by James Cervelli
Apartment owners often think that do-it-yourself property management is the best way to reduce costs and maintain hands-on control. However, hiring an experienced third-party-management firm can help owners realize savings by tapping into the broader resources of a full-service property management team. A good third-party manager can save time and money, as well as deliver industry expertise that can enhance the value of assets.
Tenant services require attention to detail:
Tenants are the lifeblood for any apartment property. Finding good, reliable talents is one of the biggest challenges in the industry. Leasing properties to higher quality tenants generally means fewer problems, better rent collection and less renter turnover. Finding those high caliber tenants is part art and part science.
- Step one is marketing the property correctly. A good manager will know their target demographic and how best to reach that market whether that is through social media or traditional advertising.
- Step two is screening applicants. Property managers need to be aware of fair-housing and anti-discrimination laws and also use the available tools to check background, references, income and work history. Experienced managers know what to look for, as well as factors that might represent a potential red flag for problem tenants.
- Third, the job is not done when the lease is signed. Oftentimes, it is just getting started. Managing tenant relationships and serving those renter “customers” helps to increase lease renewals and reduce costly turnover expenses.
Leveraging resources to generate savings:
One of the big advantages of a third-party manager is being able to take advantage of economies of scale and vendor relationships to reduce expenses. Oftentimes, third-party management firms can leverage buying power for their entire portfolio of management assets to obtain more favorable pricing than what an individual property owner can achieve on their own. Likewise, property management firms often have a team of experts with skills in areas such as marketing, construction and accounting, as well as having dedicated maintenance and repair techs that can service properties on an as-needed basis.
Properties require active, strategic management:
The days where property managers could sit back and put properties on cruise control are long gone. Property management is evolving beyond the passive role of making sure the trash is emptied and the windows are washed. Today’s property managers also aim to deliver strategic advice that can enhance the overall value of an asset. For example, strategic property management can help to determine what capital expenditures can be deferred, and what preventative maintenance should be done now to avoid more costly expenses later. In addition, what investment can be made to help achieve higher rents and generate more income that can drop right to the bottom line. Those decisions involve not just knowing the property, but also having a keen understanding of the dynamics driving the local marketplace.
Reduce the day-to-day workload:
Any apartment owner knows that there is a lot more to managing a property than collecting rent checks, changing lightbulbs and taking out the trash. There are dozens of issues on the daily “to do” list to make sure properties run smoothly ranging from scheduling routine maintenance and repairs on equipment to overseeing security and safety. Delegating responsibilities to a third-party manager can help to reduce unnecessary stress. (No more midnight phone calls when the power goes out or the roof leaks.) Outsourcing those daily management tasks to a third-party frees up considerable time for property owners. For some owners, reducing the workload is a welcome step as they start to move closer to full or partial retirement. For others, it creates more time that can be better spent focused on growing their business interests.
James Cervelli, is co‐owner of Cervelli Real Estate & Property Management. Founded in 1983, the family-owned company provides investment sales and property management expertise within the New Jersey “Gold Coast” region and currently managers more than 1 million square feet of commercial and multifamily space in New Jersey and New York. For more information on third-party property management services, contact James Cervelli @ 201 868 6300.