Successfully managing a property is indeed not a ‘walk in a park’ or an easy task. It requires a specialized set of skills proven with years of experience to do that. Several developers consider hiring a property management firm as an additional cost. There is a common notion among many developers that if they manage their own property, it will result in more savings and a reduction in the operational cost of the building, thus maintaining its property value. However, that’s miles away from reality.
Several developers don’t have the necessary experience as well as complete know-how on various landlord-tenant laws and other laws regulating the real estate sector. This often costs the developers and landlords dearly in terms of legal penalties. Furthermore, many developers fail in the adoption and implementation of building management technologies or PropTech which costs developers a fortune in terms of poor maintenance of the building, high operational cost, surge in service charges for the residents, decline in tenant retention rate, and lower occupancy. These factors also have a profound impact on their Return on Investment (ROI) for the developer. Thus, in all fairness, it makes sense for the developers to hire a professional property management firm as they can assist developers in making wise decisions and taking care of their tenants while they focus on the ‘greater good of their business.
It is also crucial to hire an experienced property management firm to manage your assets as an inexperienced property manager can cause equal damage to the property value. Several developers prioritize the service fee while shortlisting the property management firm, however, that’s not a wise practice. A saving of AED 30,000 in service fee can cost developers 10-20 times more if the property manager fails to address tenant grievances, satisfaction rate, service charges, operating cost, occupancy rate, sales & marketing of the units, and timely maintenance and upgrades of the building due to poor management. Thus, it is always important for the developers to prioritize the experience, and expertise of the property management firm or property managers over the service charges.
How Can an Inexperienced Property Manager Devalue Your Property?
Here are the common mistakes committed by the many property managers which can adversely impact the value of their property:
1. Lack of Maintenance & Upgrades:
Timely maintenance and upgrades can ameliorate the condition of the property and ensure its value stays stable. However, developing a viable plan to ensure timely maintenance is still trivia for global property managers as well as developers.
Due to the lack of effective management or negligence of your property managers in conducting timely maintenance & upgrades, the property can fall victim to wall crack, ceiling, peeling paint, dampness, timber decay, fungi, sagging or deformation, erosion of mortar joint, insect or termite attack, roof defect, etc. Lack of timely maintenance & upgrades is to blame. This will result in a substantial decline in the condition and the value of the building.
As an experienced property management firm, Kaizen AMS addresses the following issues through effective planning. Our highly experienced property experts do a well-thought analysis of the costs involved in performing the maintenance & upgrades and design a well-analyzed budget to manage future expenses. Kaizen AMS’ experts always make sure that they come up with a plan that is in the best interest of the building’s performance as well as the pockets of the developers.
2. Higher Time to Market:
Marketing the property has become quite challenging in the last decade. Earlier, developers used to rely on the traditional methods of promoting the property, either through networking or newspaper advertisement. However, the advent of technology has completely disrupted the real estate industry. Unsurprisingly, many developers are still struggling to comprehend technological changes. Today, most of the properties are sold online in their initial construction phase and on social media in their initial construction phase. Developers are losing big for missing out on attracting buyers to their properties by not embracing the technology and by working with an inexperienced property manager. This is resulting in properties being sold at lower prices which are negatively impacting the property value.
Furthermore, several traditional developers & their property management firms neither have technology nor systems in place to document the details of property and buyers nor have the knowledge of the right platforms to market their property. This is resulting in higher time to market (TTM) which has a drastic impact on the cash flows & the overall revenues of the developers.
3. Lack of Proper Tenant Screening & Document Management:
Tenant screening is another ‘boil the ocean’ task for several traditional & small developers and landlords. They don’t have a viable process to conduct tenant screening which is an integral responsibility of a developer. This is maximizing their potential liabilities and possibilities of handing over their properties to the wrong tenant. Furthermore, lack of tenant screening is also an invitation to rent payment defaults & delays which can impact the revenues and brand image of the developer and ultimately results in the decline of the property value.
Several developers & landlords with a lack of technology usage in their business operations also face challenges in managing the documents submitted by the tenants for screening purposes. This often leads to missing out on or losing important tenant information which can create a problem for the developer in the long run. Lack of document management process can also lead to an inaccurate accounting of rental income and poor planning and strategic decision making.
It is also crucial to screen retail tenants in accordance with the retail strategy/tenant mix plan. A viable and well-thought tenant mix plan can play an important role for the retail sector in designing a strategy to attract tenants. If a property manager identifies an anchor tenant prior to the completion of a commercial property or a new mall or series of shops it can attract several new tenants. The property manager must also brainstorm on the concepts that will complement other concepts to multiply the tenants and increase the occupancy rate of the property.
