Managing Risks in Real Estate By far the highest number of commission penalties, consumer complaints, and license suspensions and revocations in most states, are connected to property management. It’s not that property managers are ineffective. It’s just property management one extremely transaction-heavy business. Even as a typical agent might handle dozens of sale transactions every year, a typical property manager can tackle hundreds of smaller transactions. Just because they’re smaller doesn’t give these transactions less importance, and it doesn’t decrease the risk entailed in doing them. Being a property manager, you’re dealing with an owner to market and rent their property, handle rent collection and remit the money to them, as well as to manage the property in all aspects, from maintenance to enforcement of tenant rules. That means you’re transacting with owners and tenants, repair guys, advertising companies, contractors and so on. Every one of these transactions bring some kind of risk into the business, especially those related to financial functions. This makes risk management very important. The economic survival of a property can be threatened by a huge disaster. The records kept play a huge part, as any legal action taken by others can be easily disputed if there are detailed records that oppose their claims.
5 Uses For Professionals
A considerable part of risk management is determining risk versus reward. Take, for example, a property with a swimming pool on it. The property manager and owner must balance the value of the pool and the risks it brings. When a risk is identified, there are three ways to address them:
Doing Professionals The Right Way
Avoidance The pool will be removed as the extra rental income it brings is far less than the insurance cost or the risks involved. Control The pool is retained but a coded … Read More ...