you are not experienced in these matters, this situation may turn you off from investing in a property ever again. Let a professional property manager handle these tasks and take the burden off your shoulders.
• Termination by the owner
If an owner would like to terminate a lease based on the rental agreement, notice of termination must be delivered to the tenant in writing within the time period stipulated in the contract. Read: https://goo.gl/B4attc (resource in Spanish)
• Staying in a rental agreement
The renewal of a rental agreement normally must be agreed upon by both the tenant and the owner. The rental contract normally stipulates the terms of a renewal which may include an increase of rent, change in term of lease, or everything may stay the same
All experienced property managers will do a full inspection and inventory of a property prior to a tenant moving in so that they can compare to the condition of the property upon move out of the tenant. If there is any damage the tenant is responsible for, these items should be paid for using the security deposit paid by the tenant upon move-in.
Make periodic inspections to the properties, so you can be sure of the conditions and prevent any future damage.
Expenses and Liabilities
A professional property manager should be using an online property management system that tracks all expenses and income for both the tenant and owner of each property. A monthly statement is to be sent to each tenant and owner breaking down the expenses and liabilities for each month so that each party has a very clear picture of their financial status. At the end of each calendar year, a year’s end statement should be sent to each owner showing the total years income and expenses.
Now that you can see how complex and involved property management can be, it is obvious why a good property management is so important to have.
For more information on our property management services visit our website: HouseHunters Panama