Property Management VS Real Estate Investing

Property Management VS Real Estate Investing

Investing in real estate can entail owning a single single-family rental home or hundreds of apartment complexes. It can be a secondary source of income in addition to a full-time job and business. Real estate investing, whatever its scope, should not be confused with property management.

Many rental property owners have no desire to be landlords. For them, the property is simply an investment. The day-to-day operations are typically handled by a property manager hired by the owners. As their portfolio expands, they may require the assistance of a real estate investment manager. These individuals are in charge of the financial and strategic aspects of real estate investing. Real estate investing, property management, and real estate investment management all serve separate purposes.

Investing in real estate or managing investments?

Real estate investing occurs when a person owns a property other than their primary residence. They own and rent out the house, apartment, or commercial space. They accept the financial risks and rewards that come with the job.

An investor may begin with one rental unit and plan to purchase more in the future. As their property portfolio grows, the situation may evolve from a simple way to supplement their income to a full-fledged business. Real estate investment firms come in all shapes and sizes. It could be as simple as one person or as complex as a large conglomerate traded on a stock exchange.

When real estate investing grows into a business, the owner may require the services of a real estate investment manager. This person or company has no ownership interest in the properties but works for the owner to manage their portfolio of properties. It is their responsibility to devise a strategy that will provide the best return on investment for the owner.

A financial manager or wealth manager is not required for someone who only has a checking account, but someone with a portfolio of stocks, bonds, mutual funds, and retirement accounts may. Similarly, an owner with only a few properties may not require the services of an asset manager. Anyone with multiple real estate assets will benefit from having an expert assist them in getting the most out of them.

What exactly is property management?

Property management, on the other hand, is not limited to real estate investment firms. Even if you only have one rental property, you should consider hiring a property manager. The job of a property manager is to look after the needs of the tenants and to keep the building in good condition. The owner may live too far away or lack the time, ability, or desire to complete the necessary work. The more properties in a portfolio, the less likely an owner is to be able to manage them.

A reputable management company will always do everything possible to protect the owner’s investment, such as finding reliable tenants, maintaining the property in good condition, reducing expenses whenever possible, and adhering to a budget. It is critical for owners to find someone they can rely on.

A typical full-service property management firm would provide the following services:

  • Find suitable tenants: Property managers can handle everything from advertising and showing rental properties to screening applicants and conducting background checks, as well as providing lease paperwork and tenant rules and regulations.
  • Prepare rental properties: Property management companies hire or subcontract various tradespeople to prepare rental units for new tenants. Carpenters, HVAC technicians, painters, and other tradespeople will be needed to prepare apartments or houses for rent.
  • Collect the rent: Rent collection, as well as the associated accounting and banking, is frequently the responsibility of property managers. They will also typically handle late notices and, if necessary, initiate eviction proceedings.
  • Handle requests for maintenance: During emergencies or when repairs are required, tenants are usually instructed to contact the property manager. The company will provide the appropriate worker to take care of the problem, just as it does when preparing units for new tenants.
  • Maintenance and upkeep: The property manager is in charge of the building’s exterior as well as any public areas such as a pool, laundry room, hallways or workout space. They will regularly mow the grass, shovel the snow, and sweep.

What is The Role of a Real Estate Investment Manager?

While property management focuses on renters and physical space, a real estate investment manager’s primary responsibility is to strategize and advise real estate investors on how to strengthen their portfolio and increase revenue. They offer the following services:

  • Keep an eye on the real estate market: Real estate asset managers will monitor market trends and make recommendations on which properties to buy and sell. They may keep an eye out for specific types of properties that will fit into the portfolio strategy. For example, one portfolio may only include single-family homes, whereas another may benefit from expanding to include an apartment block.
  • Consult with lenders: The real estate investment manager will work with various lenders to secure financing on behalf of the owners. They will look for low interest rates and handle all of the negotiating and paperwork.
  • Leases and property agreements must be negotiated: They will draught the necessary legal documents to protect the owners’ interests.
  • Increase the value of your property: They will assist in steering decisions towards what will maximise the asset’s value. They may, for example, recommend repairs and improvements on one property versus another. Alternatively, they may recommend adding amenities such as a pool or workout room based on what renters are willing to pay more for in a specific area.
  • Promote the property: Many asset managers will collaborate with a leasing team to market the rental in the most appropriate way for the region, with the goal of reducing vacancies and increasing revenue.
  • Budgeting: The asset manager will be in charge of capital and operations budgets, as well as a financial strategy that minimises costs while maximising value. They will manage cash flow and provide long-term financial projections.
  • Engage the services of a property management company: To reduce the investor’s administrative burden even further, the real estate asset manager may locate and interact with a property management company on their behalf.

Is Real Estate Asset Management or Property Management Required?

The services offered by a property management company and a real estate asset management company are somewhat similar. Both may handle marketing and budgeting duties, but that’s where the similarities end.

Real estate asset managers are concerned with the big picture. They act as generals in a war room, devising an overall strategy to meet the real estate investor’s objectives. Property managers are the ones who are on the ground. They are on-site, carrying out orders to complete whatever tasks are required.

A real estate investment manager is not required for everyone involved in real estate investing. However, anyone with more than a few properties should think about hiring a property management company. Select Leasing & Management has years of experience in the St. Louis area helping landlords reduce their property management to-do lists.

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