Rental property developers normally experience several challenges, when it comes to the long term management of the said properties. The property developers are able to transfer some of the said rental property management challenges to the property management companies they often engage to manage the properties on their behalf. Anybody considering putting up houses for rent should, at the very least, be aware of the existence of these challenges. He or she shouldn’t, however, be discouraged by the challenges: because there are ways in which they can be overcome. That said, a person who gets into the business of putting up rental properties without fully appreciating these challenges is likely to end up being greatly discouraged. So it is best to anticipate these challenges as an aspiring rental property developer, and go on to make plans in advance on how the anticipated challenges are to be handled.
The first rental property management challenge is something to do with the fact that some property management tasks turn out to be either demeaning or dangerous. An example of a demeaning property management task would be that of unblocking blocked toilets: which is something that has to be done (directly or through agents) from time to time, so long as one is in this business. An example of a dangerous task on the other hand is that of painting high walls in a multistoried apartment block, or that of repairing a roof. Those are tasks that have to be carried out, directly or through agents, from time to time so long as one is in this particular business. When putting up rental properties, you need to be ready to be called upon to do these things from time to time. True, you may not have to do them personally (you can always hire ‘agents’ to do them for you) but you would still be ultimately responsible for them. The real challenge is in the fact that even when you have the money, it may not always be easy for you to get people willing to do these sorts of tasks for you.
The second rental property management challenge is something to do with the fact that (almost inevitably), some tenants turn out to be difficult people. So you end up having problems with things like rent collections. You may also end up being called upon to resolve conflicts between tenants every once in a while. You may hire a property management company to handle these things for you, but so long as you are the property owner, you are the one who is ultimately responsible.
The third rental property management challenge is something to do with the fact that (contrary to widely held notions), the rental property development business is a low profit margin business. So you are likely to find yourself having to balance things carefully, if you are to end up with some profit at the end of the day. Things can be particularly tricky if you have financed the establishment of the rental units using a loan. In that scenario, you have to devote part of what you collect, in terms of rent, to the repayment of the loan. Another part of what you collect from the rent goes to the payment of the property caretakers or the property management company you have engaged to maintain the property for you. After all that, you are likely to be left with very little.