Property management can be a delicate undertaking if you are not particular about record-keeping. An unexpected audit could arise. A legal dispute may arise from a simple misunderstanding. Proper records are a form of insurance for any property owner.
The law dictates the records a property manager or owner should keep as well as the minimum time of storage. Some of these records include past insurance policies, audit related documents, banking and transaction records, minutes of meetings, and claim related information.
Not all property managers manage to organize and safely keep records for their property owners. Property owners need to hold their managers accountable and regularly request to have copies of important documents. Here are three reasons why having such records is necessary.
#1. Possession is Nine-Tenths of the Law
You never know when a need will arise for documents relating to your property. Perhaps the tax authorities are conducting a random audit on you and your business. You may need proof of maintenance work that you claimed as an expense. You do not want to start calling your property manager and hoping they can send you the documents quickly.
It is safer to make a habit of requesting and keeping electronic copies of transaction records, inspection, and audit reports of your property. Back them up if necessary. It serves to keep your property manager in check because they know you are a hands-on owner.
Sometimes, your relationship with the property manager may become frosty. It is sometimes inevitable in human and business relationships. You do not want to have to ask for your records when trying to move your business to another manager.
When you own several properties, you need records to inform your choices. For instance, you may realize that properties in a certain area are not yielding as much rent as you could get somewhere else. You many need to ask whether you should dispose of a particular property?
It’s important to have updated records that are organized and preferably digitized. This gives the person that needs it quick and efficient access whenever they need it. It saves all parties involved time and money.
Having not only access but also possession makes for faster decisions. If someone is interested in buying rental property you own, you could pull out records and show how much rent you collect. At any given moment, you can correctly value that property.
#3. Knowing Your Business
Finally, you want to find out the ins-and-outs of the business you have invested in. The real estate business has many moving parts and records help you ask the right questions to learn.
A good owner should understand whether the yield they are getting is good enough for the size and location of the property they own. Could some renovation increase the value of the property? Such discussions are crucial in your relationship with the property manager.
You also need to discuss maintenance costs with the property manager. Are they justifiable and is there a way of keeping them down? Such tacit knowledge only passes to you when you get access to your property records. Later, you may find the confidence to manage a property by yourself and handle all paperwork.
PMI JCM Realty Group
There is an abundance of business management software today. Your property manager has to be able to guarantee you access to your property records in real time. This is an important question to ask when screening property managers.
PMI JCM Realty Group is trusted by thousands of property owners. PMI JCM Realty Group’s brand promise is centered on excellent communication right from onboarding of new property owners. Each client has access to an online portal where they can access monthly reports of their property. Monthly reports include expense and tax statements, which is a huge relief for clients.