4. Lower Tenant Satisfaction & Retention Rate:
For decades, several traditional developers and landlords have managed their properties themselves. This was easier back then as there was not much competition. Moreover, due to the limited number of developers in the market, tenants also didn’t have much choice. However, with the passage of time, the industry has become much more competitive with the entry of several world-class developers in the UAE. Thus, it has become pivotal to adopt newfangled technologies to offer higher value to the tenant within limited rent & service charges. This will uplift the level of tenant satisfaction score and retention rate and allow the developer to gain a competitive edge over rivals.
All this might look simple on paper but accomplishing it has been a ‘hard nut to crack’ for several property managers globally, creating an urge to choose ‘Kaizen AMS’.
5. Invitation to Legal Problems’
With the advent of technology, it has become much easier to access information in a few clicks. This has empowered the tenants & residents more on their rights.
Although it is good practice to know more about your rights in many cases, it has also given an invitation to several legal challenges for the developers.
A minor error of the property manager has resulted in tenants filing hefty lawsuits against the developers, resulting in a serious loss of revenue and reputation. Thus, it makes sense to hire a property manager who possesses a thorough knowledge of local laws & regulations to comprehend these situations.
The Kaizen Difference:
Without a shadow of a doubt, hiring an experienced property management firm can assist the developers in overcoming all the pressing challenges discussed above, to keep increasing the value of a property:
Here are some ways through which Kaizen AMS’ Property Managers Enhance the value of the property:
1. Ensuring a Robust & Compliant Building Design:
Hiring the right property management firm during the construction & design phase can assist the developers in constructing robust building infrastructure which stands tall on compliance. During pre-occupancy, property managers assist developers in procuring all necessary operating contracts.
Kaizen AMS’ Property managers are well-equipped with advanced property management technology to overcome many issues that arise during the design & construction phase. We continuously invest in developing as well as in investing in PropTech software to curtail any possibility of defects as Kaizen AMS understands that such errors can seriously damage the reputation of a developer, and can adversely impact the value of the property. Furthermore, our property managers always keep an ‘eagle’s eye control’ on the budgets allocated by the developers to ensure the construction of the building is completed within the assigned budget by developing a well-thought budgeting plan.
To know more about the crucial role property management firms can play during the design and construction phase of a building, kindly go through an insightful article titled –“Why are developers not consulting Property Managers during design and construction?” by Mr. George Malakos – Business Development Director at Kaizen AMS.
2. Timely Renovation & Maintenance:
‘Old is gold’ – unfortunately this phrase doesn’t stand right in the case of property. Irrespective of how better the property looks today, as time passes the building gets exposed to wear & tear which is very much noticeable by the buyers and has a detrimental impact on the value of the property. Building infrastructure, plumbing, and electrical arrangements & setups get obsolete which reduces its charm among the potential buyers & tenants.
With the passage of time, buyers have now become more aware and conscious and they closely inspect for defaults and patchwork done on the property. They also thoroughly check for ventilation and sunlight. These factors have a deep impact on the value of the property. Conducting timely up-gradation and home renovations are the ‘cherry on the top’ as they transform the condition of the property and prevents it from going outdated.
The significance of timely renovations can be understood from that statement that a two-decade-old property can attract more buyers and price compared to newly furnished if it is well-maintained. An experienced property manager can play a major role in keeping the property up-to-date and as per the dynamic requirements of the buyers & the industry. Furthermore, property managers can work around renovating and upgrading all available amenities such as – swimming pools, community centres, gyms, children’s parks, etc. to galvanize the value of the property and keep it as per the dynamic requirements of modern buyers.
Kaizen AMS’ property managers ensure timely renovations of the building to maintain its elegant interior & exterior. In this journey, our property managers also tie up with the building maintenance specialists such as – contractors, plumbers, technicians, and electricians and also leverages the power of advanced Building Automation System (BAS) to get timely updates on the current condition of the building and perform renovations accordingly.
Kaizen AMS’ Property managers also conduct manual inspections to identify any snagging issues in the building. They often prioritize those parts of the building for renovation which are either out of date as per the building’s current code requirements or have the biggest impact on the value of the property with minimal investment.
