If you own a rental investment property, you’ll probably want to hire a company to help you manage it.
What should you pay attention to when signing a contract with a real estate operator?
When investing in real estate, we focus primarily on achieving the highest possible profit. Therefore, an appropriate operating strategy is necessary to maximize the revenues achieved. Find out why a commission from profit is more advantageous than an agreement with the operator for a fixed rental value.
Settlement of rental income
Cooperation with a real estate operator brings many benefits, provided that it is based on transparent principles.
An experienced operator who focuses on maximizing profit strives to settle the rental of real estate based on commission income.. The margin for commission settlement is usually around 15-25%, while for fixed rent it reaches 25-40%. However, it is worth noting that the fixed amount the owner receives is usually lower than in the commission system.
The risk of commission settlement lies on both sides, but this form is more beneficial in the long term. Economic fluctuations, for example those caused by the situation we saw during the COVID-19 pandemic, affect both the owner and the operator.
Benefits of settling commission on profit
In the model in which the commission is calculated from the profit, the operator also incurs financial and time expenses in preparing the facility for the next rental. Therefore, he tries to optimize costs and maintain a high level of real estate service, because the amount of his remuneration depends on it.
The property rental manager’s commission includes taking over the responsibilities related to comprehensive service, i.e. preparing the property for rent and servicing the apartment during rental. However, experienced managers have their own technical facilities and cleaning service, w hat allows you to reduce the costs of operating the apartment.
It is often the case that the lower the percentage of commission charged by the operator, the fewer real estate services are covered. Therefore, it is worth carefully analyzing the contract and checking whether a given settlement model will certainly relieve the apartment owner.
The choice of cooperation model is important
For a person who is at the beginning of the journey of investing in real estate, finding the right premises is only half the success. It is also necessary to establish cooperation with an operator that will allow you to obtain the best possible return on your investment.
The choice of cooperation model affects the profitability of the investment. Property managers provide continuous service by taking financial and physical control over the rental.
