When you hire a property management company to manage your condo, it’s a given that they’ll take on the core responsibilities of overseeing your property. But how are they also leveraging their expertise to attract and retain better residents? If you find the right property manager, you’ll be able to increase your ROI, as well as reduce the amount of stress and time you have to dedicate to running your rental property.
As you might have guessed, return on investment is a measurement of performance used to measure the profitability of an investment. ROI is used to compare the return on your investment relative to your investment’s cost. To calculate your condo’s ROI, divide the profit your condo generates by the cost associated with it. So, for example, if your condo generates $24,000 from rent payments per year and the overall cost of running the property is $20,000 per year, then your profit is $4,000. If you divide $4,000 by $20,000, then you get your ROI which is 20%. In general, anything over 15% is considered a good return on investment for a property.
Property managers offer significant value due to their expert ability to rent and maintain your condo. They also will have a network of other property managers, realtors and sub-contractors to assist with finding tenants and making sure service requests are handled quickly and professionally. Let’s explore the specific benefits of working with a property manager in more detail.
It goes without saying that if your condo sits empty, it doesn’t make you money. A reputable condo management company can optimize your property’s online presence by creating well-written and well-placed listings that highlight the features of your property that set it apart. This kind of intentional marketing can attract prospective residents more effectively than you can on your own. They’ll know exactly where to advertise, how to boost the searchability of your property, and where your ideal clients will be looking for properties. If there are particularly effective internet listing services for your area, they’ll have that information readily available. These sites integrate listings across multiple sites, such as Hot Pads or Trulia, to create a single, searchable database of rental properties. Or, if renters in your area prefer to search individual rental websites, they’ll know that they should be listing your condo there, instead. Depending on the size of the company, they may also have a network of other real estate professionals who can work with prospective tenants. With more interest comes more applicants and, eventually, renters.
One of the reasons condo owners might lose money on their investment is because they undervalue their property when it comes time to put it on the market. Reliable condo management companies specialize in doing the market research necessary to set a fair, but profit-earning rental price. On the flip side, a condo management company won’t overprice your condo, which can create long vacancy patterns.
After your condo management company’s expert marketing creates a pool of applications for your condo, it’s important that the “right” residents get signed on. Many property owners find that working with a condo management company takes the guesswork out of the process. Condo managers know what red flags to look for and how to select responsible residents. By completing credit screenings and background checks on your applicants, they’ll be able to determine which of your prospective residents will be the best choice. Responsible residents will pay their rent on time, will take care of your property, and ultimately, keep your rental profitable.
Part of a condo manager’s job is to build a good rapport with residents. Let’s face it, very few property owners have the time to do this. But, a large portion of your condo manager’s job is to keep your residents happy. This will keep your condo rented and making money. So, they’ll be sure to keep channels of communication open. If your residents feel well taken care of, they’re more likely to stick around. According to Buildium’s 2021 Rental Owner’s Report, 31% of rental owners reported that the pandemic had a negative impact on their residents’ ability to pay rent, with 13% of owners having worked out a payment plan with at least one resident. Unsurprisingly, the number of rental owners who wanted an expert’s help jumped from 78% in 2019 to 90% in 2020. This is due to the fact that property managers are able to build rapport with residents and work closely with them to meet their needs. Tenant retention keeps your property occupied and making money, increasing your overall ROI.
Another benefit of working with a condo manager is that they can work directly with your condominium building’s board. Condominium boards set the building’s bylaws, hire maintenance staff, and maintain common areas. A condominium management company can act as your intermediary to make sure that your residents are following all of the building’s policies. They can also keep your residents happy by working with the condominium board to make sure all maintenance requests are handled quickly.
While many property managers can add significant value, it’s important that you hire the right one. Here are a few things to look for in your future condo management company.
It goes without saying but, we’re going to say it anyway: experience matters. An experienced company will be better at staying up-to-date on industry regulations and on the newest methods of marketing a property. When making a decision about what management company you want to hire, look for a well-established company with years of experience. You may also find that more experienced companies are more likely to be associated with organizations such as the National Association of Residential Property Managers (NARPM) or National Association of Realtors. These professional associations offer their members continuing education and coaching that benefits you, the property owner.
Working with a condo manager who’s local to your property will ensure that they’re familiar with the local markets and how to attract renters in the area. It also increases the likelihood that they’ve developed a network of vendors in the area who can jump in at a moment’s notice to help you should you want to upgrade your condo or if your residents need a repair quickly.
Look for a condo management company that has a profit-driven mindset. They should be as driven as you are to increase the profitability of your property and maybe, even eventually grow your rental business. A company with this mindset will have experienced managers on staff who have strategies in place to help you maximize the ROI of your property. They’ll also be up-to-date on current market trends. Additionally, they’ll be diligent about monthly reporting, keeping you fully abreast of your income and expenses. In fact, investor-minded managers will likely use property management software that will ultimately increase your profits but automating the day-to-day tasks related to running a property and creating a method for efficient, open communication between the two of you. Good managers will help you grow your business, making them well worth their fee.
Your condo manager will be representing you to your condominium board. They’ll be the first point of contact with new and existing tenants. Therefore, it’s vital that they’re excellent communicators. Pay attention to the way they communicate with you when you’re interviewing them. Look for a property manager who is responsive, easy to get a hold of, and straightforward.