When doing business with real estate, you have to do it professionally. That is why once you purchase an estate you always wanted, your job is not done, and it has just begun. Managing assets professionally requires certain skills and it has certain hidden aspects that most people do not know. If you are looking to become a professional in managing your aspects and want to get a hang of these skills and hidden aspects, here are a couple of things which you should pay attention to.
How is it different?
The first question is how is property asset management different from a normal property management? Well, the answer is simple: property asset management is property manager, with a focus on the broader context. As soon as you introduce business aspect and view your property as a potential money maker, you will understand the true meaning of property asset management. Instead of simply having a property for rent, you change it and add a new role to it – office, manufacturing space, warehouse, etc.
Hidden Costs
By looking at assets from two different angles (individual objects and potential enterprises), you will be able to make the most out of property asset management. The end result is earning money, and in order to do so, your real estate has to gain value and become of worth; therefore it must be in good condition and well equipped. As usual, there are several hidden costs most people do not pay attention to: mortgage fees, conveyance, repairs, renewal, etc. In order to earn the top dollar from your property, it has to be in top condition before you try and sell it, so taking care of these hidden costs may cost you now; however it pays off for itself once the asset has been sold.
Vacancy
Every year, vacancy takes about 10-20% of the gross income. Vacancy is very important and most people take it for granted. It is directly connected to different improvement costs and redecorating costs, as well as leasing and legal costs. When it comes to vacancy, this is something you should not be doing alone. It is highly advised that you seek the help of asset management and remarketing services in order to get things done in the right way. A person with experience will judge and evaluate things from a professional perspective, which is something you will never be able to do. I know that this invokes some extra costs, but trust me when I say that it is worth it.
Maintenance
When it comes to maintaining your asset, we have to take into consideration that the cost of it is a subject to change. It depends on the relationship of the tenants and landlords, and based on the state of the property, maintenance can be left to the new owners or pay off once the asset is sold. Either way, ignoring it could cause income loss or drop in value, so it is highly advised not to do so. In order to effectively manage your assets, you have to find a problem once it appears and fix it. If you do not, it will just grow and multiply, causing additional expenses and even bigger problems. The key is to solve problems by not spending too much money on unnecessary repairs and making as few mistakes as possible.
Taxes
Finally, we have taxes which tend to take from 15-20% of your property’s total income. However, this number varies and it is not the same for every country, so predicting the cost of taxes cannot be done accurately. Taxes cannot be avoided, so before you purchase or start any financial project, keep taxes in mind all the time.
Managing your assets can be fun, and knowing a thing or two about it will benefit you in the long run. Doing things professionally will change your perspective, and once you realize the full potential of managing, buying and selling properties, you might as well end up doing it for a living.