We know from experience that these owners are looking for the income without the headaches. They are paying for it, so why shouldn’t they get it? Local owners frequently retain a semi-active role with the properties- approving tenants, vetting vendors, etc. Not so with remote owners. The distance between their home and investment can increase their feelings of unease. This also necessitates greater levels of trust and reliance. Property managers can either add to unease or dispel it.

The checklist when vetting a property manager for a foreign owner of local property revolves around technology and trust/accessibility.

Trust/Accessibility:

• Assurance that bids for projects, insurance, etc. Will be competitive
• Notification of Community changes (zoning, crime, etc.)
• Reliability that rents will be competitive
• Vacancies will be kept to a minimum
• Properties will be maintained according to owner’s standards.

Technology

• Online visibility of their accounts
• Access to security camera images
• Electronic fund transfer capability
• 24 hour access via an emergency phone line.

This list isn’t exhaustive. It’s a jumping off point. You may notice these requirements differ from the needs of local owners mainly in terms of trust and oversight due to the physical distance and infrequent access logistics.

Many owners look at New York property as a long term value investing play. They need to be kept abreast of changes at the local community board level and zoning board levels.  If a property is rezoned, creating more FAR, owners need to know immediately. The same goes for bars, schools, and developments opening nearby.

Regarding technology, all worthwhile property management software these days allows online access for both tenants and owners. Additionally, it’s relatively inexpensive to purchase and install security cameras and hardware to monitor property remotely. The increased sense of awareness these investments offer can be worth far more than their cost to any investor.

Modern Property Management- Managing to Metrics

Property Managers need to advocate and implement financial visibility and operating efficiency. Unlike management in many other fields, property managers have largely neglected management evolution for too long. Despite Ford developing the assembly line roughly 100 years ago, building superintendents still lack processes to replicate strong consistent results on a weekly basis. Although Automated Clearing House (ACH) has been around for years and years, most property management companies still rely on postal carriers to deliver rent/maintenance/common charges. These seem like the tips of the iceberg.

Techniques have been developed to increase efficiency and visibility in business and organizations. We aren’t suggesting superintendents become automatons or that everyone be required to link their bank accounts to their property management (though sometimes these would be improvements). Instead, we advocate increased visibility and efficiency.

Wherever possible, staff responsibilities and routines should be spelled out. This is down to the details of how staircases are cleaned top to bottom, at what times, and how long it should take. Managers should inspect the results each week and keep recorded, trackable results. This performance tracking is great for employee review and customer satisfaction.

The cash conversion cycle is another passion of ours. If, rather than traditional postal delivery (assume a minimum of two days), managers use ACH, it not only improves the cash conversion cycle, it also increases automation, making payments easier to track. Increased automation is good.

When you consider what’s important in selecting your vendors (property managers, mechanics, lawyers, dry cleaners, whatever), look for visibility and efficiency. Together these produce reliability- a characteristic we’re all looking for in our partners.

According to Inc., Cash conversion cycles for small businesses are predicated on four central factors: 1) the number of days it takes customers to pay what they owe; 2) the number of days it takes the business to make its product (or complete its service); 3) the number of days the product (or service) sits in inventory before it is sold; 4) the length of time that the small business has to pay its vendors. Inc. provided the following formulas to determine these factors:

Once a small business owner has these figures in hand, he/she can figure out the company’s cash conversion cycle by adding the receivable days to the production and inventory days, then subtracting the payables days. “That will tell you the number of days your cash is tied up and is the first step in calculating how much money you’ll want in your revolving line of credit,” Inc. concludes.