Technology’s role in the future of property management

Property management as an industry thrives in developing economies like the Philippines with robust real estate markets, stable legal frameworks and regulatory oversight, and an environment ripe for turning assets into thriving investments.

Metro Manila’s decentralization and the rise of emerging cities in the provinces are spurring the industry to life. As the urbanization of provinces accelerates and real estate markets expand to those outside the capital, the demand for professional property management also rises.

Property managers — whose tasks encompass a gamut of services from the oversight and administration of daily property operations to maintaining property quality through consistent upkeep and repairs — are necessary to ensure the efficient utilization and maintenance of real estate assets, especially for property investors.

The property management industry brings structure and expertise to managing residential, commercial, and mixed-use properties, ensuring they meet modern standards of safety, sustainability, and tenant satisfaction. In a developing economy, where resources need to be maximized, effective property management can even considerably enhance the appeal and functionality of real estate, attracting investments and contributing to economic stability and growth.

It is an especially remarkable period for the industry, as the country’s onward march towards economic growth and urban development coincides with transformative breakthroughs in technology. Machine learning (ML) and artificial intelligence (AI), for instance, are at the forefront, offering unprecedented capabilities to predict and manage various aspects of property management.

Advanced property management software today utilizes big data to monitor property performance, finances, and tenant behaviors, enabling managers to identify key performance indicators and address weak areas. Meanwhile, sustainability is another critical trend reshaping the industry, as property managers increasingly focus on reducing the carbon footprint of their assets by optimizing energy consumption, improving waste management, and incorporating renewable energy resources.

In fact, many local governments across the nation are utilizing technology to improve their cities. In April, the Baguio City government said it is implementing a technology-enabled initiative titled “Project MINERVA (Monitoring of Indicators for Efficient Redevelopment and Value Assessment)” to address urban decay and promote smart city development.

“With the project’s ultimate goal of driving predictions and monitoring models for air quality, water quality, urban mobility, and tourism management, we’re able to use technology to advance our goal of becoming a truly smart city by 2027,” Baguio City Mayor Benjamin B. Magalong said.

Other cities are also turning towards the smart city route. There are the emerging hot spots, like Cebu, Davao, Bacolod, and Iloilo. Early this year, smart city developer Iveda launched a $5-million venture to execute several contracts over the next 12 months to bring smart technologies to these cities. The initiative will build on their existing work in the country and roll out AI-enabled technologies to modernize key infrastructure, such as airports, roads and sidewalks, leveraging AI tools to enhance public safety and city management.

There are also others like the City of Victorias in Negros Occidental, for another example, which announced a digital road map for the implementation of a smart city master plan merging technology and government in partnership with data science and artificial intelligence company Aboitiz Data Innovation (ADI).

Technology is revolutionizing the real estate sector as a whole; and property managers, by embracing these technological trends, can stay competitive in an industry that is poised for growth and meet the ever-evolving needs of urban living

Source: Business World

Valuation: Unlocking the real value of real estate

Real estate is commonly one of the major assets held by individuals or business entities. Like any asset, real estate has a value which is used by stakeholders, whether they’re owners, sellers, potential buyers, developers, investors, or government entities.

This value is determined through valuation.

Valuation or appraisal is the process of getting the value of a property as of a specific date for a specific purpose. The common basis of value is market value, which is defined by the International Valuation Standards (2020) as “the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.”

In simple terms, it is an estimate of the price that the property can likely be sold for, wherein the buyer and seller are in the transaction of their own free will and they are both well-informed about all aspects of the transaction and the property. Of course, anyone can assume a price on their property as they see fit, whether it’s based on their initial purchase price, additional costs on construction, renovations, or they can attribute some additional perceived special value. However, that will not necessarily be equal to market value since it will likely not be a balanced or unbiased view of the property value. Property valuation should be conducted by a qualified and licensed valuer to make sure that the market value is determined objectively and competently.

Valuers or appraisers in the Philippines are duly licensed by the Philippine Regulatory Commission (PRC), and they undergo continuous education to keep them abreast with the methods and standards of valuation.

Valuers prepare valuation reports for different purposes, generally for sales, financing, recording/reporting or regulatory compliance, investment, insurance, or expropriation reference purposes.

Sales: Since real estate involves a significant value, buyers and sellers alike want to make sure that they’re getting a fair price for a property. A valuation report is prepared to establish an objective value for a property, which can then be the basis for negotiation in the transaction. For buyers, they can choose property options that align with their budget.

Investment: To formulate informed business decisions, investors need a valuation report which will help them understand the dynamics of the property, highlight any potential risks, and help them determine their business strategies.

Financing: Financial institutions need an official report that determines the value of a property which will be the collateral for a loan. The valuation report will be a key input for them to mitigate the risks associated with lending.

Recording/reporting or regulatory compliance: Valuation reports are prepared for financial reporting purposes or regulatory compliance. The regulatory body requires the owner to secure a valuation report as a basis for their submission.

Insurance: Valuation reports are crucial for insurance companies to estimate the insurance coverage and premiums of properties. The replacement cost of a property is assessed so the insurance company can ensure the policyholder has adequate coverage for unforeseen damages or losses.

