Posted in Finance Articles, Total Reads: 509
, Published on 22 January 2016
Property management is the operation, control, and oversight of real estate. It includes administration of commercial, residential or industrial real estate property. Property management also has another perspective to it. It encompasses every aspect that is needed to manage a property, which includes functions like control, disposition, utilization, repairs and maintenance, rent collection etc. Hence, the concept embroils handling and managing all the day to day operations that are focused around the property.
When we were sipping our evening coffee today, a friend of mine said that his father made a recent investment in a beautiful plot near Lonavala. But then, he wasn’t sure of how to take care of the property! He wasn’t sure if he could manage it by not being there.
This is a common concern that most of us share. The solution to this has to be something big, self-defining and an all comprehensive in terms of an approach. This creeps in the concept of Property management.
But to understand this one big concept, let us first dive into two smaller concepts, namely: Property and Management.
Property in management terms, is generally defined as a possession, which is of great worth monetarily. It also holds importance as it generally is an asset of status to an individual.
On the other hand, management is basically the process of managing. It involves managing all sorts of resources; human and otherwise. Management, thus, is an all pervasive process, which in itself is a colossal task.
Now, when we amalgamate these two meek, yet compound concepts, we get one big model of Property Management. Property Management is a broad term, which simply means managing ones property. But things aren’t as simple as they appear to be. This concept encompasses the need of planning, control, and a complete gestalt of one’s property. It calls for the need to be accountable and responsible for the piece of real estate one owns. This is generally how the role of management is in any business.
However, a better understanding of this concept would come from understanding the multilayered process it enfolds, which is enumerated as below:
1. Setting the ground rules:
The first step to property management is to understand the basic ground rules of the property and get them clear. It is important to understand what the property offers and what is the rent to be charged for the same. The goal is always to maximize the profits, and minimize the vacancy rate.
2. Market it just right:
The next step is to position your property in the minds of the customers. It is important to create a proper positioning in order to get the desired clientele. Strategies like advertising, newspaper advertisements, bill boards etc. would be used for the same.
3. Occupant Selection:
The next step is to carefully choose who our tenants would be. This step is of great importance, as one damaged fruit can rotten the entire basket. Hence, a proper tenant check must be done, in terms of last rental records, payments, credits etc. associated with the occupant.
4. Property Specifics:
It then becomes important to identify, and make a note of the items that are included with the property and given to the tenant for use. This could range from equipment’s to furniture and to other minute details.
5. The Agreement:
The next and one of the most crucial steps would be to sign the tenancy agreement. Once this agreement is signed, it becomes a record for both the parties that would be involved in this transaction. The agreement would contain every small detail that has been discussed by the property leaser and the buyer.
6. The Advance:
The next step is to generally collect the rent for a fixed period of months in advance. This serves as a security for the property owner, which ensures him a guarantee of the tenant.
7. Rent Collection:
The next step is to collect timely rents from the tenants and review rents as and when required. This would help detect the rent payment trends and identify defaulters.
The eight major step is to provide, service as promised. This involves timely repairs and maintenance that has been promised in the agreement to the lodger.
9. Completion of Tenure:
The final step (if and at all required) is the step of ending the tenancy. Once the lodger expresses his willingness to vacate the property, all the necessary steps needed to ensure a smooth vacancy are taken. This would also include completion of any remaining dues.
The above explains the process of property management. However, this is a continuous process and does not end here. It restarts at step number one, and keeps going in loops as long as the property stands.
Understanding the process of Property Management, makes it essential to understand the need of a Property manager. A property manager forms an integral part of Property Management. It is he/ she who is responsible for the property to both the tenant and the owner. The general reasons for hiring a property manager are: Limited time, other things to manage, the cost of hiring a property manager is affordable or because the owner is situated far away from the property. They would also help us ensure shorter or reduced vacancy cycles, tenant retention, timely rental collection and fewer problems to deal with.
In totality, Property Management is multi- dimensional and can take any course of action in the long run. It includes various aspects, concerns, roles, responsibilities and role players. Conversely, it is important to continuously monitor the same and have constant checks to ensure effective property management. Therefore, Property Management is the tool to liberation, even when one isn’t sure of taking upkeep of the estate. It serves as an effective relief and an important instrument that helps property perform better.
Project Management is no longer a thought! It’s a seed whose fruits would be nothing less, than sweet.
This article has been authored by Abbas Akbar from SIBM Pune
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