Choosing a property management firm is one of the most important ownership decisions a real estate owner can make. Few owners want a barebones operator who only does the minimum to keep rent checks coming in. Preserving and enhancing asset value takes more. The key question is how much service the owner needs—and expects—from a property management firm.
Pan American Properties is a full-service property management and real estate investment advisory firm. We are committed to giving clients a complete package of solutions at every phase of ownership.
What can a property management company do?
Like any service industry, property management can have numerous layers. Many management companies make their profits by blending a few in-house capabilities with a heavy dose of outsourced work. To understand why, consider all the elements that are required to capture the full scope of property management:
Keeping a building structurally sound, attractive, and safe requires regular inspections and a team of skilled contractors. The maintenance challenge grows with the size of the property, due in part to the sophistication of the systems that keep modern buildings comfortable and functional.
- Tenant service and management.
Screening applicants, handling paperwork, and collecting rents are all basic functions of property management. So is relationship management. Tenant retention is essential for keeping a property financially sound. Especially in turbulent economic times, prompt responses to maintenance requests is a critical part of making the tenancy’s value proposition clear.
Tasteful and cost-effective renovations are often the differentiator for properties in competitive markets. Relatively few property management firms maintain in-house renovation teams, due in part to the cost of keeping planners and skilled workers on staff. For the owner, the result is often higher costs and a disconnect between the renovation project and the owner’s broader goals for the property.
- Operational accounting.
Keeping track of the cost of ownership is a key function of a property management firm. Building sound annual budgets and sticking to them requires expertise at several levels: accounting staff who understand the business, contractors who take budgets seriously, and day-to-day managers with financial discipline.
- Strategic advice.
Property is an investment, whether it’s held for short-term gain or is intended to become part of a family’s legacy. A property management firm can enhance its clients’ outcomes by advising them about trends affecting local real estate values and rental markets. The more creative and sophisticated a firm is in its financial analysis, the more value the client will receive from the engagement.
- Transactional support.
Transactions involving investment-grade real estate properties require several layers of sophisticated expertise. The buyer’s attorneys guard against legal risk, but to succeed they need knowledgeable people on the ground to conduct due diligence, and financially sophisticated advice to develop a reliable understanding of the property’s value and expected financial performance. A property management firm can bring together all the insights a buyer needs to make good decisions.
Do you need it all?
As the above list of capabilities suggests, property management is much more than processing tenant applications and making sure the grounds are swept from time to time. For property owners, the question is: What mix of capabilities are needed to properly manage a particular asset?
The answer depends on several factors, including these:
- The size of the property. A single duplex obviously has different management needs than a 300-unit multifamily complex. With greater size comes greater financial risk, more sophisticated maintenance requirements, and a more dynamic mix of tenants.
- The owner’s goals for the property. Some property owners are chiefly interested in aggressively minimizing expenses, even if that means allowing some aspects of the property to decline. Others want much more, and they’re willing to pay a premium to get it.
- The owner’s investment objectives. Someone who only plans to ever own that single duplex probably needs a different level of sophistication from their property management firm than someone who is building a large portfolio of real estate assets. Likewise, an owner who relies on properties for personal income may need different services than someone who is chiefly interested in principal accumulation.
All this is to say that there is no one-size-fits-all solution in the world of property management. We recommend owners and investors talk to several management firms before they make a choice. Ask tough questions and explore every angle. It’s an important decision.
Pan American is a comprehensive property management firm
The comprehensive range of services we provide to our clients is a hallmark of the business we’ve built at Pan American. If we’re the right property management firm for you, we will serve your needs with dedication over the full lifecycle of property ownership.
What do you need from your property management firm? Give Pan American a call today at (714) 505-5544 or send us an email to start a conversation. We’re looking forward to serving you.