In today’s economic downturn, sagacious management of your property investment has gained increased significance.
Europe’s debt crisis has depressed international trade and finance, the rippling effects of which are seen in other economies as well.
The so-called ‘American Dream,’ which triggered progress and prosperity to the world economy as a whole, has now become a thing of the past. We are now experiencing unprecedented events, ranging from manmade tribulations including Wall Street protests to earthquakes, tsunamis and other natural disasters that create long-lasting adverse effects.
New Zealand is not immune to such adverse effects, despite being a small and remote country. Global recession has created a dent in our economy.
How can we best prepare as property investors to shelter ourselves from such effects?
Crucial functions
Managing your property means more than just collecting the rent and occasional visits. Those of you with a property portfolio will understand the need for being proactive and sensitive to the existing and emerging trends.
Investors should perform the following functions:
- Quality maintenance at all times
- Constantly liaising with tenants directly or through a property manager to understand how their business is operating
- Upgrading and renovating the property to retain tenants and attract new ones
- Extending leases where possible by providing incentives
- Having a line of credit and bonds at the time of leasing
- Purchasing within budget, with provision for unforeseen circumstances
- A Backup plan if a tenant vacates abruptly, although some property owners believe that the tenant is locked in a lease for a number of years. But I have seen some tenants accumulate debts during a lease term
- Acquisitions should be multiple tenant properties to split the risk
- Maintaining good records
The list is endless but those listed above should be considered basic.
With an established portfolio, you would not only feel secure but also find avenues for innovative ideas and expansion and the advantage of employing the services of an experienced property manager.
Qualified Manager
One of the risks of operating through an agent is that he or she may not rise up to your expectations, causing problems to you and your tenants.
However, do not consider that your worries would end with the employment of a property manager, as you will still be required to oversee their work to ensure that they are performing the requisite tasks.
It will not be easy for you to give up control if you have built your portfolio and have managed it yourself for a while. Your time will be better spent fishing out the next deal instead of worrying about maintaining your property.
You have to be a lawyer, accountant and a good negotiator to succeed in today’s property sector. You should be well versed in the local laws, regulations and practices including taxation and property law.
Knowledge is power and information is money in property.
This sector has grown to demand fulltime professionals.
Look after your customers and you will have their loyalty in challenging times.
Poor management can turn a good investment into a very bad one quickly.
It is more than just repairs and maintenance but about managing your tenants.
If you are experienced, you may be the best person to manage your investment but it will come at a price: your time.
Mahesh Ranchhod is a Director of the Ranchhod Group of Companies based in Auckland. Phone: (09) 3031353 Mobile: 021525569
Email: m.ranchhod@xtra.co.nz Website: www.ranchhodgroup.com
The Group incorporates New Zealand and Australian Companies and Trusts designed to invest in commercial properties and manage them in Australia and New Zealand. The above article should be taken only as a guideline and not as specific advice. Mr Ranchhod absolves himself along with the management and staff of Ranchhod Group of Companies and Indian Newslink of any responsibility or liability that may arise from the above article. Readers should seek professional advice before acting upon any information contained above.
