The process of managing a property is far more than just collecting the rent and administering leases. It can and should be a strategic process that is matched into the landlord and their property investment requirements. That is where ‘strategy’ takes over.
Local area assessments and strategic investment discussions should be happening between asset managers and their clients frequently and at least monthly.
The best property managers and retail centre managers know all about ‘strategy’ and they use it as part of developing unique and special property services for their clients. Those property managers will speak frequently with their clients, to find out what could be changing for the client in the investment targets, and well as sharing property information of value for the location.
Things change in property, all too quickly. Every year the property market will change when it comes to tenants, enquiry, business sentiment, operational costs, and occupancy. That is why a strategic plan to manage a property is so important. Facts can be seen and discussed, and choices can be made. A well-managed property is a product of many controls, activities, and strategies. That is a communication process.
How to Implement a Property Management System
Here are some facts to think about as you design and implement a property management service for your clients:
- Talk to tenants – Pressures on tenants change throughout the year when you are considering occupancy, business costs, and business activities. Work closely with your tenants to stay ahead of their property pressures. Ask questions regularly of all tenants in a property, so you can advise the landlord of changes and opportunities. It is all about reducing risk.
- Control and reduce arrears – Arrears or the slow or non-payment of rent will be a constant problem in many properties (depending on property age, location, and improvements). Supply and demand for space locally can change the arrears and occupancy equation. Some tenants are more successful than others, and that is also why ongoing tenant contact is a good thing. A problem of arrears or slow payment is the sign of a problem to come; check your arrears every week for pressures and signs of struggle.
- Watch and action lease dates – Lease dates are critical ‘thresholds’ in the cycle of tenant occupancy. They will be for things such as options, rent changes, expiry dates, renovation provisions, and insurance updates. There is a legal thing here called ‘time is of the essence’ and it can apply to the implementation of critical lease dates. If a date passes without
- Improve rental stability and growth – In an investment property it is nice to see the rent grow over time, but the occupancy of the property and the viability of the asset will the primary concern. What can you do to allow tenants to occupy a property successfully over time?
- Put some direction and control into expenditure – Every property will (or should) have a budget of expenditure that can be set, tracked, and changed as the year progresses. That budget can then be compared to other similar properties in the same general location. Ultimately you are looking to keep your expenditure budgets in line with other similar properties. Tenants are sensitive to costs and will look around a location to find a property with lower outgoings and rental structures. All of this then comes back to reducing the risk for the landlord over time.
- Predictive and accurate reporting – This is part of a weekly and monthly reporting cycle to the landlord. I go back to the point that property management is not just about ‘collecting the rent’. There are plenty of other things to do and all those things should be in a reporting process that looks to the future and controls the current cash flows. Reporting is part of that.
There are other issues to watch in a commercial property management service, so the list gets longer. If you are a commercial or retail property manager, take these facts and put them into your real estate business services.
Give the landlords you act for a special service that is matched into your real estate business. Over time that should mean the growth of your real estate property management portfolio.