Owning commercial real estate can be a rewarding investment. However, the real heavy lifting begins after the purchase contracts are signed. Wondering how you can make the most of your commercial real estate properties? While commercial property management comes with quite a few challenges, once you know a few simple best practices, it can be a very lucrative investment strategy.
In this blog post, we will uncover four commercial property management tips that will help you succeed in your commercial real estate property management goals.
Be Proactive with Property Maintenance
Maintenance should be a top priority. Keeping commercial properties in top shape should be considered a given for any property management professional. However, simply keeping up with basic maintenance and responding efficiently to emergency maintenance requests isn’t enough. It’s important to apply preventative maintenance to commercial properties to protect both your own interests and the interests of your tenants.
How does preemptively inspecting for potential issues and applying preventative fixes help both you and your commercial property renters? Here are a few ways:
It Helps Reduce Maintenance Costs. Fixing small issues before they can become larger issues is a good way to save money on property maintenance. For example, fixing a plumbing leak while it’s a trickle is a lot cheaper than having to tear out and replace large sections of your property’s walls and flooring because of water damage.
It Keeps Your Commercial Property Looking Nice. The appearance of your commercial property can play a role in the success of the businesses that rent space there because it helps attract customers. This, in turn, helps your tenants make their rent payments (and encourages them to keep renewing their lease rather than leave).
It Helps Prevent Injuries. A lack of maintenance can lead to dangerous conditions in a structure. From respiratory hazards from mold growth, to tripping on uneven flooring, to slips in water puddles from leaks, there are many hazards that occur when maintenance is lacking. Using preventative maintenance helps to prevent these injuries.
It Can Keep Property Values Up. Commercial properties are often valued based on their grade or class (A, B, or C), with better grades being able to command higher rental fees. Falling behind on maintenance issues can lead to a reduction in class, which makes it harder to command a higher rental fee for the property.
Maintenance is often the single most important issue for determining whether tenants will renew their leases or look for greener pastures elsewhere. So, it’s important to be proactive with your property maintenance.
Know Your Leases Well
When it comes to commercial properties, leases can be very complex and complicated. However, knowing how to read, understand, and explain leases with great proficiency is vital for great commercial property management.
Keep in mind you will likely have multiple tenants, and lease agreements may vary between them. In order to know what to expect with each tenant, you need to ensure you understand what each part of the lease means. It’s also important to take the time to create strong and secure leases with your tenants at the beginning of any commercial lease relationship. For a successful and stress-free relationship with your tenants, ensure leases include everything necessary.
Create an Asset Management Plan
Another great tip for commercial property owners is to make sure you have a solid plan in place for how you are going to succeed in the long run. You need to know exactly what you plan to get out of a property and how you’re going to do it.
Having a solid strategy helps you create a roadmap of what actions to take and will influence everything you do. For example, you need to have a good idea about how long your holding period will be on a property, whether it is five years, ten years, or twenty. Based on the amount of time you plan to hold a property, you can figure out what your strategy is for achieving optimal value from the asset. Will it be through cash flow over time or will it be through a sale? By knowing these things in advance, you’ll have a much better chance of succeeding with commercial property management.
Prioritize Communication Always
The secret behind the success of every business is good communication. Being responsive with your current tenants is one of the most important things you can do as an owner. Showing attentiveness with prospective tenants, demonstrates that you’ll be attentive if something needs consideration in the future. In short – people tend to do more business with people who they feel comfortable with and that they feel they can rely on.
Photo by Alexander Mils on Unsplash
