Effective residential property management is the foundational bedrock of a profitable real estate investment. You can have a great piece of property bought at the right price with the right financing, and yet still lose money if the asset is poorly managed. In a previous article, we addressed how poor residential property management can sink your long-term investment.
In this article, we will be addressing the benefits of a professionally managed asset and how it can save you thousands. To begin, using a professional property management service will help you save time by taking over the day to day operations of the property. This enables you, the landlord, to actually enjoy the benefits of passive income.
Professional property managers have calculated systems to make your life easier. This is a critical selling point as these time-tested strategies allow your property to operate like a well-oiled machine. In essence, these strategies or systems are documented processes that allow for easy, repeatable operations that can be performed by a multitude of people. Most importantly, the combination of different systems creates an organizational structure that allows for greater operational efficiencies, which directly affects an investors bottom line.
The Key To Rental Property Management
What are the common systems used in professional property management? While the exact systems used may differ from one manager to the next, they all reflect some form of the following: Property related systems, accounting systems, and tenant management systems. Under each umbrella, there are typically a number of subsystems that manage the individual tasks and duties relating to the property.
Deciphering The Key
Property related systems are usually broken down into several subsystems to include processes for dealing with inspections, property maintenance, contract services, and more. These subsystems may be broken down further to manage individual tasks. For example, inspections can be broken down into various tasks such as move in/move out inspections, pre/post renovation inspections, and routine inspections.
Accounting For Property Management
Similarly, the accounting system can be broken into subsystems which incorporate tasks for accounts receivable, accounts payable, general ledger, and financial statements and reporting. While most property management firms use bookkeepers to work these systems, DNS is unique as our financial department is overseen by an in-house CPA. We have incorporated an online payables platform, AvidXchange, which is designed to streamline the AP approval process. This system allows investors to view and pay all bills and invoices relating to their investment online with ease.
Tenant management also breaks down into several subsystems to include marketing and leasing, screening, rent collection, maintenance requests, lease enforcement, evictions, and more. Tenant management is often touted as the most difficult and headache-inducing aspect of owning investment property. That is why it is imperative that an investor has the proper systems in place in order to deal with these kinds of issues. For example, resident portals are a great way for tenants to pay rent online, view lease information and account history, as well as submit maintenance requests. These portals help reduce the number of incoming calls by providing relevant data to tenants that are easily accessible.
Systems aside, professional property management will provide other benefits such as having access to a pool of licensed and insured contractors as well as increased tenant lead flow. All of these benefits translate to a more profitable investment that allows you to enjoy more of your time.
Property management is the lubrication that keeps your real estate investment functional and profitable. The systems mentioned above create an environment that is conducive to solving problems, and solving problems is what saves you money. We’ve only scratched the surface of effective residential property management but stick around for our next article to learn more about how to better manage your investment. While this is certainly overwhelming, don’t fret. That’s where DNS Property Management comes in. We’re here to ensure that your property is the prosperous passive income generator you’ve always dreamed of. Give us a call when you’re ready to make your rental properties into investments, rather than parcels of land.