Over time any investment property will suffer decline unless strategies are implemented to underpin property performance both financially and physically. That’s where the experienced and professional commercial real estate agent can provide practiced skills and knowledge to the equation.
Most investors may understand the pressures of the property market, but they will not have the resources to connect into it in a comprehensive way. That is where any skilled agent or broker can add real service and skills to help property investors locally in finding the right tenants and improving property performance. I say ‘locally’ because every agent should focus at least 75% of their marketing efforts into the local region where rents, prices, and property supply can be easily identified. In that way an agent becomes a specialist.
If you work for a number of property investors with quality investments, you can establish annual property performance plans to help improve issues and challenges. There should be a fee to the process or an understanding that you will be getting the listings as they come to the market.
Here are some ways to develop an action plan of approach to help improve the value of a property and its performance:
- Tenant mix and selection – In a property that has multiple tenants in occupation, the placement of tenants and the selection of the right tenants will bring improvements to the performance of the property over time. Your tenant canvassing and soliciting process will have relevance here.
- Property leases – Each lease in a property will have variations to clauses and occupancy situations. Get to know what each lease is doing from a cash flow perspective, and determine the critical dates behind each lease review, option, and tenant commitment. Action issues early for the landlord client so rental and occupancy issues are maintained.
- Vacancy solutions – Generally speaking most vacancy issues can be identified early in an investment property. There are signs to look for including terms of lease, and tenant trade. When you see a vacancy issue arising, start discussions early with the tenant and landlord so that a new tenant or lease can be created as soon as possible. A vacancy in a property is a real drain on rent and outgoings.
- Market rental – Every 3 months the market rentals in a region and within any property type should be compared and tracked. In that way it makes it a lot easier for you to negotiate new leases when they arise.
- Net income – The net income for a property will be the result of key indicators such as the property performance trends across gross income, expenditure, occupancy levels, lease incentives, and market rents. Get to know what key performance indicators apply to investment property types in your location. That information is invaluable for investors and landlords in so many different ways.
- Tenant retention – The tenants in any property should be split into groups where the higher quality tenants can be encouraged to continue in occupancy at lease expiry. A lease strategy can then be set for those tenants. The less important tenants can be set aside for replacement when leases expire or relocation is required.
- Property maintenance – The maintenance of a property will send visible messages to the tenants in occupation and the customers visiting the property. A poorly maintained property will also show signs of ageing; that then leads to challenges with leasing, lease renegotiation, and market rentals. If you are to be involved with a property for a landlord or investor, identify those weakness issues with maintenance that can detract from property performance.
- Renovation strategies – It is good to know what renovation or expansion plans a property investor may have with their property. In that way you can explain the future of the asset to tenants as they seek to plan their business viability.
Simple strategies like these help property owners and investors move their property performance to the next levels of improvement. Information and action underpin successful property investments today. That is where any specialised commercial real estate agent or broker can provide valuable services to clients.