Expropriation: The state has the power of eminent domain where they take private property for public use, and in exchange give the owner just compensation. The basis of just compensation is an official valuation report.

Property valuation is a vital process that needs to be undertaken to empower decision-makers in making informed decisions covering real estate. When you need a valuation report, you want to be sure that the valuer is qualified, competent, and has an unbiased view to deliver your property’s real value. While you can engage the services of any licensed appraiser, the more prudent choice would be to go with licensed appraisers in a company with a proven third-party stamp of approval.

How to Manage a Rental Property Maintenance Budget for Better ROI

Managing a rental property maintenance budget is crucial for property owners to ensure profitability while maintaining the value and appeal of their properties.

However, while staying within budget is important, it is equally essential to make wise decisions that do not compromise the quality of maintenance and ultimately impact the return on investment (ROI).

Keep reading to learn some expert best practices for effectively managing rental property maintenance budgets, estimating maintenance costs, and the benefits of partnering with a property management company. By implementing these strategies, property owners can achieve better financial outcomes for their rental properties!

Every Property Gets Its Own Budget

Maintenance budgeting can't be "one size fits all" for every property. Each rental property in your portfolio has unique maintenance requirements, so creating a specific budget for each property is crucial.

Factors such as property size, age, location, and type of tenants will influence the maintenance needs and associated costs. By tailoring budgets accordingly, property owners can ensure that sufficient funds are allocated to address the specific maintenance demands of each property.

Align Maintenance Budgets with ROI Goals

When planning a maintenance budget, it is essential to consider the desired return on investment for each property.

By establishing ROI goals, property owners can allocate resources accordingly and make informed decisions about the level and frequency of maintenance and repairs. This approach ensures that the budget supports your overall financial objectives.

Include Routine Maintenance Costs in Your Budget Planning

To create an accurate maintenance budget, it is vital to consider common maintenance expenses that occur regularly — not just potential emergencies or significant repairs.

Routine maintenance could include HVAC system maintenance, plumbing repairs, and general upkeep. By incorporating these predictable costs into the budget, property owners can avoid unexpected financial strain and ensure that funds are available when needed.

Partner with Reliable Vendors

Selecting vendors who offer quality services at reasonable prices is crucial for effectively maintaining a rental property maintenance budget.

Research and establish relationships with reputable vendors who have a proven track record in the industry. Request multiple quotes to compare pricing and ensure that your preferred vendors offer competitive rates without compromising quality. By partnering with reliable vendors, property owners can achieve excellent maintenance outcomes while optimizing their budgets.

Implement Best Practices to Avoid Costly Repairs

Prevention is key to avoiding expensive repairs.

Implement routine maintenance practices such as regular property inspections, timely repairs, and addressing minor issues promptly before they escalate. Additionally, engaging professionals for maintenance tasks rather than attempting DIY fixes can prevent further damage and save costs in the long run.

Adhering to best practices ensures the budget is not burdened by avoidable and costly repairs.

Collaborate with an Accountant

Maintaining accurate financial records is essential for effective budget management. Working with an experienced accountant specializing in rental property management can help property owners keep track of expenses, maintain receipts, and ensure compliance with tax regulations.

How to Estimate Maintenance Costs

Where can property owners start to plan accurate maintenance budgets? Create a rental property budget spreadsheet and apply one of these formulas.

The 1% Formula

The 1% Formula suggests that property owners budget 1% of the property's value for annual maintenance costs.

For instance, if your rental property's value is PHP3,000,000 the annual maintenance budget would be PHP30,000. However, while this formula provides a general guideline, it is advisable to consider other factors that may influence maintenance expenses.

The Square Footage Formula

Another approach to estimating maintenance costs is the Square Footage Formula. Property owners allocate a specific PHP amount per square foot of the rental property.

The appropriate amount will vary based on factors such as property location, age, and condition. Property owners can research local market rates and consult with industry professionals to determine a reasonable dollar amount per square foot for maintenance.

Work With a Property Manager to Budget for Maintenance

Partnering with a residential property manager offers is an excellent strategy for effectively managing rental properties and their budgets. With the right property manager, you have expert guidance for making maintenance decisions and budgeting accordingly.

Be sure to establish protocols for the levels of repairs or maintenance your property management company can conduct without your approval. For example, routine repairs or fixes under a specific amount could already have your approval. However, significant repairs, like a new roof or HVAC system or repairing tenant damage, would require additional approvals from the property's owner.

Additionally, frequent communication between property owners and a property manager is essential for discussing maintenance needs, upcoming upgrades, budget allocations, and ROI goals. By staying on the same page, property owners can make informed decisions and address any concerns promptly.

Maximize Your Rental Property Maintenance Budget With Expert Property Management

Effectively managing a rental property maintenance budget is essential for property owners to achieve profitability and maintain the value of their properties. By implementing the best practices we've mentioned today, property owners can optimize their budget and avoid costly repairs.

For property owners in San Carlos City seeking expert budget management and improved ROIs, reach out to Ziggurat Real Estate Corp! We can provide the necessary support and guidance you need to reach your goals.