3. Minimizing Rent Defaults through Effective Screening & Documentation:
Kaizen AMS conducts an in-depth screening and background verification of the tenants and asks for both electronic & hard copies of all relevant documents before the final handover of the property. This significantly minimizes the possibility of rent defaults or delays. Furthermore, Kaizen’s property managers work around framing viable policies & frameworks to curb any practice that can adversely impact the revenues of the developers as well as the value of the property. We professionally address the cases of payment arrears, forms of breaches, and dishonored cheques and also make recommendations to the developers on the best ways to collect arrears from the tenants.
In some cases, some of the property management firms also engage with collection agencies to assist with legal actions taken by the client against tenants. They also communicate & arbitrate all settlement arrangements with tenants.
4. Working on Reducing the Service Charges to Boost Tenant Satisfaction:
Higher service charges have been the biggest culprit in deteriorating the tenant’s satisfaction with the residence and his length of duration at the property. To ensure minimal service charges at its managed communities, Kaizen AMS’ property managers continuously invest in Property Technology or PropTech to minimize the operational cost of the building which results in lower service charges and energy bills for the tenants and homeowners.
Tenant satisfaction also has a direct impact on the property value as well as the brand image of the developer. It also positively impacts the ability of the developer to attract more tenants to their properties, resulting in more revenues for the developers.
5. Making Properties ‘Smarter’:
Kaizen AMS’ property managers lay special emphasis on making the properties smarter. They liaise up with building automation firms to perform advanced technology upgrades to increase the value of the property.
Some of these upgrades include – voice control, remote access over a home, a wirelessly controlled network of devices, installing advanced security features like home surveillance systems to send intelligent notifications, lighting control, and automated window treatments. Our managed communities are under the surveillance of CCTV and monitoring devices 24×7 to ensure the utmost security and convenience of the residents.
Smart properties have a positive impact on tenant satisfaction, occupancy rate, revenues of the developer/landlords, and above all the value of the property.
6. Marketing of the Property:
Kaizen AMS’ property management team starts marketing the property even before its construction is completed or ideally when it is 50-60% completed. This practice ensures targeting the buyers in the initial stage before they make their mind to go with the other developer. It also ensures property doesn’t stay vacant for long and the developer doesn’t incur a loss. Kaizen’s Property managers try to create a buzz about the property to attract more buyers and ensure the property is sold at its highest value and fetch rents that are at par with the industry’s average.
Some of the ways a Kaizen AMS’ Property Manager does marketing of the property are as follows:
- Posting an advertisement on the prominent property websites to capture most of the buyers during the initial stages of construction
- Working on the Search Engine Optimization (SEO) rankings of the property advertisements to get it more attention on the internet
- Spreading a positive ‘word of mouth’ about the property to build a favorable brand image of the developer and attract more buyers through referrals
- Marketing the property in the local real estate portals and newspapers to target buyers from every segment
- Promoting the property on signage as well as through local bulletin boards
- Tie-up with developers or media companies to advertise the property in weekly & monthly news publications
7. Prevent Legal Challenges:
Undoubtedly, hiring a professional & experienced property management firm like Kaizen AMS can protect the developers from several legal issues which can prove extortionate for them. Kaizen AMS’ property managers are very much familiar with State and Local tenant-landlord laws and safety codes. Furthermore, we also have a large team of lawyers or legal experts who have decades of industry experience. They guide our property managers on the next steps in case the developer faces any legal issues.
The top ways in which your property managers are decreasing the value of your property are –
- Not performing timely maintenance & upgrades
- Lack of technology adoption leading to higher time to market
- Lack of effective tenant screening & document management which is leading to frequent defaults and delays in the rent payment. This is adversely impacting the revenues and brand image of the developer and the value of the property
- Ineffective management of tenant grievances leading to lower tenant satisfaction & Retention Rate with lower occupancy
- Inviting legal issues & hefty lawsuits by not managing the property in a professional manner
The Need for you to Choose Kaizen AMS – (a top 3 Property management firm in Dubai)
Kaizen AMS property managers:
- Assists developers in procuring all necessary operating contracts during pre-occupancy and provides their valuable advice during the design and construction phase
- Performs renovation & maintenance of the property on a timely basis
- Conducts an in-depth screening and background verification of the tenants and also asks for both electronic & hard copies of all relevant documents before the final handover of the property.
- Continuously invest in Property Technology or PropTech to minimize the operational cost of the building which results in lower service charges
- Liaise up with building automation firms to perform advanced technology upgrades to increase the value of the property.
- Market the property even before its construction is completed or ideally when it is 50-60% completed to ensure the majority of units are sold by the time building is completed.
- Backed by a large team of lawyers & legal experts protect the developers from complex legal challenges.