If you are looking to buy commercial property or want to understand how your commercial property can be better managed, you’ve come to the right place. Hiring a commercial property management company may seem like an expensive waste of money, but they can help make your life far easier, especially when it comes to renegotiation, tenants, and other aspects of property management. So how do you go about understanding what a commercial property management company does and then go on to hiring one? Don’t worry, we’re here to help.
Commercial Property Management, an Overview
Think of a commercial property management company as an asset management organization. They are a third party that takes on all the responsibility of managing a profit driven property. If you pass over responsibility to a property management company, the only thing you will need to manage is the terms of the contract with your new managing company.
What Do Commercial Property Managers Do?
It would be easy to think that a commercial property manager just finds tenants and renews leases, but that isn’t the case at all, the job is very involved and requires substantial knowledge in areas such as building regulations, rental leases, hiring the best service vendors, building codes and governing laws. If your property is being managed, they will handle the due diligence to ensure it is up to the required standard to be leased out to prevent you from facing any legal troubles.
Not only are they aware of laws and legislations surrounding buildings, they also have a good working knowledge of the legal framework around leases. Leases can be tricky, especially if you are leasing for long periods of time and want to have particular caveats in the legal document.
Why go to a lawyer who’s understanding may not be as thorough as a property management organization? Be certain that you are getting the limitations and agreements you want in place by using an experienced and knowledgeable commercial management company.
The Management Of Your Property
A commercial property is something that you want to generate you income, so you want to make sure that it is managed in the best way possible. These tasks can include basic rent collection, all the way through to deep budget analysis, cashflows and reconciliation.
A good property manager will ensure that the lease and other governing legal documents are relevant and up to date, tenants are aware of their duties under the lease, rent is collected, and any associated administration is dealt with efficiently and correctly.
Your management company should only contact you in the event of an emergency or if you are required to make a higher-level decision with regards to how your property is managed.
How To Choose The Right Management Company
It is always tempting to make decisions based on cost, but we strongly advise against that. If you are considering a property manager, you must be considering or have invested money in a commercial property, so you want to make sure that you have the best team of people managing your asset. You may consider choosing a firm that has multiple offices in different states. This is often a good indication that they will have a larger footprint and legal team working for them, so their understanding of the federal and state laws will be better than a firm that just operates in one state.
Chances are, if the organization is large and operate across the country, they have been operating for some time, thus they will have extensive experience of what their customers need and want from their service.
Before you decide, get a few quotes from different firms and see what type of service they can offer you. It may be that you want a basic service for managing just one commercial property but don’t want to sign into a 5-year management contract. Or it may be that you want the option to add more properties to your agreement, so you require flexibility in this arrangement. Make sure that your property management quotes include exactly what it is you want from the management company. Stick with commercial specialists; you don’t want a residential property management firm to attempt to manage your commercial building.
Even though residential property management can be more ‘hands on’, the specialized administrational and legal work required to manage a commercial building is vital to your protection and profitability in ownership.
There is a well-known idiom that says buy cheap, buy twice. You can apply this point of view to commercial property management companies. As they are managing your asset, you want to be sure that you have the best team working for you to maximize your investment with as little friction with the tenants as possible. Generally, the larger the firm, the more legal expertise they are likely to have on hand, and therefore more protection and less risk to you.
If you are unsure of which firm it is that you want to use, ask for as many quotes as possible and see which operators will give you the best service and don’t need you to be involved. Look for a management company that will not only collect rent, but help you manage your budget and analyze your spend. Commercial property management is not just about collecting rent, but rather about managing and protecting all aspects of your investment, so chose your management firm wisely!
Interesting related article: “What are Property Rights?”