When a property management company is hired by a property investor or a landlord to take care of certain rental properties an agreement is entered into which spells out the obligations of both sides. Here are some of the functions expected of a property management company.
The company should prepare a detailed budget of cost of operating the rental home or condo. This function encompasses all of the envisaged tasks and apportions funds for their execution. The budget must include income from rents and an estimate of costs for the three main functional areas. These are repairs and maintenance to the property and the cost of tenant services. Administration charges will also have to be approximated and included.
Budgeting Capital Expenditure
As a property becomes older some deterioration is inevitable. Consequently it is likely that the rent for this property will have to be marked down in proportion and therefore provide less return on the owner’s investment. A property manager should develop a long-term budget to cover renovation and capital improvements. Remodeling, renovating, and installing contemporary appliances will increase the rental income or at least help to maintain it. Improvements could also command a rental on par with similar properties which are newer.
Capital improvements are generally provided for in depreciation, a head which an accountant will incorporate, amortized over the estimated useful life of the property. Depreciation attracts certain tax advantages.
Budgeting for Marketing and Advertising
When a property falls vacant, word gets around and attracts prospective tenants. But a property manager cannot rely on the grapevine as a form of advertisement. The manager must have a marketing plan which will need an advertising budget. It pays to advertise periodically in certain media publications which people looking out for rental properties refer to. A more vigorous marketing effort will be needed when a property falls vacant. When advertising, it’s a superlative idea to announce improvements and renovations. Expenses associated with an advertising effort have to be catered for.
Getting their Act Together
The property management company represents the owner, where the owner’s interests are paramount. Both should work closely to maximize income from rents and optimize the return on the money invested in the property. The first step in that direction is to prepare a comprehensive and realistic budget, which should become the operative guideline.
Talley Properties Inc.
Talley Properties is one of the oldest property management companies in the Charlotte region of NC. It has been in the business for over 30 years during which it has built up an unmatched reputation for excellence of service. This property management company, which handles mid-range to high-end commercial and residential properties, provides the full range of property management services. It knows its area of operation intimately so is able to judge with remarkable accuracy just what the earning capacity of a rental company is. The company also has close associations with local builders and tradesmen so is able to keep maintenance costs to the minimum. Because it is known to be one of the leading property management companies in the region, properties managed by Talley Properties have an enviably high occupancy rate.