Long term successful investors employ pro-active property managers rather than just any property manager so that long term and short-term goals are merged into an overall strategy. What does this mean?
It’s understandable that an investor’s most immediate need is maximise income and minimise expenses. Most investors are borrowing money and they and their managers become obsessed with immediate return because it’s often crucial to the ongoing survival of the investment. The worst case scenario, stated simply is: no rent = no income = no loan re-payments = no investment.
For experienced investors, however, income is one part of an overall strategy. Most have three main aims: optimum income, optimum expenses and a focus on capital appreciation. They choose an agent who will optimise their income-to-expenses ratio over the long term and who has expertise to look after the big picture.
For example, when the floor coverings in an investment property need replacing, buying the cheapest carpet will certainly minimise expenses at the time of expenditure; however, if the carpet doesn’t wear well the saving may turn out to be less cost-effective in the long term than a carpet that was a bit more expensive but lasted twice as long.
Capital growth is usually the most important of the investor’s three aims and it is often overlooked by property managers with a narrow focus on management rather than investment. If investors hold their property for any length of time (which most successful investors do) capital growth becomes the most wealth-producing part of the overall investment strategy. Only a good property manager will keep the big picture in view and advise the investor about events impacting on the growth of their investment. When selecting an agent to manage their property, investors should assess whether the agent is qualified to give this kind or advice and make sure the management programme includes regular inspections and written reports (with photos & advice).