The management of a commercial property can be a complex issue. There are things to consider and plan for. The management process simply doesn’t just involve the collection of rent. There are many other things to do. A skillful property manager has to be chosen for the property type based on experience.
The larger the property, the more demanding it can be when it comes to property activities and management structures. The larger properties have complex lease structures, tenancy mix strategies, property business plans, and lease strategies.
Here are some things to merge into your property management processes whilst helping your clients to move ahead with overall investment performance.
- Most clients will be focused on the rental as the foundational issue for property benchmarking. The rental will be in the form of gross income and the net income. From the gross income there will be deductions for property running costs and expenditure. The expenditure needs to be well managed so that the net income is equal to or better than the other properties of the same type in the same area.
- The type of property will dictate the levels of enquiry and benchmarks of market rental. Review the local property market regularly to understand that your property is similar to others when it comes to market rental.
- The expenditure for the property should be managed to a business plan. Every expenditure structure should be split into the categories that apply to each property. That will include municipal rates and taxes, insurances, fire and safety, security, energy, and repairs and maintenance. As you split the expenditure, you can see where the averages are appropriate for the property type. If that is not the case, then changes need to be made.
- The tenancy mix and the lease structure will be quite important when it comes to the overall cash flow. A tenancy mix should be supported by a good standard lease document that covers the requirements of the landlord and the property as an investment. The landlord should consult with their attorney or solicitor to create a lease that is suitable for the long term cash flow that they require. A good property manager will understand lease terms and conditions and just how to administer them.
- The tenancy mix and the vacancy profile for the asset will need to be carefully tracked. The vacancy profile should be reduced whilst the tenancy mix should encourage ongoing tenant success. This then suggests that a lease negotiation is not a separate and individual thing. A good lease is created to integrate into the surrounding tenants and the property tenancy mix overall.
- The maintenance for the property will be ongoing and should be manage to the expenditure budget. Keep in close contact with the contractors for the building so that you can understand where the major items of expenditure can have an impact on property cash flow. Preparation is the key to success when it comes to expenditure and maintenance. Large costs should be managed to a time where the property can afford the expenses.
So these are some of the big things that will have an impact on your property management structure and service. Take these things and refine your services to help every client improve property performance.