5 Oct / 2017

Property Management Business Models

Do you own a property and would want it to be rented out or have someone monitor it? If you do, then you might consider the idea of having it managed by a third party. It will save you from all the hassle of having to answer inquiries from potential tenants or to maintain a property that has not been rented out yet for months, etc. However, before you even attempt and talk to a company, it would be best for you to have an idea as to the different types of property management business models. Knowing what are they will give you an idea as to what fits you perfectly and according to what you needed. In this way, you will be hiring a company who does know what they are doing, and the cost will be within your reach.

The following are property management business models:

  1. By percentage

This is the model being used by most property management companies who do manage some home units. What happens is this, the landlord is going to sign an agreement together with the company, giving the right to let the company do the things on his behalf to have the unit rented and also collect rental payment. The landlord does not have any idea at all as to who is the tenant of the property. Then, out of the monthly rental, the company takes about 8-12 percent, and give the rest to the landlord.

  1. Fixed rate

This is the common model being used when the property involved is an empty site or home. What the company does is to monitor the property to ensure that it everything is safe and secure, and then make a report, give it to the owner. Since there is no income coming out form this type of property, the company charged a fixed rate towards the owner.

  1. Revenue share

This model usually applies to a commercial property such as business or establishment centers of which they do generate revenues. What happens here is that there will be an agreement between the owner and the property management company, giving the right to the company to turn the property into business wherein it generates income such as business centers or even as a service apartment. There will be no paying of rent to the owner. The company will share a percentage of the overall revenue of the business.

Bottom line, you need to be certain as to what type of company you are going to hire to manage your property. This is important. You want to be earning money out of your property. This should be the case in every property you want to be rented. Check out the figures and see if it’s worth it to hire a particular property management company or not. You do not want to be losing money at the end, right? Thus, you should be very choosy when it comes to hiring a third party managing your property.

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