5 Uses For Professionals

Managing Risks in Real Estate By far the highest number of commission penalties, consumer complaints, and license suspensions and revocations in most states, are connected to property management. It’s not that property managers are ineffective. It’s just that the business of property management is very transaction-intensive. Though your typical agent might do a dozen sale transactions yearly with a purchase agreement and related documents, the typical property manager can do hundreds of smaller transactions. The fact that they’re smaller doesn’t make such transactions less important, and it doesn’t lower the risk involved in doing them. If you’re a property manager, you’re dealing with an owner as you market and rent their property, collect and remit their rent, and handle practically all other aspects of property management, from implementing tenant rules to maintenance. That means you’re transacting with owners and tenants, repair guys, advertising companies, contractors and so on. Every one of these transactions bring some kind of risk into the business, especially those related to financial functions. Risk management is, of course, extremely important. The property’s economic survival can be threatened by a big disaster. Record-keeping plays a significant part, with any legal action taken by others being easily disputed by existing detailed records that contest their claims.
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A substantial part of risk management is the determination of risk against reward. Take, for example, a property with a swimming pool on it. The property manager and owner must maintain a balance between the pool’s value and its risks. After a risk is identified, it should be addressed in one of three ways:
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Avoidance The pool will be taken out because the cost of insurance or the risks involved are greater than the extra rental income. Control The pool is retained but a coded lock and fence will be installed to keep the area off limits to small kids. Risk Transfer The most common way of dealing with risk is to get insurance and transfer the risk to the insurance company. A good property manager will plan for issues, keep files and records of all activities, and constantly assesses these functions to find out if change is needed. Documents and Email In different states, you only need to maintain transaction records for half a year. But it is advisable to keep them far longer, especially if you can do so in digital format. For sure, if any of the parties has a claim and someone wants to sue you for something that occurred earlier than six years ago, they will still be holding their document copies. If you’ve already destroyed your own copies, it would be much harder to plead your case. Finally, in terms of email, any court action that involves a federally guaranteed loan (pretty much all residential deals), will be able to compel you to produce emails that have something to do with your transaction and communications with your customer or client.