The Property Management Side of Real Estate Investing
Often, when we think about real estate investment, we tend to focus on the deal and the end result. In reality, the investment itself can be more about what falls between the two, and while wise real estate investors know this to be true, it’s important to think specifically about investment property management—before you make a deal. Every property possesses different qualities that need to be managed, but let’s look at common considerations when weighing your property management needs.
Your tenants have the power to make or break your real estate investment. You must be able to:
- Find a selection pool of good, trustworthy tenants.
- Screen tenants to make the best choice.
- Provide a solid lease that protects you and the tenant.
- Arrange and track payment of rent with minimal effort.
- Keep reliable records/books.
- Understand renter’s insurance and liability of ownership.
- Deftly navigate the eviction process (if ever necessary).
Even with stellar tenants, any investment property requires upkeep, to ensure its value is maintained or increased. The list is extensive, but let’s start here:
- Grounds: mowing, landscaping, tree pruning, shoveling, ice mitigation, curb repair and sprinkler maintenance are just a few of the required activities for upholding and increasing curb appeal and minimizing risk.
- Roof to foundation: hopefully you’ve invested in a property with a solid, intact foundation and a roof that isn’t older than your grandmother, but regardless, both must be checked regularly for damage or degradation. Occasionally, repairs and replacements must be made.
- Handyman tasks: your tenant opens the cabinet in the kitchen and the handle falls off. An appliance needs replacement. A javelina charged the patio doors and shattered the glass (it could happen)! Someone needs to manage these types of repairs and it usually isn’t the tenant (unless that is part of their lease).
- Annual inspections: like any city, Phoenix has building and maintenance codes that apply to your building and you need to ensure that you meet those codes in order to continuously provide a safe environment and protect yourself from certain liabilities.
These are just a few of the items to consider when vetting your next real estate investment. Make a list of what your potential property might require, then determine whether you have the time and interest to do it yourself or whether you have the means to hire a property manager. Both options carry weight in determining the true, long-term value of your investment.