Trust management of real estate. What’s this?

At its core, trust management of real estate involves a third-party organization managing someone else’s real estate and other (accompanying) property in the interests of the owner for a certain fee.

The goal is to ensure the profitability of the property transferred to management. Real estate management companies operate only legally.

Practice shows that trust management services are most in demand among business and elite class homeowners, since they can significantly save their time.

  1. In what cases is it advisable to transfer real estate to trust management?
  2. If the owners plan to move out of the city for several months (or even years) and want to make a profit from renting out their apartment.
  3. If the owners work abroad, but intend to invest in real estate in Ukraine (or vice versa) and make a profit from it.
  4. If the owners want the property to be profitable, but do not want to make special efforts to do so.

If owners want to minimize the risks associated with renting out housing (for example, searching for respectable clients, downtime of housing, late payments, damage to property by tenants, etc.).

What can include real estate trust management?

The range of services provided by trust management companies can be quite wide. Among the most common:

– implementation of repairs (both initial and ongoing);

– preparation of an apartment for rent or sale (home staging);

– professional verification of documents required for renting or selling housing;

– search for tenants and conclusion of contracts with them;

– looking after housing (including the operation of the apartment, timely payment of utility and rent payments, serviceability of household appliances, etc.);

– optimization and payment of lessor taxes;

– services related to the sale of real estate

What are the advantages of transferring real estate to trust management by professionals?

Usually, in the real estate market (in particular, in the rental segment), you can run a business on your own. But the stereotype that in this case the profit will be higher may not work. Why? Because one way or another, the owner will have to provide the same services as the management company, but the latter has a polished algorithm to automatism and associated costs are minimized. For the owner, the time and money spent on similar actions can completely eat up the potential savings on paying for the services of the manager.

A company that takes over the management of someone else’s real estate is trying to maximize profits from operations with property transferred to management. The reason is banal – her earnings directly depend on the profitability of property in management (mainly managers work for a percentage of the profits received). This is achieved through better awareness of market conditions (supply, demand, prices), the legal framework, ways to reduce the associated costs of promoting the proposal to the market, and the like.

And another important argument in favor of a professional real estate manager is the speed of the operation. The trust management company will find a client (tenant) as soon as possible, check documents, prepare and conclude an agreement. Whereas such actions for the owner can last from several days to several weeks, or even longer. And this is lost profit. And if the rent is short-term or daily, then the losses are gaining weight (especially in business and premium classes).

What are the risks of transferring real estate to trust management?

The main risk of transferring any property to trust management is associated with the right choice of a management company. The task is overwhelming.

In order not to make a mistake when choosing a manager, it is worth considering:

– the reputation of the company, which is evidenced by positive customer reviews (especially friends and acquaintances);

– experience in the real estate market (everyone knows how to start buying and selling or renting real estate, but only companies with experience know what happens at the final stages of transactions);

– specialization in a certain segment (for example, in renting business class and elite class housing);

– the professionalism of the staff and how they are guided by market trends (the best way to identify it is only during a personal meeting, in no case by phone);

– honesty and integrity (no one can give a 100% guarantee of success, but if the company’s specialists reveal all the opportunities and risks, then such a manager responsibly approaches working with a client);

– attentiveness and attitude towards the client (a good manager tries to understand the client’s needs as accurately as possible in order to choose the best from a variety of options).

Despite this, no one is immune from mistakes. Therefore, so that the mistake when choosing a manager is not expensive, it is advisable to carefully read the agreement on the transfer of property to trust management (preferably with a professional lawyer, one-time expenses for which can save a lot of money in the future), and also, at the stage of starting a relationship, conclude an agreement for a short period (3-6 months) with the possibility of its extension in the future.

And finally: how much do trust management services cost?

Typically, the cost of trust management varies between 10-20% of the rent for an apartment. But the total cost depends on the specific list of services provided by the management company, an individual approach to each client and loyalty programs.