10 Things to Know: Property ManagementView all Press Releases
Before You Buy Your First Commercial Property
It may seem like an easy way to make money. Some financial motivational speakers say buy a property, rent it out, make bank. But what really goes into managing a commercial property?
Check out the ten need to know items before you buy your first commercial property.
1. What is property management?
Property management includes anything regarding the property including physical maintenance, rent, bills, mortgages, taxes, city permits, and anything else you can think of.
2. How many properties do they manage at a time and how will this affect my property?
Property Management teams manage many properties at a time. The benefit to this is they are experts in their field. They have seen every commercial property pickle there is to see, and they know how to get you out of it! Whether it is a permit problem, a problem from past management, or anything else, teams like the Hunington Properties property management team know how to fix your problems so that you can relax and enjoy the income stream.
3. Do I need to pay someone to manage my property or can I do it myself?
You can choose to manage your own property or have someone do it for you. Our recommendation is to have an expert professional, such as the management team at Hunington Properties do it for you. The reason we suggest this is there are many tricky legal and financial matters that a property manager takes care of on a day to day basis. These things are easy to mix up if you don’t know what you are doing, so we recommend letting an experienced professional handle it for you.
4. How much does it cost to manage a property?
Costs for property management vary and are decided upon at the time the management agreement is drawn up. Fees may be a certain percent of rent collected or a flat fee, and they vary depending on the size of structure and amount of work that is required to keep it up.
5. What is CAM and why is it so important?
CAM stands for Common Area Maintenance, which includes water, physical upkeep of the property grounds, sewage and trash, and pest control. This is a big-ticket item for many tenants; it is also variable, aka it changes from year to year. So, it is very important to keep track of how much has been paid and how much is owed as a result of a monthly CAM increase from the year before. Also important is to know how to accurately estimate what future CAM will be in order to avoid large CAM reconciliations at the end of the year. This can be very high stress if you don’t know how to make this estimate, so we recommend trusting this to a professional.
6. Do property managers lease the property out if a tenant stops leasing from me?
In the case of closure due to nonpayment by a tenant, the management team will work diligently to fill that space again. It works a little differently when a lease expires. Either the management company works with the current tenant to renew the current lease, or you, the owner will have a separate leasing team, like the leasing team at Hunington Properties, fill the vacancy for them. When there is a management team and a leasing team within the same company, like there is with Hunington Properties, it can alleviate some of complexity of the situation; they are in constant contact with each other, working diligently to keep your properties fully leased.
7. Will the property managers pay the bills/taxes or do I do that?
In a word, yes. The property managers and their companion accounting team will receive all the bills and correspondence on your behalf. They will handle all of this and will let you know of anything important that comes up so that you stay in the loop with your property’s financials.
8. Do I have to deal with the tenants or will they do that for me?
Dealing with tenants can be a sticky wicket, and this is something that property managers are happy to take care of for you. This particular part of property management is very time consuming and it is a relief for property owners to let someone else take that mantle.
9. Will the property managers operate from my physical property or will they work remotely?
Your property manager will operate from their home office and not from your property. However, they will make regular stops on your property to monitor the physical condition of the property, check in with tenants, and make sure billed work is being done.
10. Will the property managers have access to my financial information?
Property management teams have access to the information you provide to them regarding your property. However, it is much easier for you if they have access to the financial information for your property, because it allows them to do their job more efficiently and relieves much of the strain on you in owning a property.
Having these ten items in your toolbelt as you move forward into your first experience as a property owner will help you look like a pro. If you have other questions about what goes into property management give us a shout on LinkedIn. We would love to hear from you!