The range of services offered by commercial property management companies varies. Some offer a manager to do everything from organising cleaning services to hiring reception services. Then there are arrangements where the property manager makes sure the property is always tenanted and little else unless there is an emergency. But in case you think you can handle the responsibilities of a commercial property investment by yourself, here are three reasons why you should think again.
1. Having a property manager on side
If you invested in a commercial property for the financial advantages and have no interest in the market as a whole, you need someone on side who lives and breathes property management, someone who knows the best way to secure a reliable source of tenants. They need to be a people person – someone who is going be friendly but firm with tenants during site visits, someone who makes your property a desirable place to set up shop. Poorly managed commercial properties can become ghost towns.
Find a property management company that trains its own staff and has a recognisable ‘brand’ in the market place. Make sure you agree to targets, such as no more than a 5% vacancy rate per year, and ask them for a list of the tradespeople they use. Make sure the agency you hire your property manager from has a dedicated property management department and can represent your interests at a tenancy tribunal if the need arises.
2. Property management and the law
That last point is important, because if you have no experience in property management, you probably aren’t aware that commercial leases in each state are covered by specific legislation that says what needs to happen if a tenant fails to pay rent. In NSW, the Conveyancing Act sets down strict requirements for giving the tenant necessary notice before they can be evicted. If you do or say the wrong thing you could end up in court, especially if an unscrupulous tenant senses your inexperience.
3. The false savings of self-management
The financial savings of not paying a property manager are often outweighed by the benefits. It takes time and expertise to manage tenants and the smooth daily running of a commercial property, and to keep up-to-date on changes to the market. These include changes made to the legislation and rules governing property management, changes that those working in the industry are attuned to.
But there are cultural changes as well, new areas opening up. An article in The Australian pinpointed the trend for rooftop gardens in CBD properties to help workers engage with the outdoors. So a commercial lease could include clauses on communal herb gardens and bee hives!
The National Broadband Network roll out is another aspect of this challenging work to keep on top of. It means commercial property management will become more, not less complicated, as tenants seek out those properties that have fibre optic access.
To monitor this, plus deal with demanding or difficult tenants on a day-to-day basis, you need a commercial property manager who has dedicated themselves to working on your behalf, letting you reap the rewards of investment without the hassles.