How to Be a Top Commercial Property Manager Today

To be a top commercial real estate property manager you need to have solid market knowledge but you also need a comprehensive set of personal skills to match the needs of the property and the clients that you work for.

Many managers will graduate from ‘residential’ property, and move into ‘commercial’ property as part of growing and expanding their career. Whilst the idea is good, there are many factors and issues involved in changing property type. Commercial property is very different and much more complex than residential property; the knowledge base required of a person providing management services is far more extensive.

I do not want to scare you away from commercial property management as a career; but I do want you to respect the skills and knowledge that you will need in the role. The fee for managing a commercial property is substantial, but with that comes the requirement for personal skill and property control on the part of the manager and the agency.

In talking about this, I am not at this time specifically bringing into the discussion retail property. Retail shopping centre management is even more complex than commercial management. The fees in retail property are for this reason generally higher than that which applies to managing commercial property.

Here are some other main skills required of the property manager in performing their daily and weekly duties.

  1. Negotiation skills will always feature as part of the job specification. Negotiations will be diverse across many different situations including property leasing, contracts and negotiations, maintenance contractor’s, tenants, solicitors, accountants, and landlords. The commercial property manager needs to have professional skills and suitable training when it comes to these diverse negotiation requirements.
  2. Leasing situations will arise continually from the managed properties. The larger the portfolio, the more frequent the leasing requirement. In my opinion the property manager should be well skilled in leasing structures and or leasing negotiations. In this way they can help the landlords that they act for as part of selecting a new tenants for the managed investment property.
  3. Lease documentation will vary greatly from property to property. This then says that the property manager needs to understand the differences in leases, how to bring them about, and how to interpret them. Rent reviews, rental structures, maintenance, option terms, refurbishment requirements, and tenant covenants are all unique situations that require specialist review with each and every lease in a managed portfolio. Critical dates will arise from every lease document as part of the management process. Many an inexperienced property manager has overlooked critical dates in the leases only to find that the landlords position has weakened considerably as a direct result.
  4. Income and expenditure analysis will occur throughout the financial year for a managed property. The income needs to be optimized, and the expenditure needs to be suitably controlled. The difference between the two is the net income and that will have a direct impact on the value of the property for the landlord. It is the property managers duty to ensure that the best outcome is achieved given the prevailing market conditions.
  5. Tenant communications should be well maintained throughout the year. When tenants are overlooked or ignored by the property manager, relationships soon sour, hence this exposes the property to unstable rental and or vacancy factors. Keep in contact with all tenants on a regular basis. Record all communications in writing so that the necessary evidence is available if any lease situation becomes the subject of a dispute.
  6. Landlord reporting and controls will be unique to the particular landlord. Whilst most agencies have some form of income and expenditure controls and specific reporting processes, it is up to the property manager to interpret the reports and provide the necessary recommendations. Every monthly report produced for the managed property should be carefully checked as part of the month end process.
  7. Maintenance controls will involve essential services and maintenance contractors. The age of the property will have some impact on the strategies behind repairs and maintenance. The complexity of the property and the tenancy mix will also have impact on the maintenance activity. Every lease should allow for the permitted use relating to the tenancy. Maintenance may be part of that process and certain maintenance costs may be applied to the tenant or the landlord depending on the particular lease situations. I go back to the point that each lease needs to be fully understood by the property manager.

Property performance is achieved through a fine balance of all of the above issues. That is why special skills and knowledge are part of the job specification for a commercial property manager.

Six Steps To Commercial Property Success

Commercial properties are a great addition to any investor’s portfolio. Investors buy commercial properties and lease them for monthly income. However, buying a commercial property requires skill, knowledge and diligence. Purchase commercial property by following six key steps:

Select a Property Type
First, determine why you wish to purchase a commercial property. Buy the appropriate property for your needs. For example, if you need a business headquarters, consider an office building within city limits for proximity to employees, suppliers and customers. If you need to own farm houses outside a city, consider buying land. Below are other commercial property types:

• Apartment buildings
• Retail buildings
• Warehouses
• Mobile home parks
• Marinas
• etc

Arrange Financing
The second step is to arrange financing for your property. Commercial properties are relatively expensive compared to residential properties, so you should budget sufficient funds. Set aside reserves and find out the total loan amount you are preapproved for. Know the total capital outlay needed to close. Banks and individual lenders underwrite loans primarily based on a property’s Loan to Value (LTV) and debt coverage ratio (DCR) and secondarily to the borrower’s creditworthiness and experience. You will need to prepare a comprehensive loan package to “sell” the property and yourself to the loan officer.

