There are many things to explore as part of a new property management listing on your brokerage books. In this audio program, John Highman talks about the factors to question and review. Most particularly key matters to look into will include:
You can listen to the audio program here to understand exactly how you can approach the handover process in commercial property management today. It doesn’t matter whether you are managing a retail shopping centre, or a commercial office tower. The same strategies and processes apply. Attention to detail will help you with the fact review and gathering process.
Real skills are required and special people should be dedicated to the process of providing specialised services to investors and company owners.
In this audio program, John Highman talks about the special and unique skills required to manage a commercial or retail property today. Learn how to grow your brokerage business from a base of management activity and property management clients.
Property Facts and Controls
When you completely understand the strategies behind property management, you can develop special services across asset performance including the following:
– tenant retention
– income enhancement
– lease negotiation
– expenditure management
– net income generation and cash flow control
– lease administration
– maintenance management
– risk minimization
– renovation and refurbishment activities
– vacancy minimization
So there are many concepts and strategies within this list. If you take each individual concept, there are many specialised services that can be provided to your clients and customers.
In this audio program, John Highman talks about the importance of commercial and retail property management in brokerage performance today. Learn how to improve your brokerage business and the future commission opportunities available in your town or city.
The services that you provide in commercial property management are quite special and should be costed accordingly. Care and consideration is required when you are considering establishing a new fee or quoting on a property management service. There are variables at play that could have an impact on your fees suitability and amount.
If you set the wrong fee in quoting on a property management service, you could position yourself for loss of income over time when compared to the time you are committing to the property and the client. Under resourcing is a big problem in our industry.
Don’t provide the client with a low fee quotation simply to win the new business opportunity as a property management appointment. Understand the property, the client, and the tenancy mix before you set and finalize the fees for service. Look at the ‘big picture’.
So what do you do here?
You should understand all of the property issues that may put pressure on your management services. Many an agent has lost a property management client and property appointment simply because the agent has been unable to control the property efficiently and improve performance over time; under quoting the fee will very likely create that issue.
So what do you need?
You need the right people and the right processes to manage a complex office or retail building today. Don’t underestimate the required skills of the process and the demands of the property. Match the people and the processes to the property.
Here is another error that is all too common. As a general rule, don’t set your fees based on a percentage of passing income. Whilst that may percentage approach be an industry standard in your location, it is only an indicator and should be compared to many other factors and choices. There are other things to look at and consider before you finalize your fee structure and client services.
Assess all the factors
Consider the following factors as you work through this process of property management assessment and opportunity:
Landlord requirements – some landlords are unique and special when it comes to property management requirements and services. The complexity of the property and the cash flow can very likely create pressures on reporting and financial controls. You could find yourself generating many variations of reporting to satisfy the challenges of the property and the clients requirements for information. Interview the client as the landlord before you quote on the final fees for service.
Property complexity – inspect the property completely and thoroughly. There may be issues in the property to control and manage over time. Look specifically into the issues relating to maintenance, rentals, vacancies, lease management, tenant volatility, and property performance. Every property will have certain strengths to work with, and weaknesses to work through and resolve. The weaknesses are the ones that will challenge your task and time management. The weaknesses will also threaten the cash flow and property occupancy over time. Create a business plan for the property to address the known and upcoming weaknesses.
Tenant mix – review the tenancy mix as you inspect the property. Understand the tenants that are trading well and those that are struggling. Identify the tenants that may be under some form of pressure and develop a base plan as to how you may manage that occupancy and improve the overall results. It is a good idea to incorporate a tenant retention plan into the property performance strategy.
Time based comparisons and assessments – when you first take on the property under management, it is likely to be a busy period of time for the first few months as you work through leases, tenants, and maintenance issues. The question to consider here will be how you can get the property under control effectively and efficiently. Some properties can take months to reshape and control. If you are about to commence management of that type and intensity, be very careful as to how you set your fees for service.
Income and expenditure review – the history of the property can tell you something about financial management and cash flow. Understand how the income has been changing over time and if there are any weaknesses in market rental currently. Rental and income weaknesses need to be identified and addressed quickly and efficiently. Comparisons to the prevailing market conditions will be required, and negotiations will need to be commenced as soon as possible. Seek your landlord instructions and comments as part of an income review and opportunity assessment. Know all the facts. Also review the expenditure within the property and the history of net income. Has the property being improving through good financial management or are their hurdles to address? Are there issues or weaknesses of current and future income, and will there be expenditure volatility to be dealt with?
So there are many things to look at when it comes to pricing your commercial property management services. Understand the client, the property, and the tenancy mix before you set the final fees and commence your professional services. Build your brokerage portfolio with care.
A retail shopping center is a special place where the tenant mix just has to match the client and customer requirements for the location. If you make mistakes in retail tenant placement then sales and customer interest in the property will slow. That can only mean on thing and that is a decline in rent.
So there are issues to consider in finding the right tenants and placing them in the property. Certainly the landlord should have a say in what they think about tenants and tenant mix choices, but the center manager should give guidance to the leasing process and tenant placement.
In this audio program, John Highman talks about retail leasing and the important choices to be remembered in attracting and converting tenants to a retail property and or shopping center.
In commercial real estate property management, procrastination can be a big issue or hurdle in getting the harder jobs done. Let’s face it, there are difficult things to do every day of the week in our industry. Have your people in the management team got the right knowledge, experience, and commitment?
