The second decision you make after you have decided to invest in real estate in the United States is to choose the management company you will work with.
Asset management in the United States is a large-scale and developed industry. Due to the size of the American market and the need to effectively manage many properties, there are many asset management companies who operate in different sizes, types of specialization and geographical location.
Since we, as Israeli investors, are not physically present in our property area, we need a local partner who will carry out a wide range of operations related to managing our assets.
Moreover, an effective asset management company in the United States is also the key to a high yield over time. Working with an expert company saves unnecessary expenses, unpleasant surprises and provides you with support to further develop your investments in the United States.
Typically, a property management company is registered and controlled by the state in which it operates (for example, this is the case in Ohio) – the company has a property management license on behalf of the property owner and it is the legal representative of the investors to the lessees, the regulators and the law enforcement authorities.
Naturally, the management company has costs that you will have to cover for its activity during its management period for your asset.
Working with the management company makes it easy to manage property remotely, use it as a focal point for all the issues related to the property and leverage its professional expertise as they are familiar with the local real estate market and able to locate the relevant professionals, while maintaining a level of expenses that will allow you a constant revenue stream.
Responsibilities of asset management company?
Asset Management Company takes upon itself the following range of activities related to the asset or assets you have acquired in America:
- Initial preparation of the property for rental – whether it is ongoing maintenance or improvement of property, the management company takes care of the issue of renovation before the beginning of the rental – painting, repairs, replacing carpets and lighting fixtures, checking integrity and more. In the event of improvement – upgrading the interior design, adding electrical appliances, renovating and replacing curtains, systems, etc. The management company will be responsible for bringing the property to its desired condition and to improve the attractiveness that will enable faster rent. A well-executed preparation of the property prior to the beginning of the lease may save future malfunctions and expenses during the rental period, as well ensure tenant satisfaction.
- Marketing the property and pre-approving the appropriate tenants – the management company handles the issue of marketing the property to potential customers – by signage, working with brokers, advertising in various marketing channels, digital advertising and more. In addition, the company handles the examination of potential tenants – their repayment ability and preliminary interview.
- Handling the asset rental – After locating the customers, the property management company handles all rental related activities – preparing the rental contract, determining the amount of the deposit and collecting it, signing contracts, due diligence for the tenants (credit history), collecting the first payment and handing over the apartment to tenants.
- Payments, insurance and fees – leased properties are obliged to register and pay various fees – neighborhood, municipal, state or federal. The management company handles, pays for and renews fees. In addition, the company collects the bills for electricity, gas and water from the tenants. It also deals with insurance of property or assets, and handles registration, payment and work with the insurance company on a regular basis or in the event of an insurance event.
- Regular maintenance and work with tenants – throughout the rental period, the management company handles the ongoing maintenance of the property and the handling of malfunctions or other emergency events that may occur during the rental period. The management company is the one that serves as a daily address for tenants, on any subject related to the property, payments, malfunctions and any other issue related to the apartment.
- Eviction of tenants – Sometimes, as a result of difficulties encountered by the tenant, the lease must be terminated, and they must be evicted. This is a structured process that is carried out with the legal authorities in the relevant state and handled through the management company, as the representative of the owners.
- Property sale – In the event that the investor wishes to sell the asset, the property management company will assist in working with real estate agents and realtors and will also carry out all necessary actions towards the sale of the property.