Find a Commercial Agent
The third step is to find a commercial agent to assist in your property hunt. The commercial agent is a link between the seller and buyer. A veteran agent will likely have a “pocket” listing of properties available. The agent should listen to your requirements, make appropriate suggestions and help you avoid mistakes.

Make Offers
When your agent gives you a list of properties, be sure to cull a short list from it. Get the seller’s profit and loss statement, a statement of cash flow and rent rolls. After selecting a few properties that meet your criteria, submit letters of interest (LOIs) to your agent, who will forward them to the seller. Each LOI will spell out general terms like price, financing, due diligence period, good faith deposit amounts, etc.

Conduct Due Diligence
Once your offer is accepted by the seller, perform due diligence to ensure the profit and loss (P & L) and cash flow numbers are accurate. Verify income and expenses. Beware of any impending tenant vacancy, inflated “pro forma” figures, deferred maintenance, ambiguous or onerous contract clauses and local commercial property competition. Beware of the overall commercial property market cycle. Have a qualified commercial real estate lawyer review all contracts.

Manage The Manager
After you close escrow, be sure to manage your manager or management team. A great manager will keep an eye on expenses while maintaining or improving income generation. Either keep or replace the existing manager. In fact, preselect a manager long before you even close on the property. In this manner, you can have a near seamless ownership transition.

Tip – You do not want to be in the business of management. That’s what managers are for. Your job is to sit back and let the manager deal with the day to day operations. You need to step out of the picture and just collect checks. Better yet, find the next commercial property for your portfolio.

Summary of Steps
• Select a property type
• Arrange financing
• Find a commercial agent
• Make offers
• Conduct due diligence
• Manage the managers

Invest Money In Commercial Property for Best Returns

Investing money in commercial property is nowadays catching up. Those people who are already invested in residential property are now looking at this kind of opportunity. It is happening quite frequently in the case of the people who made good money in the residential property. They would like to explore the opportunity of investing in this kind of properties also. The advantage of investing in business properties you need to spend less time over the maintenance of the property. Even you can lend it out for someone to take care of the development and finally can make good money over the long-term. You are having the great advantage of finding someone who can take the property for a lease for a long time. Once if they are committed to pay the rent as per your expectations with regular rise on each year, it is definitely going to give you even good returns in terms of rent. If the person who has taken the lease is an organized a person, it is going to stay there in the property for the long-term and you need not such for a tenant each year.

The good advantage of business properties you need to invest high amount of money only once and that’s it. You need not invest money regularly for updating it and renovating it. In many cases that is being taken care by the company who has taken it for commercial lease. Does maintenance cost over the long-term is going to be much less in a business property when compared with the residential property.

You can find a tenant who can give you the property back in the same condition that you have given to him after a certain period of end of the lease. Does the tenant is even going to pay the maintenance cost after vacating the property. This is going to save you a lot of money and hence if you are having a chance to invest you can invest money in commercial property. The other advantage of commercial properties it is bit easy to predict the success of a commercial property. As you are already being in a heart area you need not wait for the time so that it will develop. Finding a tenant and getting a proper rent of the expected level is quite easy in the case of commercial property when compared with the region shall property.

Because of the change in the policies of the lenders and bankers now a days it becomes bit easy to get the money for investing in commercial properties. You can find a suitable mortgage even if you are a small level invest your to invest in commercial properties. The main reason because of which we are not entered into the commercial properties we don’t understand the advantages and disadvantages of investing in that kind of property. Being we are very much well aware of the home that we are staying, we are just more comfortable investing in flats and homes. We feel like this is a kind of investment even though the basic aim is not investing in property. If investment is the only reason because of which we are buying something it is always better to buy a commercial property rather than a recession flat. It is just because the value of the house may decrease over the time but the Valley of the commercial property will definitely rise with respect to time.

We shall not fall into a rotation that commercial property means we shall buy a very big one and you need to invest a lot of money. Even we can buy a small commercial property in a small value. We can just by even a small place for a retail shop or a coffee shop. These kind of small ventures are definitely very much affordable even for the middle class people.