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Property Management Loans & Financing

Property Management Business Loans

As we all know, the real estate market likes to fluctuate, so for all property management companies, preparing for the ups and downs of this industry is essential to staying successful, even during difficult times. 2015 was a good year for real estate and property management companies, and 2016 is also seeing promising results. Many property management companies are getting ready to see vacancy rates lowering nationwide with rents remaining strong – which is great news for property management companies everywhere, just not so much for renters! After 2008, property management companies battled with a large supply of vacant new construction apartments in need of filling, driving rent prices way down, but each year since then has seen continuous improvement.

Overall, the property management industry is expected to remain positive for the next few years, but with property management being so closely tied to the fluctuating real estate market, you never really know! As of 2015, the property management industry reached over $39 billion; this means the average property management firm brings in over $1.2 million. And for all of those property management companies out there who are worried about consolidation, just know that the twenty largest residential property management firms have less than 5 percent of total industry revenues, which is great news for the smaller scale property management companies, allowing the property management industry to be highly diverse, yet very competitive. Many property management companies are finding that creating a brand, and actually following through with what their brand promotes, are differentiating them from the rest of the industry. The most influential way property management companies are doing this branding is through the implementation of new technologies that make the renting process easier for both the company and the applicant.

Property Management Industry Trends

For 2016, the major trend that every property management company needs to be focusing on is technology; being prepared and ahead of the game can help a property management company stay on top, even during difficult times in the real estate market. Technology and property management software’s are improving and expanding the property management company industry like never before – and there are always different financing options available to help cover these much needed expenses, such as real estate lines of credit. Here are some of the emerging technological trends that will boost every property management company’s profitability, as well as increase the amount of efficient work done with less labor, allowing more focus to be spent on customer service.

  • There has been an increase in technology based real estate market intelligence and decision making tools. Property management companies across the United States are in need of technological tools that can effectively determine what product, market, and time are right. Basically, these new technologies that have emerged allow property management companies to utilize expansive data sources and statistical methodologies; some of these software’s even offer individual apartment market reports covering the top 100 markets nationally. In addition to these vital uses, local market research and intelligence allows a property management company to utilize sophisticated and timely information to ensure that they can stay on top of vital opportunities. Staying on top of current industry trends and consumer demands is vital in the property management industry.
  • Effectively screening possible residents for both commercial and residential vacancies is an ongoing battle for many property management companies today – but luckily, technological advances have fixed this problem for the property management companies willing to invest in these new systems. For those property management businesses implementing new advanced tenant and resident screening technology, owners and managers are improving profitability through ledger-level integration, rental payment history databases, in depth criminal background checks, and in depth rental credit checks. Some of the more advanced, but also more expensive, software’s offer scoring engines that return applicants with a “pass or fail” format based on a variety of factors. These advanced systems are also automatically rescoring applicants to determine if those possible tenants could qualify for a higher priced or lower priced unit, depending on the criteria. This allows property management business owners to eliminate the once tedious task of efficiently screening new applicants.
  • Tracking, managing, and successfully executing property expenses is vital for a property management company to be successful – however, this tends to be a very tedious task to manage expenses. Today, more and more technological software’s are offering fully functional, all-encompassing solutions that allow property management business owners to effectively track property expenses against the budget, as well as allowing property management companies to speed up the process without messing anything up. Online purchase order systems also effectively implement risk management processes that ensure all vendors and suppliers are in full compliance with regulations, especially (LINK4) While this software can be pretty expensive, and tedious to implement into a well established property management company that already has systems set up, it will lead to faster processing of invoices, reduce staff and time, and reduce the average number of days to pay vendors – thus, these systems will allow property management companies to save a lot more money in the future.
  • Better security for information processed online is in high demand in all major industries, because with growing technological advances and large databases comes more hacking and data sharing issues. Every single applicant wants to be reassured that their private lease documents and other data will be safe and secure due to their sensitive nature – this is a growing trend that will only continue to grow in both the commercial and residential sectors of the property management business industry.
  • Many tenants that choose to rent a residential or commercial property from a property management company usually want the added benefit of knowing that no matter what, they can get a hold of a property or facility management in an emergency – or even just to schedule a repair. This is a generation defined by wanting access to things immediately, which is why having more responsive technology based for 24/7 maintenance is important when catering to future tenants. Many call center management options are available to help a property management company be on call all the time, to answer prospect questions, help set appointments, and to essentially help a property management company lease more space. When all of this is executed well, a property management company will see increased revenue.

There are many other necessities and trends that are emerging in the property management industry today, however none of them are nearly as important as focusing on shifting business models into a more technology driven business. While most of these ventures can be incredibly expensive up front, there are a variety of loan possibilities for property management companies out there, so being aware of what options are around can help create this technological shift.

Types of Property Management Loans

Types Rates Terms Funding
Bank 6-10% 3-7 years 14-30 days
Line of Credit 5-15% 1 – 3 years 7-30 days
Alternative 6-25% 1-5 years 5-7 days
 Cash Advance 1.16-1.55 3-24 months 1-3 days

Bank Loans For Property Managers

Traditional financing definitely makes sense for any property management company that can qualify — its just not easy for many to qualify. If your property management company is able to get financed by a bank, you can expect among the best rates and terms avaible. Simply put, getting capital from a bank is the best type of debt financing available. Banks offer term loans for working capital, real estate purchase, debt refinancing and just about any other business purpose. On top of that they offer very affordable lines of credit — many with limited covenants.

  • Rates: 5-10%
  • Terms: 1-25 years

Alternative Property Management Loans

Getting capital from a bank is never easy. If your property management company was unable to get financed through a conventional lender, another option may be to get a property management alternative loan. Unlike banks, non traditional lenders aren’t credit driven, but moreso cash-flow focused. Since its easier to get financed by an alternative lender, you can also expect to pay much higher rates.

  • Rates: 9-25%
  • Terms: 1-5 years

Property Management Cash Advances

Cash advances aren’t usually any property managers first choice for financing. But when finacing is needed quickly, company has bad credit, or even has a tax lien, a cash advance may be the only financing option available. Cash advances (sometimes called ACH loans) are the sale of the company’s future revenue in exchange for immediate cash at a discount to the lender. The lender will forward the property management company cash, and then make remit a set amount each day from the management company’s bank accounts through the Automated Clearing House process until the loan if fully-repaid.

  • Factor Rates: 1.16-1.50%
  • Terms: 4 months – 2 years

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