Real estate property management is a long-term investment that plays a crucial role in building wealth. It is a valuable option for many investors and individuals due to its ability to appreciate over time.
Economists from Lloyds Banking Group predicted that by 2025, residential homes in the UK will see a 2.3% price increase, while Santander forecasts a stark 97% increase by 2030. Can you imagine the possibility of these estimates being exceeded or if the property market makes a stronger recovery?
As a real estate investor or owner of property portfolios, you should closely monitor these market trends. On top of doing market analysis, there are also other factors you must not overlook if you want to succeed in managing your portfolio.
As you acquire more real estate across different cities, management will become challenging. Thankfully, there are tools you can leverage to keep track of all your assets and grow their value over time.
In this article, you will explore different strategies used in property asset management, which you can apply during property acquisition, maintenance or enhancement of your existing assets.
What is Property Portfolio Management?
According to Investopedia, property portfolio management is a strategic approach to monitoring and managing a collection of properties. This process helps real estate owners choose their methods for acquiring, maintaining, and improving real estate in line with their financial goals.
There are several benefits to managing your property portfolio, such as:
- Ability to make informed decisions that can improve the performance of your real estate
- Decrease in potential legal fees related to cases of bad business reputation or personal injuries due to property negligence
- Early identification of potential hazards, which leads to better compliance with safety and regulatory standards and lower liability concerns
- Prevention of physical damages on your property
- Reduction of risks linked to your properties
5 Ways to Achieve Success in Property Management
Investors are drawn to real estate for its potential financial benefits and future security. However, if you are new to the market, finding the ideal property can be challenging.
To ensure successful investment decisions, make sure to follow these five best practices in property asset management:
1. Evaluate Property Location
Property developer Beech Holdings states that a property's value is closely tied to its geographic location.
This is demonstrated in the 2021 Hometrack Housing Report data, where average property prices in Wales have increased by over 11%, a rise from the 10.8% recorded in October, reflecting continued growth in the housing market.
Thus, when searching for residential properties, prioritise those in desirable areas with schools, amenities, and transportation. Opting for a property in a prime location increases the likelihood of attracting tenants and seeing long-term value appreciation.
However, if you are planning to look for commercial properties, focus on factors such as accessibility, closeness to business centres, and the demographics of the market.
2. Analyse the Property Market
Analysing the market is the process of gathering and then interpreting information about your property. You will typically look at various data points such as property acquisition, sale, rental, or development.
One way to determine a property’s current value is to compare it with the sale prices of similar properties in the area through Comparative Market Analysis (CMA).
CMA is a process that helps determine the maximum purchase amount for any property. Property owners using CMA arrive at a competitive selling price before listing a building in the market.
To start comparing properties in the market, you must familiarise yourself with the neighbourhood. Walk around, do your research, and study its history. Ask yourself these questions:
- Are potential tenants mostly students or families?
- Is the housing market experiencing a boom or decline?
- Is your rental property located in a prime location?
- What are the predictions for property prices in your area?
- Which commercial establishments are closest to your rental property?
- Which properties have the highest listing price in the current market?
For example, the 2024 UK House Price Index reveals that over the past year, the East of England, South East, and South West experienced the most significant declines in house prices.
Moreover, the average home in these three regions costs £344,000, which is 30% higher than the UK average. This indicates that while these areas may be facing price drops, they still maintain a higher market value compared to other regions in the UK.
3. Build a Diversified Property Portfolio
Diversification is a proven strategy in finance, and it is equally important in real estate investment. The main idea is to spread your investments across various property types, locations, and strategies to minimise risk and maximise returns, as highlighted by a financial publication, World Finance.
Since property types and markets exhibit distinct performances, you can combine your assets to leverage market upswings or lessen downturn impacts.
Diversifying your property investments can be achieved through various ways:
- Geographic Diversification: This means investing in properties across different cities, regions, or countries. This lessens risks associated with local market conditions.
- Investment Strategy Diversification: Achieving a balance between generating income and building capital appreciation can be done through a combination of long-term rentals, fix-and-flip, and vacation rentals.
- Property Diversification: This means acquiring a combination of residential, commercial, or retail properties with the knowledge of their unique risk-return profiles.
Start defining your investment goals, to create a well-balanced and diverse property portfolio. Then, assess your risk tolerance while setting a timeframe for when you want to see returns.
