operations

6 Questions to Ask Before You Hire a Property Manager

Dan Rafter — Mon, 08 Jan 2018 09:00:06 +0000

Your goal when buying rental property is to make money. Hiring a property manager to operate that property for you — find tenants, schedule repairs, or hire outside help like landscaping companies — costs money, and can quickly eat into your profits. Managing your rental properties on your own eliminates this extra expense.

There are times when it does make sense to hire a property manager, however. In those times, that extra expense is well worth it. You just need to determine when this move is the right one.

Here are a few questions you need to answer to determine whether hiring a property manager makes sense for you. (See also: How to Choose Income Rental Property)

1. Where is your rental property located?

Hiring a property manager makes the most sense when your rental buildings are located far from where you live. Maybe you live in New York, but your rental properties are in Florida. Managing those properties from more than 1,000 miles away is going to be a challenge.

Say tenants complain that their heat isn't working. You can't just jet down to your property to eyeball what might be wrong before calling in a contractor. If you are working with an area property manager, though, they can quickly respond to your tenants' complaints and find a professional to fix the problem.

Traveling to and from a property located hundreds or thousands of miles from your home can be expensive. Hiring a property manager might be the more cost-effective solution when your rental units are located too far away.

2. Do you own too many properties to manage on your own?

Even if your properties aren't located far away, you might need the help of a property manager if you own several rental properties. Yes, the more properties you own, the more income you might generate from them. But the more problems you'll have to deal with, too.

If you own several properties, you'll receive more late-night phone calls from distressed tenants. You'll have to spend more time vetting potential renters. You'll have to build a deeper roster of qualified plumbers, carpenters, electricians, and landscapers.

This all takes work. Hiring a property manager to oversee multiple buildings that you own can eliminate much of the stress that goes with this.

3. How much money do you have?

The cost of hiring a property manager varies. But it's not free. According to property management search website All Property Manager, you can expect to pay from 8 to 12 percent of the monthly rental value of a property.

Say your rental property earns $10,000 a month in rental income. At 8 percent, you'd pay a property manager around $800 a month. You'll have to determine if you have room in your budget for this fee. If the property management fee will take away too much of your profits, you might be better off managing your rental properties on your own.

4. How much time do you have?

Fielding tenant phone calls, vetting new renters, hiring contractors, and collecting rent payments takes time. If you are also working a full-time job and raising a family, you might not have enough time to manage a property and your other responsibilities.

If managing rental properties is your full-time job, your schedule might permit you to take on the duties of property management. The key is to be realistic about how much time you have. The more hectic your schedule, the more sense it makes to hire a property manager.

5. How much experience do you have?

Managing rental property comes with a steep learning curve. You might think you know what the job entails. But until you build experience in the field, you might be surprised at all that's involved in successfully managing a rental property.

That's why hiring a property manager often makes sense for inexperienced real estate investors. When you hire a property manager, you can take the time to learn the rental business while an experienced professional handles the day-to-day operations. Yes, you'll pay a bit more for this professional. But a property manager can help you avoid the most common rookie mistakes involved in investing in and managing rental properties.

6. How much conflict can you handle?

Even if you take the time to screen tenants, you can still end up with renters who won't pay their rent or who will damage your properties. Are you willing to take on the stressful and complex job of having to evict someone? If not, hiring a property manager might be the best choice.

A property manager can handle the often-lengthy process of evicting bad tenants. And by having a professional take on this task, you can avoid the emotional turmoil. It's not cheap but sometimes it's worth the fee so you can skip the headaches.

Like this article? Pin it!

This article is from Dan Rafter of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How Operations Can Support Ecommerce Growth

Julie Rains — Thu, 14 Oct 2010 17:28:40 +0000

Link:

http://www.openforum.com/idea-hub/topics/managing/article/how-operations-can-sup...

If you're running an ecommerce business, you have most likely spent much of your time, attention, and money on generating sales through search engine optimization, purchase of keywords, social media, and more. What happens when the sales start registering? Your business needs to ship orders and satisfy customers or die.

