Property management is a field often fraught with complex regulatory and operational demands. The firms must take care of local laws, tenant issues, safety standards, etc., at all times with the utmost proficiency.
However, there are chances these aspects won’t be properly managed due to many properties, risking you losing clients. Therefore, about 89% of property management companies outsource their operations to reliable service providers to mitigate such risks. A strategic partner manages most operations and handles all situations on time so your firm and clients remain harmonious.
However, how exactly do outsourcing property management firms mitigate risks by handling the operations? Read on to find out the answer.
How Outsourcing Property Management Operations Mitigates Liability?
An outsourced property management company takes control of various operations to make sure no laws are violated, rent is collected on time, and tenants are happy.
1. Lease Agreement Preparation
Lease agreements contain various stipulations that, if improperly drafted, can expose property owners (your clients) to legal risks. Outsourcing this operation makes sure that such agreements comply with local laws, are clear, and don’t contain terms that jeopardize the property.
Therefore, the risk of tenants suing your clients for wrongdoing decreases. Outsourced property managers create standardized, legally vetted documents that address common pain points, from ambiguous clauses to fair tenant terms.
Not only that, but outsourcing lease preparation operations also helps your company align its agreements with newly introduced regulations. Thus reducing the risk of legal disputes, costly litigation, fines, or any other tenant conflict.
2. Rent Collection
Rent is a revenue source for property owners, and delays or disputes over it can collapse your deal with your clients. This is the risk many property management firms are aware of but not successful in mitigating it.
However, outsourcing this operation can exclude your company from that list. The outsourcing partner can reduce/mitigate the risk of you losing business because of rent issues because they have systematic pipelines explicitly built for such operations.
Your outsourcing partner will employ rent tracking and reminders for each property you manage. Any delay in payment for a property or in case of multiple non-payments, they manage the legal follow-ups and any necessary collection action.
If any complaints need to be filed in such a regard, the outsourcing partner can also help through the entire process. Therefore, they support you in every possible way and minimize the risk of losing a property due to rent issues.
3. Legal Compliance
Most countries have property regulations, such as in many counties of the US, where grass length must be below 12 inches. In the same way, others are required to keep pathways clear of snow, update fire safety equipment, and more.
Missing a single requirement, like someone slipping and getting injured because of failing to clear snow, can lead to a penalty. However, your company can avoid risking client relations over such compliance by outsourcing this operation.
When you choose a qualified outsourced property management company to manage this operation, they ensure the property doesn’t violate any rule. These companies partner with legal compliance specialists in different regions to update themselves about every rule.
Further, they have access to trusted contractors who can do periodic maintenance checks on the properties your firm manages. They also keep tenants in the loop so they’re aware of the rules and try to upkeep the property’s condition.
So, through this process, your outsourcing partner ensures that the properties remain compliant with federal laws, and your client stays out of legal exposure. Thus mitigating your risk of dealing with any unexpected legal matter and losing a client.
4. Tenant Screening & Management
The biggest risk of managing a property is renting it to unreliable tenants. Because then, you’ll not only have to handle the tenants but also make amends with the property owners. In most cases, tenant disputes occur due to negligence during the screening.
Now, it’s understandable that when managing numerous properties, there’s always room for errors. However, such cases can risk your reputation along with the lost business. So, to avoid the risks, outsource tenant screening and management operations.
The outsourced property management company can help your firm rent properties to vetted tenants. The ones who clear screening processes such as financial stability and background checks for behavior. The outsourcing partner facilitates the entire screening process on their own and presents you with the best candidates.
Besides helping to rent, they also manage those tenants’ grievances professionally, diffusing tensions and resolving issues efficiently. This approach minimized the risk of conflicts between tenants and property owners.
Therefore, your company can hold onto properties without reducing your operational value while minimizing the risk of impacting clients’ revenue as the rent keeps flushing money.
5. Vacant Property Registration
Even when a property you manage is vacant, it remains exposed to risks. To make it stay out of it, you’ll need to add extra operational power at your company, which will cost you and still will have a chance of error, resulting in the risk of penalties.
Instead, you can partner with a reputed property management outsourcing company and let them handle the vacant property registration, security, and maintenance operations. Outsourcing transfers the risk of making mistakes as they have systematic procedures running this entire operation.
They partner with reliable contractors for property maintenance and security. They help with vacant property registration, like filling out applications and follow-ups. Additionally, they make sure properties remain compliant with their area codes to avoid fines.
6. Communication with Municipalities
Responding to city/municipal correspondence is a part of outsourcing property management services, and it can free up your operations department. Communication with municipalities is a crucial back-office operation that takes time and effort.
Undoubtedly, your property management firm can handle this operation, but it’s also true that there can be miscommunications when managing hundreds of properties. Even the slightest miscommunication can result in legal consequences. Therefore, there’s always a risk of small issues getting big and taking a toll on your entire company’s operations.
However, outsourcing partners eliminate this risk as they’ve dedicated teams for each operation. Therefore, the communication department takes every precaution to manage correspondence with utmost attention and expertise.
Whether the correspondence concerns a property inspection or unpaid electricity bills, they ensure the tenants are prepared. Therefore, the risk of failing to answer correspondence on time and facing legal issues is mitigated.
7. Insurance Claims Management
Insurance claims are complex to handle as they require a lot of documentation, communication and follow-ups. Outsourcing this operation won’t transfer your or your client’s authority over insurance, but it will help streamline the process of recovering losses from property damage or liability claims.
The biggest risk when claiming insurance is denial due to improper documentation or missed deadlines. An outsourced property management partner ensures that doesn’t happen by assisting the claimants with the entire process.
From filing the claim to submitting and doing the follow-up, they can take responsibility for it. Thus, the claims can be settled without the risk of errors from your end, and your clients will remain happy about it, resulting in more business.
Outsource Property Management Operations To Avoid Exposure to Risks
Losing a client is the biggest risk a property management company faces. Lack of efficient management of numerous properties and cluttered operations is why clients terminate their contracts with property management firms.
However, outsourcing property management operations can do wonders for your business. All the back office tasks, such as tenant collection and management, property maintenance, rent collection and more, can be delegated to their experts.
Outsourced firms will act as your extra pairs of hands, helping you retain your clients for longer and saving you from the risks of losing them. Also, they save your clients as well from penalties and legal consequences – a win-win situation for all.
If you’re ready to outsource property management operations, contact IMS Datawise. We skillfully manage every aspect of property management, from mortgage and compliance to vacant property registration.
No matter what your concern is, we have ample resources to support your operations and help you scale your business. Get in touch with us today to learn more about what we can help with and how.
