Property managers are third parties involved in oversight of real estate and general day-to-day operations of the properties, from screening tenants, arranging for repairs and maintenance on behalf of the property owners. Property managers face risks in the course of their work, just like other professions. A good property manager should know three possible strategies for dealing with threats; you can avoid risk, control risk, and transfer risk. An effective property manager has to put controls in place to mitigate risks. Below are different risks associated with property management and ways you can reduce them.
Administration risk
A property manager handling many properties can have a challenge in dealing with the volume of data involved in maintaining rent rolls, contracts, incident reports, and claims, etc. It means without an effective system in place. It’s only a matter of time before an important deadline is missed, which can prove costly if the aggrieved party decides to take legal action. To reduce administration risk, the property manager can use property management software to organize his work to enhance efficiency.
Physical damage risk
Physical damage to a rental property is a common risk faced by property managers whether you’re dealing with many rental properties or just a small portfolio. It is a risk that one cannot eliminate because of issues like wear and tear. This risk can be transferred to tenants who cause damage to rental property by having a renters insurance program.
Nonpayment of rent by tenants
Rent collection is an essential part of a property manager’s job. Choosing the right tenant goes a long way in making this job less stressful because evicting a tenant is time-consuming and costly. You can mitigate the risk by placing a thorough tenant screening procedure for any tenant wishing to rent.
Risk of vacancy
As a property manager, you’ll always risk not finding enough tenants to rent properties under your management, and this can be due to competition from other property managers. Finding tenants for your clients is your sole responsibility as a property manager. To reduce the risk of vacancy, you can market yourself by having paid-up advertisements and also through the internet and social media.
Property management is a very competitive profession, and so to have the edge over your competitors, you need to be creative and aggressive in networking and marketing your services.