The way to purchase a property abroad and manage it remotely safely
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By Nir Bevagni
One of the concerns of Israeli investors in investing in real estate abroad is the question of remote property management, and rightly so. One of the benefits of investing in real estate in the US in general, is the existence of regulatory, legal and business infrastructures that support the ability to manage assets remotely in the best possible way, without any equivalent elsewhere in the world. In this article we will review and explain how to utilize these infrastructures to achieve the ability to test control and remote management of a leased real estate property easily.
US Real Estate Investment: The Way to Proper Management
Property management companies operate in the United States. There are licensed asset management companies and there are unlicensed ones. Of the licensed asset management companies there are better ones while there are less good companies. For this, we have devoted a separate article explaining how to locate and filter a good management company. Once you have sifted through a good management company, there are common concerns and now, we will offer the easy ways to deal with them:
The first challenge in remote asset management is verifying the truthfulness of the findings. On a sunny or cloudy day, an investor gets a message from the management company about having repairs done at home. The reason may be a tenant's complaint and it can also be reported by the management company that entered the tenant's house who left and found problems.
The investor who received the message from the management company should ask himself several questions:
Is it real? Is this really my property? The answer is that it is easy to verify this. When purchasing the property, it is recommended that you check with a qualified inspector and ask him to provide you with hundreds of photos of the property. The inspector should then be asked for the serial number of the expensive systems in the house, such as: air heating systems, air cooling and water heating. For these, you have nothing to worry about. A well-organized, well-maintained management company with a license will take care to provide you with pictures of the findings that support their claim regarding the defects. A comparison to the inspector's report you made before the purchase, as well as the photos, will help you easily ascertain whether it was damage that existed before or whether it was damage that occurred at the time the tenant was. Is there a warranty for repairs? The answer is that it is always worthwhile to understand, depending on the nature of the damage, what the root cause of the defect is. Is it as a result of natural wear and tear or damage done under the responsibility of the tenant. Accordingly, an orderly management company will hold in its possession a deposit of the tenant which will be used against damages under his responsibility. What is the need for treatment? The management company has an interest in a golden house. The better the house is the easier it will be for them to rent the property at the maximum price and without hearing from the tenant. This interest is very close to your interest as the property owner, but is not the same. An investor who is interested in a quality income-producing property will want industrial quiet and a property in good condition. However, there is still the cost-effective consideration. We are not necessarily interested in turning a property into a new one and also when it comes to cosmetics there is a certain level of finish or wear and tear that is reasonable and acceptable to the area. In this context, here comes the challenge facing the management company to understand what is needed in the requested repair. Of course there could be other reasons for the need for repairs, such as a periodic municipal inspector check. Therefore the principle is to understand what the root cause in the garden is required treatment, and accordingly decide on the need. The best response to the problem? When there is a defect in the property, many times, there may be a number of possible courses of action. One response may be a superficial plaster treatment, another response may be a treatment that will solve the problem from the root, and in contrast, there may be a response that will be characterized by repairing a defective system or alternatively replacing it. It should be examined according to the specific case what the best response to the defect is and a good management company has a role to help you with that. For example, when the air heating system breaks down, you should pay attention to the component that broke down and the age of the system. Accordingly, there is a point in time when the high cost of care, weighted by the fact that the system has reached the end of its life time, will make us prefer to invest in a new air heating system. Most often, this is a point that we consider in the CAPEX plan even before purchasing any property and property as an examination of all the other expensive systems in the property. It is important to emphasize that this principle is also true for other systems in the property such as the roof of the property. In this context there is a concept in real estate appraisal called the effective age of the property, and it is different from the year of construction of the house. In some cases, the best response to the problem will be clarified as part of sending a professional to the property, who will provide a suggestion on how to repair and together with the cost of repairing his proposal.
Property management abroad: weighting the costs of repairs and their implementation
After following the previous steps, we have come to an understanding of the problems that require a response, as well as what is the appropriate response to the problem. Accordingly, we also have a price quote for the necessary repairs. Accordingly, there are a few very simple steps to make sure that the proposed correction proposals are priced correctly.
First, ask for identifying information as needed, such as the model number and identifying information. When it comes to the costs of purchased equipment or materials, Google Search can easily check the price range of the equipment once you have this information. In addition, there are sites such as HOME DEPO, which centralize information for most equipment, devices and materials required in this field.
For labor costs, you can use tools like https://www.homewyse.com/. In this site you can choose the job description and get the cost estimate for it.
As we explained in the article about a good management company, such a company will take care to employ contractors and professionals who are not employed by it, so there will be a conflict of interest between the management company and the owners of properties to receive repair service from the best professionals, and we emphasize the word good and not necessarily cheap. Finally, after making the corrections, make sure that you have a receipt for the work from the professional, as well as relevant images after the repair. If equipment or other appliances are purchased, a copy of the warranty must be requested from the manufacturer.
In conclusion,
The key to working in such a process is easy and simple to work with a quality management company that will ensure that the process is done well and all you have to do is to be in control, receive the information, the pictures, and also receive the receipts And the responsibility for the work and document everything in your home. If it has not been clear so far, excellence in asset management is essential for the sake of quiet in the day-to-day operations!
We, in the Real Estate team, work in a number of countries in the USA and have developed relationships with organized and quality local management companies. We have worked over the years to arrange to improve and coordinate expectations with the management company regarding how we expect maintenance processes to be carried out in accordance with the expectations of an Israeli investor interested in maximum transparency and control from a distance, and as little preoccupation and day-to-day management. We are able to enforce this on the management company through the strength of our group, and the fact that behind us is the power of many investors and many assets.
Want us to accompany you and manage the deal with the best management companies? Want to make an investment where the odds are significant and the risks negligible? Contact us and we will be happy to build a joint strategy to purchase a property that has passed all the tests and the costs of renovation are known in advance and meet all your requirements!
