Managing the property management of your property from the thousand-foot level can be done using 2 lenses. First, looking at the property directly and second, the objective of the investment – why you have it?
When looking at the property review the tenants, expenses, maintenance, repairs, market cycle, and loan.
- Tenant review can be seen as if they pay the full rent, if they pay on time, the condition they keep the property in, and how much time energy they consume as a tenant.
- Expenses are generally broken down into taxes, insurance, utilities, operating expenses (including property management).
- Maintenance is the general upkeep of the property including lawn care, snow removal, painting and replacing flooring over time, etc.
- Repairs are items that need to be repaired or replaced. Could be snaking a toilet, replacing a sewer line or water pipe, or a drippy faucet. This also tracks directly with maintenance.
- Market cycle is the direction, speed and projected volatility of the Metropolitan Market area. The direction is if it’s going up or down, or staying flat. The speed is how fast is going in that direction, up or down. Volatility is the duration of the up and down; how long it’s likely to go up, and how far it’s likely to go down.
- Loans are frequently not a factor for residential borrowers, but as rates increase this can be important to watch. What is the rate on your loan? Does it change over time with the market (adjustable)? Is there a prepayment penalty for early payoff?
All of these items are looked at from two different perspectives: metrics and landscape. The metrics are what’s going on immediately, this month. The landscape is what has happened over time, previously and looking into coming years.
The second lens is your objective. What is the objective of holding the investment property? Is it to build wealth? Is it for cash flow? Or some other purpose? Knowing this objective helps determine if the property is producing the way it should to meets your needs.
If the situation of the property is consistent with your objectives, then nothing may need to be done. If it is not running smoothly, or aligned with your needs, then a change may need to be made.
Happy Investing!
