Categories
Real Estate Investment

10 Reasons to Hire a Property Manager

A property manager oversees the daily running of the property on behalf of the property owner. But why have a property manager when you can manage the property for yourself?

Whether property is owned for investment, development, or personal use, the technical and legal complexities of property management can place a disproportionate burden on both time and resources.

Consider the following additional benefits of hiring a property manager:

  1. More freedom and time

Having a third party manage your property undoubtedly gives you more power to move and act freely. You do not have to receive tenants enquiries, follow up for rent payment, repairs etc; your property manager should handle these matters on your behalf.

  1. Access to expertise

Property managers have vast experience in management of various types of properties and are always in touch with the current market rates and the dynamics of the property market.

Access to such expertise guarantees the landlord better results in terms of investment and finances.

  1. Reduced legal problems and liabilities

Property managers know the importance of good tenant selection; selection of a good tenant goes a long way in ensuring enhanced and consistent income, better relationships between all stakeholders of the building, appropriate use of the space let out and less legal problems.

Property managers also carry out lease and other documents management. By having leases prepared and duly signed, property managers are able to take care of the landlord’s interests, eliminate controlled/protected tenancies and thus have a solid and legal basis to address any legal matters.

  1. Access to high quality and long-term tenants

Vetting and good tenant selection is a must for a property manager when applications are made. Once more a high-quality tenant guarantees you of a stable income over a longer period of time with less maintenance costs. Proper tenant selection also helps to enhance the image and investment value of the building.

 

 

 

  1. Higher occupancy levels and tenant retention

Property managers also have insight on how to Optimally let out a space, set appropriate rental rates and negotiate with tenants. Optimal marketing results in higher occupancy levels; good negotiation tactics further helps retain tenants.

  1. Better relationship management

Over the years, property managers have interacted with, understood and managed various personality types. As a result, they are able to successfully manage all relationships necessary when handling a property. Some of the relationships managed include: landlord-local authority, landlord-tenant, service provider-tenant, service provider-landlord, property manager-tenant, landlord-property manager, property manager-service provider. Such relationships guarantee the landlord of better services that are competitive, steady income and high occupancy rates and reduced expenses.

  1. More professional property and equipment maintenance

Property managers know the importance of timely and systematic maintenance of a building plus it’s equipment. Good maintenance results in less expenditure and increases the life of a property/equipment. A well-maintained building also attracts potential tenants and helps retain tenants.

  1. Better financial management

Record keeping is a key aspect of property management. This allows the property manager to ensure that monies paid, expenditure, savings made and money set aside are all easily tracked and accounted for. Further such records allow for forecasting for the property owner(s) income, expenditure and further investments.

  1. Increased and maintained value of a property

A properly managed property i.e one where all relationships are properly managed, financial records are well kept etc results in increased value of the property. This is a general goal for the property manager which makes them indispensable asset for a landlord.

  1. Compliance with local statutory requirements and regulations

Along with expertise, property managers are also usually well appraised on statutory requirements and regulations. Property managers are among the key stakeholders whenever laws are being drafted. Hence, they are aware of key matters/areas that need to be addressed and how to address them. This includes: taxes, public health matters, building regulations, land rates and rent, redecoration of buidings etc.

 

In conclusion, given that all property owners want to have financial stability, more time to focus on other matters and want enhanced property values; it is only wise to hire a property manager.

Categories
Real Estate Investment

Consult Real Estate Experts before investing in real estate

Many desire to invest in real estate investment in order to make passive income from their investments such as apartments, office buildings, hotels, warehouses, malls and other kinds of properties.

However, over the years it has become a normal occurrence to witness investment properties being auctioned because the owner has been un able to meet their financial obligations. Other investors are unable to recoup their monetary investment because they end up with higher construction costs, properties are left without tenants or buyers and or poor cash flows that are a far cry from their initial expectations. This is because investors lack accurate cost projections including the cost of finance, approvals or professional fees. The poor returns could also be because of an oversupply of the property, little or no demand for the property or the finishes, amenities and services may not be what is in demand.

Interestingly, these cases can be attributed to lack of professional assistance before investing in real estate. The investor through an expert need to carry out a comprehensive real estate market study or feasibility study, which analyzes and investigates the demand and supply of the real estate product, a review of the performance of similar properties, realistic rental or sale prices, an estimate of the total cost, the risks involved, and the financial viability of the investment.

Ideally a market study should be done before a feasibility study. The market study will guide on the strengths, gaps and opportunities in the area and advice on the investment that will yield the highest and best returns. Once the market study has been prepared, if the acquisition is via development of the property, the developer instructs the architect to prepare drawings which are then sent back to the real estate consultant to review. At this stage the consultant can propose certain changes e.g., in the design of a mall they may propose that certain uses for example specialty shops be given more prominence as they are likely to attract higher rents compared to larger outlets which may be able to push for lower rents and as such it may be wiser to allocate the less visible spaces to them.

 Unfortunately, many prospective investors skip this crucial stage in a bid to reduce cost. They also assume that seeking professional assistance is time-consuming and complicated. However, the monies and time saved cannot be compared to what may be lost in the event that the investment turns out not to be viable.

A real estate professional would help you avoid these unpleasant surprises because the primary objective of the market or feasibility study is to advise on the viability of the real estate project. In the process of carrying out the viability analysis, the professional will also advise you on the estimated value of the property, if it is to be purchased, to ensure that in the event that you proceed to invest, then you do not pay a shilling more than is necessary

The above details will provide pointers on whether the investment property, is the right investment for you and allows you to make an informed decision. An expert is more like a good coach by your corner who can hold your hand and guide you as you look to invest ensuring that you avoid pit falls and also ensures that you are able to exploit any opportunities that may be available while building on your strengths and keeping an eye on the weak areas in a bid to strengthen them.

Further, a good financial report should also possess indicators such as the Internal Rate of Return (IRR), the net present value (NPV), the payback period and the Return on Investment (ROI). The market or feasibility report will also inform you on whether there are other less risky investments that have higher or comparable returns compared to the envisioned property investment.

When hiring a real estate consultant in Kenya, the consultant should have real estate academic qualifications, be a member of the Institution of Surveyors of Kenya (ISK) and be a registered valuer. Most of the professional firms also provide real estate agency services and as such are in direct contact with potential purchasers or tenants thus giving them an added advantage in assessing the demand for the property and the market trends. These consultants are also involved in the day-to-day management of properties and are therefore able to make design suggestions that improve the marketability and financial sustainability of the investment.

In a nutshell the professional will help you answer the questions; will this investment help me to achieve my investment goals? How much will the real estate investment cost me? What kind of returns should I expect? What is the current and projected demand and Supply for the property? Is there a better investment? Is this the right time to invest?

By Beatrice Kirathe– Director Ark Consultants Limited

This article was published in the People daily on 21st of May 2021.