The processes most real estate investors go through to develop their properties is arduous to say the least. Real estate investors sacrifice their immediate comfort and pleasures, work tirelessly with architects, contractors and others to get the properties fully developed. With all the sacrifices and resources put in, the least expected is for the property to be a place of quiet income for the real estate investor and his/her successors. But that is not the experience of most of the real estate investors in Cameroon. Generally, we have real estate investors running after tenants and caretakers, court processes, technicians and a host of others in relation to their property. Most of the time these efforts yield little fruits.
However, there is another way. Savvy Real Estate Investors have discovered a better and smarter way. Without the headaches, heartaches, sleepless nights, quarrelsome days etc. Savvy Real Estate Investors work with Professional Property Management Companies to avoid the wahalas that come with managing their properties by themselves or friends and family who may cause more problems than they solve. What is special about Professional Property Management Companies that Savvy Real Estate Investors have identified and can not get enough of it?
Our society is becoming much more sophisticated such that we can not thrive without professionals. We need professional medical personnels to stay healthy. We need professional legal minds to stay out of trouble or make the most of the tiresome legal texts. We need professional financial analysts to make the most of our money. It is in the same light that we need Professional Property Management Companies to get the most out of the properties we have invested a lot in.
3 Benefits of working with a Professional Property Management Company
We have identified three main benefits to Property Owners who work with Professional Property Management Companies.
1. The Right Tenants In
The success or failure of any venture depends on the long term value of the customers to the business. With properties, the customers are tenants. While on the positive side tenants provide the main source of revenue for the property - rents, on the other hand they can be a huge source of costs vis-a-vis operations, repairs and maintenance. The secret to long term profitability of the tenant to the property owner depends on the balance of the revenue to the costs.
On the one hand, owners of residential or commercial buildings want the most rents they can get from the tenants. This is usually the only metric the owners or traditional caretakers use to evaluate in order to accept the tenant to occupy a unit in the property. Professional Property Management Companies on the other hand take a broader look at the market to determine the right rents that will not only get someone into the property, but will get someone who will be of optimal value to the property. In our context, this tenant will pay their rents on time, take care of the property in such a way that operations, repairs and maintenance will be at the minimum. It is the optimization of these factors that make Professional Property Management Companies standout from traditional caretakers.
Professional Property Management Companies use common data and proprietary methods to screen tenants to determine their suitability for the property. Professional Property Management Companies have to focus on the long term suitability of the tenant to the property not only to optimise returns, but to also reduce the complexity in dealing with the tenants.
Sample bad situations
- There are moments when tenants can afford the initial deposit as a result of a windfall, however, they will fail to respect simple payment terms after a while.
- We have also had situations whereby tenants meet all the financial requirements but left the property in disarray, so much so that the costs of repairs and maintenance was worth more than 3 months of their rents.
- Another example is of a tenant who occupied a house for more than 14 months without paying a dime in rents and there was no way of getting them off the property in any good time.
Screening data and methodologies at Professional Property Management Companies are meant to identify such tenants at the application process so they are never given the opportunity to cause mayhem in any of the properties under their management. Such data and methodologies are expensive to acquire and process for individual owners or caretakers.
2. Significant Cost Savings
While the fees to Professional Property Management Companies might seem to be an extra financial burden to the Property Owner, working with a Professional Property Management Company has proven to actually lead to significantly reduced year-to-year overall costs. There are multiple sources for such cost savings, including but not limited to:
- Reduced costs of operations, repairs and maintenance as a result of getting the right tenants in (elaborated in the benefit above)
- Savings in repairs and maintenance as a result of scale and better negotiations
- Savings in cost of operations as a result of better operating processes
Savings resulting from scale and better negotiations
Professional Property Management Companies are designed to deal and actually deal with a large number of properties at every given point in time. This therefore implies they work their way with technicians and other providers to get the best deals for materials and labour costs for repairs and maintenance. For example, a Professional Property Management Company may have an in-house electrical technician who is used at all times to serve the company’s properties whenever the need arises. This will lead to an overall reduction in the labour cost for electrical repairs. The owners on the other hand might not have the leverage to negotiate lower labour costs for great quality work for their property whenever there is the need for electrical repairs.
Savings resulting from standardisation of operating processes
Property management requires a lot. For most owners who manage their properties themselves, or use traditional caretakers, they have just a few processes that are considered critical and therefore follow certain minimum standards. For the bulk of the operations, there are little or no standards. Unlike for Professional Property Management Companies who standardise almost all, if not all the processes that are to be followed. Standardisation leads to simplification and efficiency, therefore reduction in the costs of operations.
3. Relevant Records and Reports
Savvy Real Estate Investors are all about making informed and better decisions that deliver value for them in both the short and long terms. In order for anyone to make informed decisions, relevant information is needed. This information depends on the records that are being kept and the kind of reports derived from such records.
While traditional caretakers do their best, there is a limit to the records they can capture and the reports they can derive from such records. Professional Property Management Companies on the other hand use advanced information systems to keep track of financial and operating records pertaining to transactions, tenants, the property and the owner. Using powerful algorithms, relevant reports are extracted from these records that provide meaningful and impactful information not only to the property owners but to the tenants too.
An example
At Genie Capital, we start by providing a comprehensive Assessment Report after carrying out an intensive assessment of the property - establishing the physical, technical, operating and financial state of the property. With the Assessment Report, the property owner will have an actual view of the number and state of the walls, floors, doors, toilet pots, mirrors etc of the property as at that point in time. The same data that is used to derive the Assessment Report for the property owner is used to establish the Entry State of the Unit for the Tenant. The Tenant signs the Entry State of the Unit upon entry, and upon leaving, an intensive assessment is carried out in the tenant’s unit to ascertain the Exit State State of the Unit. By comparing the Entry State of the Unit with the Exit State of the Unit, the Property Owner knows exactly what the tenant destroyed and to what extent, thereby forming the rational basis for deduction in the tenant’s caution deposit before terminating the contract.
An unintended consequence
One of the unintended benefits of keeping clean records is that it significantly reduces the probability of tenants defrauding us or the property owners because they know there is a trail for every transaction incidental to their stay at the property.
Building, maintaining and updating such information systems come at heavy costs. Reason why it is almost impossible for traditional caretakers to have such systems, thus their inability to have such records and provide such meaningful reports. However, given that Professional Property Management Companies have already invested in such systems, they make the benefits available to their clients at no extra costs.
What Next?
The easiest way to know if something is true is to experience it. At Genie Capital, we do have a way to make Real Estate Investors experience us without having to spend a dime in the process. How? By simply requesting for a Property Assessment. What do you have to do? Fill and submit this Application Form - Property Management.
About Genie Capital
At Genie Capital we identify, develop and invest in opportunities, technologies, IPs, processes, etc that deliver superior long term returns to our investors, whether they're investing in Real Estates, SMEs, Stocks, Bonds or Crypto Assets.
We have a mission to help build the financial infrastructure of Cameroon that will enable Cameroonians to directly invest in and benefit from the development of the country, rather than leaving it to foreigners who might not understand our needs and aspirations.
Though the concepts that are the foundations of Genie Capital have been in the development since 2013 or so, the company was incorporated in Limbe in July 2021 with head office at Mile 18 Junction, Buea - Silicon Mountain, SW - Cameroon.