Experts in real estate have great explanations for why realtors should manage property besides selling homes and commercial properties.
As a realtor, you are accustomed to business on your terms. Your success is a product of the time and effort you invest into your endeavors. You specialize in adapting and growing your skills, interacting with others, and innovating your business. But you also have the potential to expand your professional experience by managing properties as well.
Maybe you’ve thought about it before, but in any case, here are some reasons why managing property might be the next step worth taking.
The most straightforward of the benefits to property management as a realtor is that it can be a source of extra income that supplements your existing real estate business. Especially if you are an agent whose main activity is closing deals, your spare time can be directed toward managing property. Monthly, this can earn you anywhere from 7-15% of the rent, and that translates to a significant side income. A few hundred dollars extra per month is a low estimate and into the thousands on the higher end.
The devastating effects of the 2008 housing crisis prompted many American rental agents to incorporate property management as an additional income source, enabling struggling agents to keep their businesses afloat. At a less drastic economic need, the extra income from property management helps to hold on to undervalued properties until prices rise or to pay bills and debt that can improve your credit score and ripen your position for opportunities in the future. At the very least, a little additional income is always a welcome resource.
Protection During Property Downturns
Diversification has been identified as an underutilized resource in the real estate business, especially surrounding the 2007 credit crunch. Property markets are cyclical, and there are inevitable periods when sales are slow—managing property guarantees an income stream even when your primary source of revenue is jeopardized. Even when property bubbles burst, the rental market sustains. We already touched on this in the previous section, but it’s worth repeating that property management can supplement and maintain your existing business during property downturns.
Complementary to Existing Business
To the benefit of your realty business, property management is a great way to build contacts. As you’re aware, real estate is all about contacts, and more contacts mean a more extensive client base. That can mean more sales. In addition, managing a property establishes a professional relationship through your connections with tenants. So, the next time a tenant needs a realtor, you are already a contact on their list.
Real estate is all about getting your foot in the door. Managing a property connects you to interested buyers that can ultimately contribute to your sales.
But is the additional income worth the work you’ll put into managing the property? While the answer to this question is highly individual, property management flows naturally from the responsibilities you already address as a realtor and can supplement your real estate business in return. You already possess part of the requirements to become a licensed property manager because you have the requirements to be a realtor. Many states also require you to have a broker’s license or property manager’s license, with varying needs. Completing the qualifications to upgrade your business experience can mean more money in your pocket, and following a career trajectory you’ve already embarked upon.
Scalable to Your Business Needs
Adding another set of responsibilities to your day might seem intimidating. But as an individual agent, you can scale your business to accommodate the time and commitment you have available. Whether you only have time to manage a couple of rental properties or even ten or more, you can adjust according to your needs. Want to push the rental property business and scale down the buying and selling? Hey, you can do that too! This adjustability is, of course, also convenient to accommodate income flux. For example, if your real estate business slows down, you can ramp up marketing efforts on the rental side and realign your business efforts in response to market conditions.
More Profitable than Closing Deals
While this is not a hard and fast rule, it is true that with a good portfolio, some agents will find that rental property management can be more profitable than closing sales. Over time, agents might become rental property managers and leave real estate altogether. However, even if you’re committed to real estate, it can still be worth investing in giving yourself that option. Closing sales is hard work, and the commission received depends on completing those transactions. But well-maintained property with reliable tenants is almost guaranteed monthly income that can contribute to your portfolio.
Property management does take discipline and hard work. Still, as we’ve discussed, the qualifications are well within your reach as a realtor. You will find that the responsibilities also flow naturally from the duties you already committed to.
Why Realtors Make the Best Property Managers
Property management plays a pivotal role in ensuring the smooth functioning and profitability of real estate assets. It involves handling various aspects such as tenant relations, property maintenance, rent collection, and financial management.
While there are various professionals capable of handling property management duties, realtors stand out as the best candidates for this critical role. Let’s explore the reasons why realtors make the best property managers, focusing on their expertise, knowledge, and unique skill set in the real estate industry.
