Property Management

Property management is one of the most crucial aspects to real estate investing. You can have many doors, lots of competent contractors, excellent tenants, and fully updated properties, but if can’t manage all of it, you will certainly have a negative experience with added stress and difficulties.

I like to break down property management into five main buckets:

1. Contract Management
2. People Management
3. Building Management
4. Asset Protection Management
5. Financial Management

If each of these buckets is properly configured and considered at every step of your real estate investing journey, you will greatly reduce the likelihood of bigger problems such as lawsuits, upset tenants, property damage, and financial loss.

Contract management is the practice of making sure all agreements are understood by all parties and documented for reference later. A residential lease is the most common type of contract that establishes the terms and conditions that both the landlord and tenant agree to. A lease is always necessary as it defines how long the tenant will be living there, who is allowed to live there, what can be done at the property, if any animals are allowed inside, the amount of rent as well as any additional fees, and much more. There are many other contracts used in real estate investing and we can discuss those further in another article.

People management is working with tenants, team members, contractors, investors and others to maintain positive relationships. Clear communication is key to reducing misunderstandings and making sure there is alignment with expectations. Being prepared to deal with unexpected circumstances and knowing how to address them will produce better outcomes.

The third type of management is the building or property management. Managing the building itself includes making sure it is safe, clean, and provides living conditions suitable for inhabitants. Buildings are large physical assets so it is important they are maintained for the sake of the occupants and the owner.

Asset protection management is the process of making sure all property assets are protected in the event of a disaster, injury, or criminal activity on the premises. If any properties sustain significant damage, its important to have the proper systems in place to repair and rebuild in a timely manner.

The final management pillar to consider is the financial management of all items pertaining to the properties. The average rental property has a mortgage, utility bills, income from tenants, property taxes, insurance payments and capital expenditures, at a minimum. Keeping clean financial records and being organized from a financial perspective will enable property owners to scale while reducing problems.