Are you an optimist, a pessimist, or a realist? Most of us would choose the later, but I like to call myself an optimistic realist. How about you?
In the months and years ahead our self-confidence and self-image will be tested by what Shakespeare called “…the slings and arrows of outrageous fortune.” The uncertain future will test our mettle too.
Yet we dwell in the here-and-now, so in this present moment what are you doing to prepare for the many positive changes ahead? Let me give you a salient example.
Four years ago we lived in a residential rental income world where the price-per-rental-unit had decreased meaningfully after the 2007-2011 “Great Recession.” Today things have changed. If you and your clients purchased rental real estate back in 2012 you’re most likely happy you did. Vacancy rates have declined as the number of renters skyrocketed in the past four years. This led to increases in rent rates which created positive changes in the values of rental income properties. Depending on which region of the country you live in, those property values soared. Meanwhile, opportunities for property management companies to grow their clientele and units-under-management also blossomed nicely. Does this mean “the party” is over? Not in the least! In fact, these positive changes have opened the doors to many other outstanding possibilities.
For instance, your owner-clients have the chance to unload some of their properties at the best prices in the past ten years. Have you discussed this scenario with them in the past 6 months? Through the use of “1031 exchanges” or the tax-advantaged use of long-term capital gains, owners can rebalance their portfolios, pay-down mortgage debt and diversify their holdings all at the same time.
As a proactive property manager, now may be the ideal time to contact your owner-clients to discuss whether the rents charged on their units are reasonable. If it’s time for an increase, they need to know.
Remember, there are at least 4 ways to prosper as property managers under today’s real estate conditions:
1) Increase your income as a percentage of rents collected.
2) Increase the number of units-under-management. This includes taking on more clients.
3) Lower your operating expenses and overhead.
4) Sell your property management business. Perhaps it’s time for a big change?
Prosperous property managers are often exceptional financial managers. They know how to balance the advantages of realistic debt levels and leverage the power of investing using “other people’s money.”
They also know that having adequate reserves and operating funds is crucial. Now may be the best time yet for revisiting your own financial condition. Do you have a generous emergency fund?
In addition, you and your clients need to have plenty of liquidity. Liquidity is a comfy synonym for adequate amounts of cash or cash equivalents. Be sure you are up-to-date on that vital situation.
Since rental real estate prices are hot right now, do yourself and your clients a favor by adopting a formula to avoid overpaying for rental properties. When are prices too high?
Your clients should be asking you this question. …read more
From:: Property Management