On this micro-blog I share my best advice on commercial property management and more general topics in a handful of sentences per sitting. Sometimes a few words are all it takes.
- David Crown
In property management, we’re almost always talking about the present. When my company and others in the industry describe the benefits we can offer property owners through our services, we explain how our licensed and insured maintenance, leasing and tenant communications can improve profits fast. And of course, those solutions are sustainable, so they compound in the long-term and multiply as the years pass.
But it’s not often that we talk about how property management in the present can translate to significantly higher profits for owners in the future. I believe it’s important to also focus on the ways that excellent property management can substantially increase your property’s eventual sale value. Read my most recent Forbes article for more on this subject.
When you run into the problem of major vacancies in one of your buildings and struggle to attract new tenants immediately, you have a couple of options. You can hit the panic button, lowering rents and accepting a lower profit margin to fill the vacancies right away, or you can reinvent the space through a large-scale remodel that will enable you to bring in higher rents once the renovations are finished.
The latter option requires capital and patience, but I’ve seen several owners undertake this type of project and profit significantly from it. When done correctly, remodeling in the face of major vacancy is the best way for a commercial property owner to turn one step back into two steps forward.
If your building is 20+ years old, you’ve consulted a leasing agent, you trust your property manager, and the economy’s strong, then it’s time to revamp your commercial space and increase your rental profits. For more on this subject, check out my article in Forbes.
Let’s talk about Triple Net Leases. Yes, they can eliminate a lot of the stress of owning commercial property, BUT…
I’ve seen properties in disrepair because a tenant essentially locked their landlord out of the maintenance process, and didn’t follow standard inspection protocols in order to save the money that should have gone toward keeping the building in good condition. They satisfied the owner initially by sending info regarding a contractor hired to maintain the systems, but after a review of the contractor’s license and their advertising, it became obvious that the contractor hired was a 1-truck handyman service with zero training on HVAC. When pressed, the tenant explained it was his brother-in-law.
Prevent this problem by hiring a manager who requires the lessee to carry a contract with an approved vendor, stipulating regular maintenance inspections that ensure the tenant keeps the property in safe and acceptable condition. Two areas of particular concern are the roof and HVAC systems, as regular preventive maintenance can extend the lives of these systems by years, even decades. At LAPMG, we require Triple Net tenants to provide preventative maintenance at least quarterly, and request the quarterly maintenance reports for review.
January 1st, 2020
As an optimist, I’m a major proponent of New Year’s Resolutions. Never view last year’s disappointments as proof that you shouldn’t start this year with ambitious goal-setting. Instead, view them as motivation to keep up with this year’s objectives even more steadfastly. Set reminders now to start every month with an assessment of your annual goals and resolutions. Always believe that this will be The Year, but don’t just believe it.
As a realist, I know that in order to truly improve this year, I need to be certain of how I did last year. That means numbers. Before I even brainstorm resolutions for the new year, I make sure to quantify performance in all the areas I want to improve in. That way, I’ll be able to take stock and set measurable goals.