What you need to know:
- You may want to set up a real estate business but are not ready for the hustle of dealing with tenants. Propery managers can do this at a cost.
- Benefits : Hiring a property management company is a good property management idea if you can afford the fees. If you think you are able to manage things yourself, you may want to keep doing so until the market turns around because most companies expect between five to ten per cent of what you collect in rent revenue.
It was always a hustle for Richard Kalumba to collect the lumpsum he expected from his tenants. Many of them would have excuses for not paying their rent on time while others disappeared without paying. This greatly hindered his investment plans as he wanted to use the money to develop other businesses AThis is common to many landlords who manage their own property. Tenants get so familiar that they start giving excuses for partial or delayed payments. However, with the hiring of a property management company, the case will be different.
According to Eng Abdu Nasir Mugisha, the director, Man Property Service Limited, people who contract property managers do it to avoid the hustle of chasing for rent, evicting tenants, dealing with tenants who wreck your property, rental scams and lousy vendors.
Factors to consider
Before you look out for property management services, ensure that you have lots of rental units or property because the more properties you own or units they contain, the more you are likely to benefit from a management company.
Distance from the property is another factor. “If your rental property is located far from where you live, hiring a property management company can be irreplaceable in dealing with the many issues that you will not be able to handle from afar. For instance runaway tenants,” says Kalumba.
You are not interested in hands-on management. Many landlords look forward to the challenge of finding good tenants and the rewards of maintaining a safe and attractive property on their own. But if you view rental property ownership strictly as an investment and want little or nothing to do with the day-to-day management of your properties, consider hiring a manager to help you to manage your property.
Also, if you have another full time job, changing your business structure, arranging financing for renovations or searching for new properties then a management company will be helpful.
Having someone run the business for you and only sends you your money is a good feeling but can only be possible if you can afford it. Kalumba adds that, “Hiring a property management company is a good property management idea if you can afford the fees. If you think you are able to manage things yourself, you may want to keep doing so until the market turns around because most companies expect between five to ten per cent of what you collect in rent revenue.”
With the above factors in mind, the property owner and manager agree on different grounds depending on the type of building, services available and whether the owner wants the company to manage the entire property or just collect the rent.
Most property management companies offer services such as ensuring that the landlord gets their money in time as per the agreed date, that property is in good condition and there are no damages after handover.
The companies can do simple renovation to commercial and residential houses, construction works, building and furnishing, land title processing as well as buying and selling of land, plots and houses. The charges usually range between five to 10 per cent of the rental collection.
Mugisha says, “Management companies deal directly with tenants, saving you time and worry over marketing your rentals, collecting rent, handling repair and maintenance issues, responding to tenants’ complaints and even pursuing evictions where need be.”
How property management companies work
There are many mediocre companies and personnel that disguise in the umbrella of property management but a good property management company is one that is flexible and works at your convenience.
Kalumba says, “The company must be registered with estate and property agents association (EPAA) and Uganda Property Development Association(UPDA) but it is also important to get recommendations from colleagues and your local apartment association on the best and genuine property management company.”
The management contract is usually renewable after a year unless you have issues with the company and if you need to have an increment from the agreed money as a property owner, your managing company should be flexible enough to allow you write to them and give reasons why you want to get more money than you had asked for earlier. The biggest challenge is failure to recover all the money they intended to get. He says, “As property managers, we pay off the landlord then collect the money from the tenants. However, there are times when we fail to recover all the money.”
Some companies allow tenants to pay in installments so they do not feel burdened or that their landlords are bad. The staffs in such companies are trained to talk to people in a calm way to enable the tenants pay on time. “We also put motivational incentives for the tenants that pay promptly and this helps because we put good prizes,” Mugisha says.
Managing companies and property owners sometimes fall out when there are demands from property that is jointly owned as family. “Some property is owned by families and in the contract only one person comes to us so we only give money to the person we know. At such a time, the other members gang against us and claim we are taking over their property,” says Mugisha .
Hiring a property management company is a good property management idea if you can afford the fees. If you think you are able to manage things yourself, you may want to keep doing so until the market turns around because most companies expect between five to ten per cent of what you collect in rent revenue.