Pump up the value: good managers use training and experience to create value for owners.
The trend among many owners during the last few years has been to reduce staffing levels while hiring cheaper, inexperienced, minimally qualified property managers. Why? I think it is because these owners don't really believe or understand good management creates value. Too bad for them, because I know better.
Experienced, well-trained managers do much more than collect rent, prepare budgets and make sure the HVAC system is working. Those are minimal responsibilities that are carried out almost routinely. Good property managers control and reduce expenses with smart purchasing decisions, effective vendor contracts and prudent management of real estate taxes and utility consumption. A knowledgeable manager enhances income through effective billing and collection procedures, by creating new sources of revenue and providing good customer service. Satisfied tenants translate into renewing tenants and renewing tenants are a grand slam for owners. Not only is a renewal the least expensive leasing method, it also produces the highest total rental income.
If increasing income and reducing expenses is not reason enough to seek out and employ high-quality managers, consider this: a well-trained manager knows how to avoid litigation, serious loss and even bad publicity. They do this because they know and understand the myriad local, state and national laws and regulations pertaining to real property, including fair housing, construction, the Americans With Disabilities Act and personnel management. They also place a priority on loss control and emergency preparedness to produce a safe environment and an effective response to emergencies.
Really good managers go even further. They provide much more than a clean box and fast service. They create a memorable experience for their tenants. Talk about value creation. If you don't think a manager who regularly engages his tenants in a personal and memorable way creates value, just think about a plain cup of coffee. Buy it at McDonald's for $.75, or go to Starbucks and pay $1.75. I know managers who have so effectively created a positive experience for their tenants that they consistently achieve above-market rates.
Well-trained managers do all of these things because they understand the economics of real estate. They know how to improve net operating income and just how that affects property value.
Does good management create value? You bet it does! Help spread the word.
D. Michael McConnell, CPM, (email@example.com) is manager of property management at Progress Energy in Lake Mary, Fla.
by Mike McConnell, CPM
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|Publication:||Journal of Property Management|
|Date:||Mar 1, 2005|
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