The path to operational success isn't clearly marked. There are a myriad of hazards to avoid. To get expert guidance on building, refining, and expanding the operational infrastructure and day-to-day processes that support sales, I spoke with Zach Piech, CEO of ValuePetSupplies.com. His multimillion-dollar company has experienced explosive growth: year-to-date sales compared to last year's results are up 50 percent. He gave me real-world strategies for getting orders shipped on time and building long-lasting customer relationships that repeatedly generate strong sales.

Challenge: Ship orders on time.

95 percent of orders are processed immediately, which requires keeping inventory in stock and minimizing back-orders. Inventory is replenished quickly so that back-orders are typically filled within two to three days.

Actions to support timely shipment of orders:

Maintain accurate, up-to-date inventory information. ValuePetSupplies.com uses various niche IT applications on hosted platforms, such as AaaTeX (a shopping cart integrator), to synchronize changes in inventory data with its accounting system, QuickBooks Online. Detailed inventory information is available to the distribution team, call center representatives who perform sales and customer service duties, and purchasing agents in multiple locations. Employees can access inventory information to verify product availability and make re-ordering decisions based on stock levels.
Execute purchase orders daily. The company moved from monthly and weekly purchasing cycles to a more aggressive schedule to keep inventory flowing from manufacturers through its distribution center and then to customers.
Eliminate drop shipments of customer orders shipped directly from manufacturers rather than ValuePetSupplies.com's facilities. Zach and his leadership team opted to cease drop shipments because of the extra administrative work involved in cutting purchase orders along with lack of control over shipping timeframes. The company either buys these items and stocks them in its distribution center or doesn't sell these items at all.
Continually evaluate and restructure shipping processes. Zach has worked with his shipping partners to find operational efficiencies. He has arranged for late-in-the-day pickups so that packages can be shipped the same day they are prepared.

Challenge: Deliver exceptional customer service, every time.

When Zach was ready to delegate the customer service duties, the company outsourced the function to a US-based call center. Unfortunately, customer problems worsened during interactions with outside representatives.

Actions to support exceptional customer service:

Hire company employees to deal with customer concerns. Provide training on company products, procedures, and policies, and impart understanding of customer psyche.
Fix recurring problems. Recently, ValuePetSupplies.com decided to discontinue a product category that accounted for 50 to 60 percent of its returns but produced only 1 to 3 percent of its sales. The company also eliminated drop shipments to ensure reliable service.
Implement a customer relationship management (CRM) system that stores information on customers, such as their order histories, product preferences, locations, inquiries, and complaints. As a result, sales and customer service representatives can engage customers more intelligently, avoid asking customers to provide detailed information on past problems, and make appropriate product recommendations.
Be proactive in alerting customers about order status and shipment information via email.
Respond quickly (within a few hours) to email inquiries.
Introduce Live Chat as a more time-efficient method of interacting with customers compared to telephone conversations. Representatives can often handle multiple live-chat sessions and respond to emails at the same time.

Over the years, I have spoken with operations managers who offer these recommendations for supporting ecommerce and retail sales.

Plan and make product purchases to match demand, which sounds simple but can be complex. Buy seasonal items early so that you'll have strong inventory levels before your busy season starts. Develop a steady pipeline of core basics (non-seasonal items) and replenish this inventory frequently. Talk with your vendors to make sure that you are aware of order-to-shipment lead times throughout the year.
Conduct inventory counts on a regular basis. Reconcile your inventory records with actual inventory in your distribution center and any sales locations. Research discrepancies and address problems that led to inaccuracies. For example, your staff may have been too busy filling orders to record transactions. Implement processes to make sure that inventory records are updated for sales transactions, transfers, or receipts of vendor shipments; observe employees to make sure that they are following procedures.
Know where products are located within your facility. Most companies will have assigned or "pick" locations within their facilities for each product type. When these locations get filled, however, employees will store extra product in "overflow" locations. Replenish pick locations on a regular basis or make sure that everyone knows where extra product is stored. Otherwise, you'll be scrambling to find products and process orders on your busiest days.

This article is from Julie Rains of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: