Owning a commercial property can be very lucrative. But if you aren’t careful, it can also be a major thorn in your side. It’s all about how you manage the property. If you get the little details right, everything else seems to go much smoother.
5 Commercial Property Management Tips
It doesn’t matter if your property is 1,500 square feet or 150,000 square feet – the same principles apply across the board. If you can master the basics of managing a commercial property, it’s just a matter of scaling up.
With this in mind, here are a few practical suggestions you can use to manage your commercial property with less stress, fewer headaches, and a beefier bottom line.
1. Hire a Property Management Company
While you can technically manage your own commercial property on a DIY basis and keep overhead low, it’s not always worth it. The easiest option is to hire a property management company to do the heavy lifting on your behalf. More specifically, you need to find the right commercial property management firm.
When searching for a partner, look for an experienced company that’s local to your community. For example, if you own a building in Los Angeles, you’ll want to work with a Los Angeles Property Management Group. But if you own a building in New York, you’re best off finding a local NYC company. Successful property management requires connections, relationships, and knowledge of local laws and regulations. By going local, you’re able to tap into all of this.
2. Use Property Management Software
If you decide that hiring a property management company isn’t right for you, there are other options. Another popular choice is to invest in commercial property management software.
While not nearly as reliable or useful as an actual property manager, property management software is certainly the best option for those pursuing the DIY route. As you evaluate options, look for a program that’s able to track:
- Rental income rates
- Monthly expenditures
- Tenant profiles and characteristics
- Local and federal regulations
- Maintenance and inspection details
- Preventative maintenance intervals
- Tenant turnover rates
- Lease agreements and documentation
- Appointments, inspections, etc.
Trying to manually track each of these variables with spreadsheets, calendars, and email is nearly impossible. By streamlining everything with a single platform, everything becomes much smoother. It’ll lead to better organization, communication, accuracy, and profitability.
3. Come Up With a Maintenance Plan
Regardless of how you choose to manage your property (property management company, software, DIY, etc.), maintenance is critically important. More specifically, you need a proactive property maintenance plan that allows you to address key systems of your property on an ongoing basis, so that you avoid serious and expensive problems.
A good proactive maintenance plan accounts for every aspect of your building, including plumbing, electrical, HVAC, pest control, landscaping, wear and tear, equipment, upgrades, replacements, and basic infrastructure.
4. Streamline Rent Collection
Nothing creates more tension, conflict, or resentment in a tenant-landlord relationship than late rent payments. It’s contentious for both parties (but especially you, the landlord). Thus, anything you can do to avoid rent issues is going to be a net positive for the relationship (and cash flow).
The more you can streamline the rent collection process, the better off you’ll be. Do your best to eliminate manual steps from the payment process by getting all commercial tenants to set up a monthly direct deposit from their account to your account.
5. Conduct Thorough Due Diligence
It’s easy to fall in love with the idea of having a tenant in a commercial property – particularly if you have a non-traditional building that requires a very specific type of business to operate in it. But never make a decision based on convenience. Always conduct thorough due diligence on the business and business owners. Ask for cash flow statements, run credit checks, and speak with past landlords. It’s better to take a few extra weeks to research an applicant than to rush into a lease agreement with the wrong people.
A Recipe for Success
While there isn’t a sterile formula for property management success, the same basic best practices apply across the board. If you can master elements like maintenance, rent collection, and due diligence, you’ll put yourself on the right path to less stress and better profits.
Begin applying the tips outlined above and you won’t have any trouble being successful.