Investing in commercial real estate does offer the potential for significant returns, though managing a commercial property requires a substantial amount of time, effort, and specialized knowledge. Today we are sharing our expertise gained from managing commercial properties along the Gulf Coast for decades. Below you’ll find our list of the most important considerations for those who are self-managing their commercial properties:
- Thorough Tenant Screening: Effective property management starts with selecting the right tenants. A meticulous screening process can help you avoid potential issues down the line. Thoroughly check tenants’ financial backgrounds, rental histories, and business credentials. Ensure that you have clearly written lease agreements and tenant guidelines to set expectations and mitigate future conflicts.
- Regular Property Maintenance: Keeping your commercial property well-maintained is crucial for tenant satisfaction and property value. Develop a proactive maintenance schedule that includes routine inspections, repairs, and upgrades. Promptly addressing maintenance concerns can prevent minor issues from escalating into costly problems.
- Financial Management: Maintain detailed financial records of income and expenses associated with your property. Proper bookkeeping and accounting are vital for tracking profitability, filing taxes, and making informed decisions. Security deposits are supposed to be held in escrow accounts, which means you’ll need a special account set up with your bank. It’s best to use property management software or hire an accountant to ensure accuracy.
- Tenant Communication: Establish open lines of communication with your tenants. Promptly address their concerns and inquiries and ensure that they understand their responsibilities outlined in the lease agreement before they sign the lease. Effective communication fosters positive relationships and tenant retention.
- Legal Compliance: Staying up-to-date with local, state, and federal regulations is crucial. Comply with zoning laws, safety codes, financial best practices, and accessibility requirements to avoid legal issues. Eviction procedures and tenant rights can be tricky, so we recommend having an attorney experienced with real estate to consult as needed.
- Emergency Preparedness: Face it – hurricanes are a fact of life on the Gulf Coast. You’ll need to have a plan in place for handling natural disasters and other emergencies, such as fires or security breaches. Regularly review and update your emergency protocols, and ensure tenants are aware of your emergency contacts.
- Marketing and Tenant Acquisition: When vacancies occur, effective marketing can minimize downtime. Having a strong network within the local business community is a good way to promote your property, as well as utilizing online listing sites and social media. But honestly, we think the best way to find tenants is to hire a commercial real estate agent who specializes in your type of property!
As you can see, the “secret sauce” for effective commercial property management is really just organization, hard work, and having the right people on your team! While some investors may choose to self-manage their properties initially, there often comes a point when it might be time to consider enlisting the services of a property manager. Some signs that it might be time to hire a property manager include:
- Overwhelming Time Commitment: Has balancing property management with other responsibilities become challenging? Is your family or other business suffering?
- Geographic Distance: Do you find yourself spending more time driving than working? If your property is far from where you primarily spend your days, managing it effectively can be difficult.
- Limited Expertise: Are you consistently running into new situations that you’re not sure how to handle, either with tenants or with your property? Lack of experience in property management can lead to costly mistakes.
- Tenant Issues: Handling difficult tenants or disputes is exhausting. Do you find yourself irritable at tenants most of the time, even your best tenants? Are tenant problems eating into your productivity or are you taking out frustrations on your family? These are all signs that it’s time to step back and find a property manager.
- Scalability: Returning to number one…if you’re expanding your property portfolio, the time commitment will grow as well. A dedicated property manager can handle the increased workload, freeing you up to find more deals.
Self-managing a commercial property investment can be rewarding but requires dedication, knowledge, and time. As demands increase or your portfolio grows, hiring a property manager can provide the expertise and support necessary for efficient and effective property management. If you’re looking for a commercial property manager in Mobile, Baldwin or along the Gulf Coast, give us a call today!
