Aaah, property investing.
You could call it… running a therapy / tenant complaints hotline, funding your air conditioner repair mans bi-annual holidays, improving your debt collection skills, and shuffling mountains of paperwork and bills around your office.
Chances are, if you own a commercial property, real estate is the asset class you feel most comfortable investing your money into to build wealth over time. You probably would never have guessed that owning an investment property would be this much work though, right?
Well the good news is, you don’t have to sell your property to reclaim your life (yes, it had occurred to many of the landlords whose property we manage, before they got our help).
The smarter thing to do is delegate all the work you don’t enjoy, or don’t have time for, to skilled professionals – people who have mastered the art of managing tenants and extracting maximum income from properties just like yours.
For a small annual fee which the tenant often pays in commercial real estate (not sure if your tenant pays your management fees? Contact us and we can let you know) appointing a professional firm to manage your property can have an enormous impact on how you get to allocate your time and may be the difference between an investment that saps all your time and generates mediocre returns, or a fully optimized investment that’s constantly performing at its peak.
Just imagine enjoying some genuine downtime again. Relaxing, and recharging, freeing up some mental bandwidth that you can redirect into other areas of your life because you’re not worrying about your investment 24/7.
There are two key motivators driving commercial property owners in search of help to manage their property.
Whether self managing, or their existing property manager is making mistakes, their current situation is resulting in them leaving money on the table.
Commercial property owners tend to have run businesses most of their lives, and simply put… they’re done with hassles. They don’t want tenant complaints. They want to dedicate their time to the things that are more meaningful to them.
On the financial side, how well your asset is managed today, can dramatically affect how your investment has performed overall when you’re looking back years from now. Missed rent reviews, incorrect recovery of outgoings from tenants – there are endless “minor errors” and “oversights” that accumulate and result in lost income, and if left unchecked over any length of time, they are incredibly damaging to your long term earnings.
Putting money aside for now, how is your investment impacting on your lifestyle? Is the constant stress affecting your health or relationships? Are holidays of any duration a pipedream?
Imagine having the ability to actually plan a family holiday in total confidence, knowing the precious time you’ve set aside for yourself and your family won’t be at the mercy of interruptions. The best part is you’re not simply delaying the inevitable, leaving the emails and phone messages to pile up while you’re away – someone is handling anything that comes up as it happens, so you can fully let go and relax knowing you’re not returning home to another mess.
All this is possible by delegating the time consuming and time-sensitive elements of investing to a competent team whose dedicated job and sole focus is taking care of your property.
The kind of results that are possible
We have helped clients improve their situation to an extent they never would have thought possible when they first came to us. Here’s a few examples of what is possible:
- Graham sold his business then picked-up and retired to Penang where enjoys a much higher quality of living compared to retiring here. We manage his property and deposit his rent into his bank account each month. Well played Graham!
- A full time student came to us when her University results were suffering as she struggled to dedicate time between her studies and managing her family owned shopping centre.
Tenants were seriously behind in rent and overall the centre was run down with maintenance long overdue.
We’re proud so say her situation is now completely transformed, able to focus 100% on her #1 priority, her studies, while the family shopping complex is well cared for.
- A busy business owner and investor swears he had reached the tipping point, ready to sell the commercial property that had been in the family for 30+ years due to the serial incompetence of a property manager and a malicious tenant who caused tens of thousands of dollars in damage and left 8 skip bins of rubbish behind.
After a single consultation with us and acting on our advice, our new client successfully received a large lump sum insurance payment for the damage. Now the entire complex of 10 units has been refurbished externally with help from the proceeds of the claim and we’re close to filling all vacancies.
Sitting down, listening to each one of these investors relay their stories, it occurred to me that there was a common thread – they each had identified other priorities, more worthwhile uses of their time which were not centred around the distractions of managing a property or tenants, and what they most needed was a reliable way of reclaiming their time and removing those distractions.
We don’t share these stories to impress you, but to demonstrate that significant improvement is always possible, no matter how dire your situation, and to convince you that time invested in appointing the right manger, is time well spent indeed.
Whether you’re self-managing your property right now, or are coming to terms with the fact that your existing manager is not up to the job, selecting the right management moving forward is key to reducing property related anxiety, reclaiming your time and ensuring your property is performing to its full potential.