If your investment strategy aligns well with your financial goals, you enhance the potential for success in your property management.
4. Manage Potential Property Risks
Property risk management involves identifying potential hazards associated with a property and evaluating their impact on profitability, as defined by a risk advisor, Marsh.
Your risk management plan will include strategies to protect not just your property but also its occupants and other stakeholders.
What types of risks are associated with properties? Here are some of the most common risks when managing properties:
- Faulty wirings that can lead to electrical fires
- Injuries to occupants caused by the deteriorating state of the property
- Natural disasters such as earthquake or flood
- Risks related to the physical condition of your property
Conducting regular property inspections, audits, and occupant surveys can help mitigate risks and save you money in the long run. Proactively addressing potential issues is preferable to waiting until they escalate into worst-case scenarios.
5. Utilise Tools to Manage Property
Property portfolio management is a complex task, requiring tool integration. You can leverage specialised software, analytic platforms, or property management applications to streamline your tasks.
Most property management apps have features that help you track property performance, monitor market trends, or manage your finances and documents.
Best Property Management Tools Options
Below are some of the available property management software that can help you manage your real estate:
You can succeed in your property management goals when you understand your property conditions, and the market trend while leveraging technology to automate your asset management process.
1. Zoopla
A property portal website that allows you to browse available houses and lots that are for sale and rent. This platform provides a trustworthy estimate for house prices, ensuring you pay the right amount.
Features
- Monitoring of travel duration and establishment of your preferred commute duration, allowing users to determine suitable living locations
- Search filters based on your specific budget, property type, or desired number of bedrooms
- Statistics on an area's average asking price for homes or rental units
Price
Free
2. MyAssets
An all-in-one asset management platform that allows property owners to catalogue their global properties. MyAssets displays property valuations, rental income, expenses, and mortgages from any location. It enables easier data retrieval by allowing users to access property information in one platform.
Features
- A document vault that digitally stores important files like title deeds, contracts, lease agreements, and more
- A worldwide map that visually displays where your properties are located
- Comprehensive catalogue of properties, including names, types, number of bedrooms, value, and more
Price
$25/month $250/year
3. Buildium
A comprehensive property management software that provides financial reports, handles maintenance issues, tracks violations and manages rental payments.
Features
- Access to reports and analytics that help in tracking rental income, expenses, and other key metrics
- An open API allowing integration with other apps used in your daily activities
- A system for tracking maintenance which includes status checking, invoice collection, or bill payments across all your properties
Price
Starts at $58/month
Ready to Grow Your Property Investment Portfolio?
Owning a property comes with huge responsibilities, especially if you want to grow your portfolio. From selecting the right property to the continuous processes of maintenance and enhancement, a property owner or manager needs to have enough knowledge of the characteristics of each asset as well as the current property market trends.
The use of a property management tool, when combined with a thorough knowledge of your investment and property market, is ultimately the key to successful property portfolio management. When you have all of these tools at your disposal, you can make well-informed decisions as you grow your investment portfolio.
Asset Management Software: Frequently Asked Questions
1. What is the goal of portfolio management?
Portfolio management utilises the strategic selection and monitoring of a collection of investments to further your long-term financial goals and risk tolerance.
2. How important is property management in real estate?
Real estate property management is essential if you want to optimise returns and protect your assets. It facilitates financial management and risk mitigation, providing property owners with a streamlined and stress-free approach to maintaining and enhancing their real estate investments.
3. What are the responsibilities of a property manager?
Property managers are accountable for daily repairs, continuous maintenance, security, and overall property management. They are typically employed by owners of investment properties like apartment complexes, condominiums, private communities, shopping centres, and industrial parks.
Master Property Management with MyAssets
Property asset management is a complex task that requires efficient tools for streamlined operations. MyAssets, the solution of choice, helps you proactively address the risks associated with managing multiple properties.
Whether you are adding properties from all over the globe or updating their valuations, MyAssets offers a user-friendly platform that effortlessly handles both tasks.
MyAssets consolidates your property information to give you total control of your entire portfolio. This powerful tool simplifies tracking and management of your assets across different locations, ensuring you are always in the driver's seat of your property management journey.
Experience the convenience of managing your properties by signing up for a MyAssets 14-day free trial. The platform can be explored in detail at app.myassets.com.
