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How Property Managers Create Value

6 Ways Property Managers Create Value for Real Estate Investors

A huge part of a real estate investor’s success is having the right team in place. From real-estate agents to contractors and handymen to lenders like Lima One Capital, an investor needs to have professionals who play specific roles that lead to profit.

Many investors consider is hiring a property manager as part of this team. Obviously, property managers charge for their services, which impacts the cash flow for any property. But the best property managers also create value in tangible ways.

If you’re considering hiring a property manager for your multifamily or SFR portfolio, it is imperative to understand the value proposition that property managers can provide. To help you do this, we spoke to Aaron McElhiney and Steve Hart of Property Management Inc., a company that offers property management services in many markets nationwide. McElhiney and Hart brought to light six ways that property managers create value for investors. Their comments will help you decide if property management is right for your investment approach and goals.

1. Proven processes

Experienced property managers have established processes for just about any situation a landlord could encounter. This leads to smooth sailing for regular interactions like collecting rent, handling maintenance, or listing available properties. These processes really pay off when something goes wrong, and a tenant needs to be evicted or a major repair needs to happen ASAP.

The best property managers handled just about every kind of situation, and so they can navigate even the trickiest scenarios in a methodical, clear-headed manner. Knowing what to do and when to do it reduces the investor’s risk and ensures that properties are back to cash flowing as soon as possible.

2. Technology tools

Good property managers also have a suite of technology tools to manage listings, document repairs, and provide financial reports investors need. An investor who self-manages will have to pick multiple software solutions he or she needs—and pay the monthly fees they may charge—but a property manager offers these kinds of solutions as part of their management fee. This saves the investor time and assures that they get best-in-class choices for the key aspects of the real estate business that technology drives.

3. Local networks

When you hire a property manager, you gain access to their contacts of real-estate agents, HVAC contractors, appraisers, and more.

“A property manager in a local area is part of a network. Everyone works together as you manage the property,” McElhiney said. “A property manager already has relationships and already has done research on quality and price. The owner simply approves or disapproves, and the PM takes care of the rest.”

He gave the example of how a property manager’s network of vendor connections leads to faster fixes of maintenance tickets. While an out-of-area investor might struggle to find a contractor or handyman who can deliver a quality fix at a good price and short timeline, the property manager knows who to call right away. And whoever gets the call wants to work with the property manager because that manager can hire the vendor for work on multiple properties. This kind of local team creates a win/win situation for vendors, managers, investors, and tenants.

4. Income maximization

Property managers help you save money incrementally through cost-effective maintenance and bundled software licensing fees. But the best property managers do more than save investors money; they make investors money by getting more income from properties.

“With a good property manager, while there is a fee, you will get more money for your properties than you could get on your own,” Hart said. Because property managers are knowledgeable about their local market, they efficiently identify the right rental rate to maximize value while getting quality tenants in place quickly.

This kind of expertise is one of the biggest values property managers provide in exchange for their fees.

5. Time savings

“Time is a valuable thing. When investors can offload time spent managing their properties on their own, it’s a huge value add,” McElhiney said.

A property manager can give you more time to make contacts, find properties, and run the rest of your business. Or help you achieve your goal of being a passive investor who enjoys regular cash flow. As an investor, you know how much your time is worth. This will help you identify whether the time a property manager saves you is worth it to you.

5. Peace of mind

Real estate investors live in a world of risk. Having someone on your team who reduces risk through professionalism has real value.

“An investor is in good hands with a property management company that takes care of everything and provides worry-free service,” Hart said. “The investor just has to cash checks and enjoy the profit.”

This value may not show up as a line item on the balance sheet, but reducing risk is important as an investor builds a sustainable portfolio that will generate profit year after year.

The Takeaway: Traits of a Good Property Manager

Just as every general contractor doesn’t provide quality service, every property manager doesn’t deliver on all the value points we just discussed. So how do you find the right property management company?

Look for these two traits:

Streamlined processes powered by technology—Find a property manager with enough experience and tools to provide a seamless experience for the investor.

Strong communication skills—A property manager should make the investor’s life easier through proactive, clear, and concise communication. Whether it’s a maintenance expense or the solution to a problem tenant, the PM should make sure the investor knows what’s happening and what the plan for resolution is.

When you find a property manager who does these two things, you’re well on your way toward finding a partner who creates value for your larger real estate investment team.

Property Management Inc. provides management services for residential properties, associations/HOAs, vacation rentals, and commercial buildings in more than 250 markets nationwide. If you’d like more information on including Property Management Inc. in your REI team, visit propertymanagementinc.com.