There are several risks that are likely to affect your property management firm that include loss of income, damage to property and legal proceedings among others. If these risks are not mitigated, they are likely to slow down the growth of your portfolio and erode your profitability. Here are five ways that your real estate management firm can mitigate risk.
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Screening Your Prospective Clients
You do not want to be chasing your tenants up and down to pay their rent areas. Moreover, you would like to have tenants who are not criminals, those who can take good care of the property and live in harmony with everyone else.
Tenant screening involves looking at both financial and criminal backgrounds of the tenants before they sign the agreement. You are able to tell if they can comfortably pay the rent and if they are of good moral standing. This way, the company evades having to evict the tenant for the lack of payment of the rent and ensures that it is not housing a criminal.
Working with a Lawyer to Create Credible Agreements
The lease agreement is a legal document that spells out the terms of engagement between the two parties. As a property management company, you must make sure that the document safeguards your interest in the house and does not bring about legal issues. The only way to ensure this is to work closely with a competent attorney.
The attorney not only drafts the agreement, but he also spells out the course of action should the tenant fail to honor his or her part of the agreement. He or she also helps the real estate firm navigate a host of legal potholes in the course of executing their work.
Have Property Management Software in Place
Data collection, scheduling of tasks and safekeeping of records are important functions in the effective management of the property. However, the use of manual records is highly ineffective. You might omit important tasks or make wrong decisions.
Real estate management software makes managing different properties easy without having a large workforce. You can store tenant information security, schedule inspections and repairs, and manage different vendors. You can also manipulate data to make informed decisions regarding the management of the property.
Do a Background Research before Picking a Property
Different areas have different risks. There are those areas with a high crime rate, low uptake of tenant apartment and restrictive laws on property management. One way you can avoid running into any of the above risks is by doing a background research on the community around the property and the property itself.
Community research includes checking on the cost of living, demographics, crime rates and presence of pollution from mining or environmental disasters among others. Building survey involves checking the integrity of the property along with the fixtures and systems therein. A favorable report in both cases enables you to ensure fewer vacancies and evade financial and legal risks from dangers of poorly built properties.
Make It Easy for Tenants to Reach You
Most of the problems that get to housing associations, courts and tribunals can be resolved with the tenant if the property management firm listened to him or her. Open communication is an essential part of the risk mitigation plan. If the company manages several properties, it makes sense to have a contact center where tenant concerns can be addressed.
Proper communication enables the firm to respond to emergencies fast. It also gives the tenant confidence that their issues are being handled. All this leads to fewer suits and fewer vacancies.
Take steps to ensure that property management is less of hustle. This can only happen if you have good tenants who pay on time and you are managing quality properties in good locations. The lease agreement should also safeguard the landlord’s interest in the property.