Appointing a Commercial Specialist
As the owner of a commercial property, you want to appoint a firm of professionals who have dedicated their careers exclusively to managing commercial property.
Many residential firms dabble in commercial property management. As genuine as they may be in their desire to help, it’s just not possible for this firm’s interests to be wholly aligned with yours. As a primarily residential firm they are obligated to allocate the resources and focus of the firm to their residential properties, to their “bread and butter”.
Putting time and resource allocation aside, there is one other reason why entrusting a residential firm to manage your commercial property could be a mistake. Experience.
There is only one way to acquire knowledge of the nuances of commercial asset management… experience. Year-upon-year at the coalface managing commercial real estate on a daily basis.
After directly witnessing the mistakes and the financial loss caused by residential firms operating outside of their area of expertise… my single wish for you as the owner of a commercial property, is if you take only one thing away from this article, it is this…
Appoint a commercial real estate agency to manage your commercial property, or, you are openly inviting mistakes and probably sacrificing income, due to lack of experience.
The financial aspect of commercial property management can be complex. With outgoings budgets, rent review calculations and end of year reconciliations to contend with, you want to be certain your new manager has the financial credentials the role demands.
Anna Valentine, the licensee at Perth Commercial Property, is a chartered accountant with years of experience at the managerial level of global accounting firm Price Waterhouse Coopers. Now I’m not saying every property manager you consider must have a CA at the helm, but the success of your investment relies on them getting the numbers right, so the manager you appoint had better know their way around a spreadsheet.
Do they communicate well and often?
I don’t know about you, but nothing frustrates me and makes me feel deprioritized more than having my calls and messages ignored. A good manager understands how much their communication is valued, and they are available to take and respond to enquiries so you are always up to date.
That said, it’s tough to judge a company on their communication prior to becoming a client. Keeping track of how quickly your initial enquiries are responded to and browsing reviews and testimonials may offer some insight here.
Interviewing Property Managers
It’s perfectly acceptable to approach your search for a property manager as you would approach hiring a new employee…
The property manager appointment process could look something like this:
- Shortlisting companies of interest
- Interviewing property managers
- Reference checks
Create a short list of management firms you feel might be a good fit for you.
At this stage you’re doing some high level research into companies. Browsing websites, reading any testimonials and client feedback for signs of high levels of client satisfaction.
Is their website client centred? Have they taken the time to create and publish helpful information, resources, videos (like these)…
These are all clues that a company is client focussed.
If their marketing material is all about them and fails to demonstrate concrete results they have achieved for their clients, this may be a sign they are not really committed (or even aware) to delivering a service that’s focussed on exceptional results for you, the client.
Ask about their experience. Try to get a feel for the organisation and its culture. Do they convey a sense of confidence in their own ability to deliver on their promised outcomes?
Remember you’re interviewing them, but you don’t learn anything when you’re doing all the talking. Let them do much of the talking.
Are they asking you the right questions?
Questions like “what challenges are you facing?” Or “what would you like improved most from your current situation?”
If they’re passionate and interested in helping you, they can only do that by learning about you and exploring what your biggest dissatisfactions are.
The interview is a good time to ask the property manager if any of their existing clients will be happy to verify their satisfaction over the phone.
You will need to provide your new manager with an “Authority to manage” this is a formal appointment document and includes the fees and terms and conditions of engagement which will vary for each agency.
Once you have signed and returned the appointment document, your new property manager should be able to start setting things in motion right away, and although the process will require some effort from you initially, you should start to notice the benefits relatively quickly, with your time input diminishing rapidly, until any contribution from you towards the day-to-day running of the property is all-but eliminated entirely.
It’s been said that “if you don’t prioritise your time, somebody else will” specifically in this case, tenants, contractors, suppliers and the myriad other people that have involvement in an investment property.
The value derived from professional property management can be tremendous, especially when you consider the fees are often paid entirely by the tenant. If now is the time for you to take back control of your time, and plan to spend your hours and days as you choose, we would love to speak with you.
5 years from now would you look back and thank yourself?
Book a free consultation to speak with one of Perth Commercial Property’s expert property managers today.