When it comes to managing a commercial or retail property, the landlords that you work with will have specific needs and requirements for the monthly report. In the monthly report certain things will need to be monitored and tracked to ensure that errors and omissions do not ‘slip through the cracks’.
Many a property manager has suffered the consequences of overlooking critical dates and critical issues in a particular property that they manage. For this very reason, the end of month report can be a very efficient way of monitoring current and future activity within the particular property.
Gone are the days of simply giving the client a financial report at month end with little commentary as part of the property management process.
Landlords expect property managers to provide a comprehensive and detailed property management process. It is not simply a matter of collecting the rent and chasing arrears. There are many more things to do when it comes to commercial and retail property performance.
Here are some tips and ideas that can be incorporated into your monthly report as it applies to your property management clients and landlords.
- The property income is always of concern to the landlord given that they need to match the income to their financial obligations and investment targets. The income should therefore be tracked on a daily basis to ensure that lease arrears are identified as soon as they occur. Some tenants will frequently stretch the required lease payments and make a late payment. The reality of the situation is that any late rental payment is in fact a default under the terms of the lease. The property manager needs to see this late payment of rental as soon as it occurs, and take the necessary action in accordance with the instructions that the landlord provides. As part of the monthly report, give the landlord a summary of income paid, income charged, and defaulting tenants. Always seek instructions from the landlord regards these defaulting tenants and the required processes of income recovery. A defaulting tenant can sometimes be converted back to ‘lease compliance’.
- The expenditure in a property will be both controlled and uncontrolled depending on the expenditure type. There are also some accounts that are ‘seasonal’ and quite large; for example they will usually be municipal rates and taxes, insurance, and energy costs. The property should always have sufficient funds to pay for these large and significant outgoings. For this very reason, a complex property with a lot of tenants will usually have an expenditure budget reflecting the timing of these outgoings activities and costs. The property manager should track the expenditure activity monthly to the budget, so that they know how much money they should hold back from the landlord as part of the end of month income remittance. It can be very embarrassing to all concerned when the property runs out of money at month end and the electricity supply is turned off to the building.
- The maintenance in a property will shift and change from time to time. Some maintenance in a property will be planned as part of the overall maintenance budget whilst others will occur as a result of unexpected breakdowns and repairs. The maintenance of the property should feature in the expenditure budget as part of the annual property business plan. At the end of each month the maintenance routines and the maintenance costs should be tracked against the existing and approved property budget.
- The tenancy mix and the existing leases within the property will have lease factors to be tracked. They will include rental changes, rent reviews, lease options, make-good requirements, insurance obligations, and renovation strategies. The list of possible actions and critical dates spinning out of the lease are quite large. When you take on a new property always review the leases comprehensively thereby defining any future critical dates that will require action and momentum at a particular time.
- The cash flow for the property will be optimized through a series of rent reviews, leasing strategies, new tenancy placements, and vacancy minimisation. The property manager should be managing these issues in a productive and comprehensive way. In doing this the property manager should be helping the landlord minimise cash flow disruption and instability.
- Lastly it should be said that the local market property conditions should be detailed in your monthly property management report. In this way the landlord can be completely appraised of the changes to the property market and the factors of supply and demand. When the landlord is briefed in this way, they understand the pressures of lease negotiation and tenancy placement. This knowledge will help when it comes to finding tenants and negotiating new leases.
This list is not finite; however it gives you a good idea of the complexity of the monthly property management report that can be created for your clients.
Take a proactive position when it comes to managing your particular property portfolio for your clients, and provide detailed comprehensive monthly reports. That will allow you to maintain and grow your property portfolio over time. It will also show your professionalism as an expert commercial or retail property manager.