Workload pressures in commercial property management are usually consistently high. Free time and spare time is a luxury if and when it occurs. Most days of the week are quite busy. Stress can also be a problem for some people.
What is the Focus?
The best commercial managers are the ones that get the work done first and foremost every day. They prioritize their time so that they are effective in the best possible ways. So what are the issues that put the pressure on? There are many pressures arising from separate categories such as:
So the best property managers know how to optimize their time and will usually do so efficiently and directly. Any inefficiencies in the job role will usually create problems with clients and property performance.
Any team leader in commercial property management should be careful to select the right people for the tasks and the portfolio under management. The team of people within the division should work to a system or plan to help them get the work done and to control the assets in the best possible way.
SOFTWARE: At the top of the list would have to be the selection and use of a specialized software program controlling property performance. There are many different programs available for the task, and some are better than others. Typically, a program will need to control rental monies in all categories, arrears management, tenant communication, lease administration, critical dates, and property maintenance. The best programs tend to be somewhat expensive, however they provide high levels of property control and reporting. If you are going to manage high quality assets for quality clients, then you will need such a program.
FILE ACCESS: Cloud based storage is always very useful. When the managers are out in the field meeting with tenants and landlords, cloud based storage can help when it comes to file access, reporting requirements, and all communications.
CLIENT ACCESS SERVICES: Develop a dedicated client portal for all client communications. All of the client reports can be stored online within a dedicated portal for VIP client access and communication.
TENANT COMMUNICATIONS: You can enhance tenant management through a special web site where any maintenance issues and communications are directed or first initiated. The website can retain all communications and redirect as required to the right people in a timely and efficient way. Like it or not, some of maintenance issues occur at the strangest of times, and you will need an effective communication process to handle those things.
MAINTENANCE PERSON: As the property management portfolio grows, there are benefits to be achieved by employing a specialist maintenance manager. The manager can oversee the day to day maintenance requirements and unexpected portfolio issues for all of the managers.
LEASE ADMINISTRATION: Appoint a year lease administration person to monitor the lease critical dates and upcoming lease changes and issues. The larger the portfolio, the more desirable, essential, and efficient you will find this position. A lease administrator will be a good addition to most property management portfolios.
TRUST ACCOUNTS AND FUNDS CONTROL: The handling of monies, rentals, arrears, and property performance will require an experienced accounting person understanding the issues of lease documentation, tenant management, and property law. There is high value here in choosing the right person for the role.
The commercial property management business is quite special in so many different ways and the same can be said for retail property management. From a portfolio of managed buildings, as an agent or broker you can generate many sales and leasing opportunities over time.
There is one specific thing to remember here. Property investors require specialized help in an ongoing way when it comes to optimizing property performance, improving the tenancy mix, maximizing cash flow, and serving both tenants and visitors to the property.
If you really understand property performance and how to enhance it, then that can be a good way for you to build your real estate business.
Are you the ‘Go to’ Property Manager?
Given that you should understand the local property market in a comprehensive way, you can be the best person to provide targeted solutions to the clients that you serve. Those solutions can be matched to the property, the tenancy mix, and the client. That’s how you grow a property management portfolio over time. Be specific and be real in the way in which you serve the commercial property and the client.
Show the client that you really have a grasp of the industry, the management process, and local tenants. There are some clever ways to do that.
Here are some other strategies to help you grow a property management portfolio:
Look at your location so that you understand where the best assets and buildings are located. When you manage, lease, and sell properties in the prime locations, your image and profile as a local agent will escalate quite quickly. Tell the local property market about your recent major appointments in management.
Find the better properties through deliberate assessment. Check out the properties for income potential, vacancy exposure, tenant popularity, and lease stability. You can learn a lot about particular properties by talking to the occupants, the landlord, and other businesses in the proximity.
Connect with the better landlords so that you can convert ongoing leads and transactions through well established relationships. The property owners locally will fall into different categories. Understand how you can serve individual property owners, corporations, public companies, small investors, and property trusts. In any town or city, there will be plenty of people in each category to connect and work with.
Use a professional software program for all of your property managements. It is a known fact that you cannot control and manage complex assets without using a significantly proven and well tested property management software program. When you have a number of tenants in a building there will be many active issues and things to control. The property management software needs to cover the bigger factors such lease documentation, rental cash flow, occupancy compliance, maintenance, budgeting, and financial performance. There is no way of managing a complex building without the right software to help you.
Integrate and assess your tenant lists so you know what is happening in a property and across a location. The tenants in a building will tell you a lot about the location and other businesses nearby. That market intelligence is valuable.
Improve property performance so that your services can be seen to be valuable in the bigger picture of property growth and change. When you are successful in turning around a difficult property, poor tenant mix, or refurbishment project, tell the local property people about that through articles, editorials, and social media.
Portfolio growth with any of your clients is a possibility. If you have some bigger clients in your portfolio, they are very likely to be candidates for alternative services such as project refurbishment, leasing, tenant relocations, and vacancy minimization. You can have a strategy for each.
Fees per management should be critically assessed so that you get the fees for the job involved. So many agents under quote to win a property management appointment. That is a recipe for disaster. Know every property for what it is and its demands, and then decide how much professional time you will need to devote to managing it on a weekly basis. Set your fees accordingly. It is easy to work out just how many hours you should be devoting to managing a property; from that point it is simply a matter of determining how much your time is worth.