Extensive Industry Experience
One of the primary reasons why realtors excel as property managers is their extensive experience in the real estate industry. Realtors have a deep understanding of property markets, including trends, rental rates, and property values. This knowledge allows them to set competitive rental rates, attract quality tenants, and maximize the property’s potential for profitability. Their market insights and ability to anticipate fluctuations enable them to make well-informed decisions to benefit property owners.
Strong Negotiation Skills
Realtors are well-versed in the art of negotiation, a skill that proves invaluable when dealing with tenants, contractors, and vendors. Negotiation is an integral part of property management, as it involves securing the best deals for property repairs, maintenance, and lease agreements. Realtors can effectively advocate for their clients’ interests, ensuring that the property remains well-maintained while keeping expenses in check.
Tenant Selection and Management
A crucial aspect of property management is tenant selection. Realtors are adept at screening and selecting qualified tenants, reducing the risk of late payments, property damage, and eviction issues. Their experience in dealing with various tenants helps them recognize red flags and identify responsible individuals who will care for the property as their own.
Moreover, realtors possess excellent interpersonal skills, allowing them to maintain positive relationships with tenants. This communication fosters a comfortable living environment, encouraging long-term tenancies and reducing vacancy rates.
Legal Knowledge and Compliance
Property management involves navigating complex legal frameworks, including tenancy laws, fair housing regulations, and eviction procedures. Realtors are well-versed in these legalities due to their real estate background, reducing the risk of legal complications. By staying up-to-date with changes in regulations, realtors ensure that the property remains compliant and that owners are protected from potential lawsuits or penalties.
Effective marketing is essential for attracting potential tenants and filling vacancies promptly. Realtors possess marketing expertise, utilizing various channels to advertise properties and reach a wider audience. From utilizing online platforms to conducting open houses, realtors are skilled in presenting properties in the best possible light, leading to faster leasing and better returns for property owners.
Realtors possess strong financial acumen, which is a critical aspect of property management. They can prepare and maintain accurate financial records, handle rent collection, and manage property expenses efficiently. This organized approach to financial management ensures that property owners receive timely rental income and have a clear overview of their investment’s financial performance.
Realtors undeniably make the best property managers due to their extensive industry experience, strong negotiation skills, and intimate knowledge of the real estate market. Their ability to select and manage tenants, navigate legal complexities, and apply effective marketing strategies all contribute to their success as property managers.
Entrusting realtors with property management responsibilities ensures that property owners can confidently rely on their expertise to optimize their investments and achieve long-term success in the real estate market.
It Can Be (Relatively) Easy!
While property management is not a passive means of side income, incorporating it into your existing real estate business can be relatively easy. Your additional responsibilities–finding tenants, fixing leaks, and managing payments–will require extra work, but remember that you can incorporate these responsibilities into your existing work hours. You have to option to limit the time directed toward each property daily. That allows you to manage your properties and focus on closing deals sufficiently.
Make sure your portfolio doesn’t grow too large and your time isn’t completely eaten up managing more properties than you can handle. However, even if your portfolio does grow, you are likely enjoying higher revenue and might even consider bringing on an assistant property manager to help with daily task management.
Of course, a significant asset at your disposal is the Internet. As a tech-savvy agent, you don’t need me to remind you of the infinite ways that the Internet is a great friend to business, whether for record-keeping, meeting tenants, growing a client base, etc. One final tip is to encourage your tenants to pay their rent online. At RentPost, we offer online rent payment tips, an accounting tool to help you balance your books more efficiently and spend less time collecting payments. That way, you can spend more time on things that are important to you.
Ultimately, realtors who innovate their business and manage a rental property can enjoy a significant extra monthly income that can be key to supplementing their existing business and protecting agents during cyclical property downturns. Property management is also a natural extension of an agent’s qualifications and existing responsibilities, meaning it can be a more readily available option for willing realtors. Diversification has shown and will continue to signal profits for modern agents that can level you, especially to new levels of profitability.