If you own a commercial property or are thinking about purchasing, there is one very important consideration you should make: Property Management.
A Property Management company works toward three basic goals:
Increasing a property’s net operating income through rent increases and/or operating expense reductions.
Increasing property values through property maintenance and suggestions for improvements.
Protecting the value of a property with proper insurance, inspections, and maintenance.
Property management companies provide an array of services to their clients, including:
Financial Services
Property managers collect rents and other income from tenants. They also pay the vendors, utilities, and mortgages and provide monthly check reconciliation. They provide a variety of financial reports, including an annual budget and monthly reports such as profit and loss, rent roll, and check register.
Maintenance
Property managers evaluate vendors, equipment, supplies, and services to keep the property operating in a safe manner and keep the tenants satisfied. They also provide regular property inspections and evaluations.
Marketing, Leasing, and Advertising
Property managers will market your property to potential tenants, negotiate and prepare leases, and advertise. Because of their knowledge of the local market, local property managers know what the current market rents are for each commercial building type and what the expenses should be in comparison to other properties.
Tenant Relations
Property managers usually have a 24-hour answering service to handle tenant needs, questions, concerns, and emergencies. Tenants are the “customers” and owners want the property management company to keep them satisfied.
Collections and Evictions
Property managers often do the things that many property owners dread doing, i.e. collecting slow rents and evicting those that don’t pay. The property owners may know their tenants personally and therefore are reluctant to enforce deadlines and penalties. The property manager acts as a buffer between the tenant and the owner and can play the good or the bad cop.
Fees for property management vary depending upon the type of property, the condition and/or location of the property as well as the services required. Basic services for most properties are a negotiated percentage of gross revenue or a minimum charge for smaller properties. Depending upon the type of lease, the property management fees can be passed through to the tenant as triple net expenses.
You’ve worked hard all these years and have invested wisely in commercial real estate. Make sure you protect that investment with a property manager.
Why not sit back and enjoy the fruits of your labor? Why not take a vacation without worrying about whether or not the roof in your commercial building is leaking because of the five feet of snow we just had? A property manager is both a necessity and a luxury.
Relax, enjoy, and tell the property manager where you want him to send the check!
Mark T. Belsanti, CCIM is owner/agent of da Vinci Realty, LLC. He can be reached at 928-779-3800 Flagstaff, 928-254-1770 Sedona, or HYPERLINK “mailto:mark@davincirealty.com” mark@davincirealty.com.
You can view da Vinci Realty’s website at HYPERLINK “http://www.davincirealty.com” www.davincirealty.com to view his listings and read past articles.
