Traditional Brokers to Property Management Companies, a Swift Transition!

19 May

Real Estate investment is your single largest investment and it becomes a matter of concern when it stays idle or rent without reliable and competent care. It is not always true that if your property is idle property, it is safe. The chances of unauthorised and illegal use increase when you are staying in another city or country.

Even if the property has a tenant, it is not easy to manage everything along with your full-time day job. Collecting rent on time, responding to maintenance work, getting repairs done on time, being available for any emergency and much more. To ease out the job earlier property owners used to hire a broker to look after the management of the property and tenant.

However, NRIs are showing increased interest in using property management services provided by companies, especially start-ups. This shows a gradual shift in the mindset of real estate investors since traditional brokers were the preferred choice earlier. If sources are to be believed, about 4 million properties in India belong to NRIs and are not represented by traditional brokers.

Property

Why this sudden shift?

Trust Issues – According to experts, one of the major reasons for the shift in the interests is trust issues. There are two misaligned and out-of-date business practices under which most traditional agents work and many earn tremendous incomes. Unfortunately, these business practices are so conspicuous that they largely contribute to massive mistrust of the entire industry.

Higher Rentals – Brokers prefer giving the properties on rent to families, whereas Professional Property Management Companies have recently started renting out the properties on per bed basis. Well, that is much like a hostel but it fetches 20-50% higher returns. Since it is the management company’s job to look after the safety of the property, owners do not mind this either.

Taking care of Insurance and taxes – A traditional broker is more like a salesperson for your property who finds a new tenant for a vacant property. However, Property Managers apart from taking care of managing tenants and their issues, they take care of your insurance and help you file taxes. Property Management Companies in Mumbai and in other cities in India, often collaborate with well-known insurance companies

Better Management – It is one of the duties of a Property Management Company regularly visit and check your property. A property being misused and being badly maintained is very unlikely if it is regularly inspected. Also, the cost of maintenance is lower as the repairs are handled at the early stage.

Extra perks – Many times as an owner you want to have a tenant on your property that fulfils specific criteria and comes from a certain background. You may want to have only married couples or only families or only bachelors.  Unlike traditional brokers, Property Management Companies take care of such needs. Not just that, there are a lot of extra tasks that a management company does for you like, taking care of agreement and documentation, apartment handovers and evictions, imposing a late fee on rent payment (If required), screening prospective tenants and much more.

No wonder there is a shift in the interests in Property Management Companies from traditional brokers. Hiring a property manager means reducing the clutter. However, everything has its own pros and cons. It completely depends on an individual’s need how he would like to handle his property or from whom he would like to be handled. The only thing that is to be kept in mind before deciding, research well and take a well-informed decision as real estate investment is your largest investment.

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