Real estate asset management is imperative for any property investor. Some asset holders tend to leave this aspect at the back of their minds as they feel like other things are more important when growing the business than having structured and proper management — or they do not know what such a term means.
Property management sure rings a bell for all asset owners, but the day-to-day habits of establishing it might still be blurry for several investors. Real estate asset management is working closely with your properties, whether by hiring a property manager or taking on the corresponding tasks yourself. It is one factor you need to consider if you want to achieve optimal profits and overall results.
Here are some of the essential pointers in setting excellent asset management to help you demonstrate effective practices.
Don’t Get Attached to Your Property
Value and look after your property, but never fall in love with it. The pride of ownership should not consume you and cloud your judgment. It’s natural to cherish your assets as they come from your blood and sweat; however, it should not go overboard. Getting emotionally attached to your property can be the start of unstrategic upgrades that are not even warranted and relevant.
Know Your Market and Submarket
Be one step ahead of your competitors and know the scope of your market as well as submarkets. The future residents of your property are just within a five-mile radius. Familiarizing yourself with the vast majority gets you a better view of the current demand in the market.
Doing a rent survey can lead to the current upgrades and amenities that break the cost of most high rents. You will create a more impactful capital improvement plan when you are armed with the necessary information.
Get to Know Your Resident Base
Making more money and working on proceeds are what a normal property investor does. While many people believe that raising rent is the most effective way to achieve your property business’s high standing, there are three broad categories you have to go through first to accomplish your goal.
Scrutinize your investments’ pillars by increasing renter retention, decreasing expenses, and increasing revenues. Increasing renter retention is the category that you’ll have to focus on the most. Make good renters feel more like residents than temporary settlers. Valued renters would likely continue staying in your property and even recommend your units to their friends and loved ones.
Never Ignore Your Property
Not getting emotionally attached to your properties is a good bar to set. But it should not mean that you neglect them completely. Your investment will not magically grow itself. One of the awful things you can let your renters experience is ignoring repair requests or not injecting budgets for property improvement.
Deferred maintenance is the perfect opposite of good real estate asset management. It could lead you to lose all your renters and clients and decrease your estate’s overall appeal. Renters are magnetized to apartments where safety and cleanliness are both a priority.
Hold Cash Reserves
In business, wins are not always on your side. If you keep this fact in mind, then it’s expected that you are already considering holding cash reserves as part of your asset management. Property investment is a breathing and living business — things could go wrong anytime without warning.
Have cash on hand be prepared for unforeseen circumstances coming to play. Many investors set aside capital for six months of debt service, emergencies, and planned improvements. Managements that do not allot a budget for cash reserves set themselves for limited options in times of dire need.
Negotiate Significant Expenses
Maintain your buying power by being on top of all the units you own and weighing significant expenses needed for your properties. For maintenance services and appliances, bulk buying is a smart way to get the necessary discounts. Try to negotiate lower costs for contracts for utilities such as maintenance supplies, electricity, trash management, and phone expenses.
Review your expenses and look for ones that might help you save more money. Retailers that offer multiple units are usually considered to larger buyers as they could also be hardly affected when your business is not thriving. Aim for a lower price as much as possible.
Other Best Practices for Real Estate Asset Management
As there could be endless best practices for real estate asset management, several property owners also consider other good habits such as:
- Protesting a tax increase
- Driving additional income
- Requiring renters insurance
- Taking account of preventative maintenance programs.
There’s no perfect formula for the best real estate asset management. All the tips mentioned above are only helpful when you commit hard work and dedication to boost your business’s growth and maintain good service to all your residents as an investment property owner.
