Learn about property management and how you can benefit from it

Amal Ali 24 Nov 2022

In today's article, we will discuss with you an important part of the real estate investment sector, which is property and real estate management.

After the ability of the real estate market in Egypt to prove its strength and stability and to achieve impressive profits in recent years, the demand for many individuals to enter the real estate field has become much greater.

As a result of this strong demand, investment in real estate is no longer limited to those with real estate experience and great market knowledge. Rather, the average citizen and everyone who can afford part of the capital tends to achieve profits by entering the field of real estate.

Due to all these changes, some investors sometimes need to seek the help of individuals or companies with experience and specialization in the field of real estate to ensure the highest guaranteed profit return from their property and real estate. In this topic, we will answer the following questions:

What is the property and real estate management?
What are the types of property management?
What are the most important features of the property management service?

If you are interested in increasing your real estate information, follow all the topics that we publish weekly on the Inland website. We recommend that you also read these topics:

What is property management?

Simply put, property and real estate management can be defined as a service that individuals and companies use to seek the assistance of a third party to supervise the rental and operation of real estate and ensure a profitable return from it.

This service can be provided for all properties, including land, homes, commercial buildings, offices, and shops.

The property and real estate management service include supervising the rental of property, carrying out all maintenance work, and controlling and managing the property. All this is provided to you as a service without the need for you to know how to manage real estate.

The concept of real estate management was not popular in the past, but it spread with the increase in investment and commercial projects and real estate. Also, not all owners are now able to manage their real estate by themselves, so another party carries out management, maintenance, operation, and rental tasks on behalf of the owner.

As a result of the emergence of a new need in the real estate market, specialized companies in real estate management services began to appear, and these companies began to increase. In the next paragraph, learn about the types of real estate management services and how to obtain them.

If you are considering investing in real estate and are hesitating between buying or renting, this article will help you decide whether to rent or own. How do I make my decision? Get to know each of them in 4 points.

Types of property and real estate management

Property and real estate management differ and can be divided into three basic types as follows:

Manage by proxy:

In this type, the owner appoints a specialized real estate company or office and agrees with them to assume the responsibility of managing his property or real estate in exchange for a certain percentage of the real estate income that the office charges.

Internal management:

We find this type of service in large companies that own many projects or real estate, so they appoint teams or a department specialized in managing the real estate of the company.

You can also benefit from the internal property management service if you purchase a real estate unit belonging to an administrative or commercial building, and the developer company of the project provides a system for managing buildings and real estate.

Owner manager:

This is the traditional type of real estate management that most owners resort to. This type is considered good and viable for those who own few properties that can be controlled and supervised directly.

Also in this type, the real estate owner can seek the help of the real estate security guard to supervise the maintenance and rent of his real estate or to seek the help of individuals such as brokers.

How do property management services work?

By Now you may be wondering how you will pay the property management companies. Here are the most common models that are used in this field.

Percentage of the property rent:

It is the most common model used by real estate management companies, especially in residential buildings. In this case, the real estate owner signs an agreement with the company, which gives them the right to rent the residential property to other tenants without the need for the landlords to intervene. The company charges 10% to 15% of the rent, and the rest of the rent goes to the landlord.

Agreeing to pay a fixed fee:

Real estate management companies resort to this model when supervising the management of real estate buildings or vacant lands that are not subject to rent. The main objective of the service is to work on preserving plots of land or buildings and ensuring that they maintain their quality and follow up and carry out periodic maintenance work. In this case, there is no rental return provided by these properties, so the companies obtain fixed monthly fees from the owner of the property.

Fixed fee:

This type is used for small real estate units with features that ensure that customers are willing to rent them. Because of the distinction of these properties, real estate management companies contract with the owner of the property and pay him a fixed amount of rent every month, and the company obtains its profits by offering the property at a higher price and obtaining the difference in the rental price.

A revenue share:

This type of contract is used in commercial, administrative, and retail real estate. In this case, the owner of the property contracts and agrees that the management company transfers the property and uses it in one of the commercial activities, and instead of the owner of the property obtaining a rent amount, the company pays a percentage of the revenues or profits. There are also mixed systems that combine the payment of a fixed amount of rent and part of the revenue.

Advantages of property and real estate management services

If you are a land or real estate owner, you will wonder what is the benefit of resorting to the property management service.

In the following points, learn about the most important features offered by the property and real estate management service.

If you do not have sufficient experience to rent and invest in your real estate, the service saves you the trouble of searching for a tenant and guarantees you a stable financial return from your real estate.
Evaluating the property and its value in the market and determining the appropriate rental rates for it through the real estate management company conducting a comprehensive market evaluation.
Collect monthly rents at a specific and fixed time. Sometimes landlords find it difficult to collect fees from some tenants, which negatively affects your investment. Therefore, real estate management companies completely exempt you from this issue, as they have systems for collecting rent, and you are not affected by the collection process, so you get your rent regularly.
The real estate management company automatically markets and advertises your property, which ensures that your property is placed at the forefront of the properties available for rent so that tenants find it easily.
Evaluate rental offers and find suitable offers for the nature of your property. Experts have sufficient ability to evaluate offers and experience to find good tenants. In addition, they take care of the legal details that guarantee you the commitment of the tenant.
Managing the relationship and dealings between the landlord and the tenant. Where the company acts as a link and coordinates and links all parties and achieves successful and effective communication.
Supervise all maintenance and insurance work for the property regularly, without the need for you to follow up on these matters yourself.
Ensure that you achieve and comply with all legal conditions related to the property, which avoids you entering into later problems due to incomplete papers or failure to follow up on your taxes.

The concept of a mandatory lease

A mandatory lease contract is a type of real estate management, where some real estate development companies offer their projects, specifically commercial and administrative building projects, and promote them by introducing the item “There is a mandatory lease contract”, which is a point that means that the developer company will be fully responsible for leasing your real estate unit on your behalf for a specific time.

Mandatory lease contracts are considered a point of attraction for some individuals who are looking for a guaranteed way to invest. All they have to do is pay the price of the real estate unit, then take advantage of the mandatory rental feature and obtain a fixed financial return.

But in this regard, you should always be careful when signing contracts, and make sure that the company is providing this service and that it is not just fake propaganda to attract customers.

To be sure, look for binding clauses in your purchase contract. Some companies also offer units at a higher price in exchange for providing the mandatory rental service.

If you are looking to buy a property, you should avoid some mistakes in real estate contracts. You can read this article to find out more information.

6 Key Points Will Help You Avoid Mistakes In Real Estate Contracts

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