Questions about commercial property management should be understood

Now that you have proposed to buy commercial real estate and are waiting to close the hosting, you may need to start looking for a property manager to professionally manage the property. Your real estate investment advisor should provide you with 2 or 3 local companies, each with its own advice. Your job is to decide which company you hire. The property manager will be the primary point of contact between you [as the landlord] and the tenant. Her main job is:

1. Receive and collect tenant rents and other payments. This is usually very simple until the tenant does not send a rent check. A good property manager will somehow let the tenant pay the rent, and a bad property manager will throw a monkey!
2. Hire, pay and supervise personnel to maintain, repair and operate property such as cleaning up trash, cleaning windows and landscaping. Otherwise, the property will be unattractive and customers may not visit your tenant. Merchant. The tenant may then not renew the lease. Therefore, you may not be able to achieve the expected cash flow.
3. Rent any vacant space.
4. Accurately record revenue and expenses and provide you with monthly reports.

A good property manager is critical to keeping your property fully occupied in the highest market rents, and tenants are happy and in turn help you achieve your investment goals. Before choosing a property management company, you may wish to:

1. Interview the company, focusing on how the company handles and solves problems, such as delaying payments.
2. Talk to people who manage property on a daily basis, as this may be different from the person who signed the property management contract. You want people with strong interpersonal skills to effectively deal with tenants.

Property management companies usually require a contract for at least one year. The contract should state the duties of the property manager, compensation, and what the landlord needs to approve.

Agent compensation: You must pay someone to manage and rent the property. You may have one company to manage the property and another company to rent the property. However, it is best to work with a company that manages and leases to save time and money.

1. management fee: This fee varies between 3-6% of the monthly basic rent of the retail center, depending on the amount of work required to manage the property. For example, managing a $2 million retail center with only one tenant would require less time for a $2 million retail store with 12 tenants. Therefore, for a center with 12 tenants, you may need to pay a higher percentage to motivate the property manager. You should negotiate the fee based on the base rent rather than the percentage of the total rent. The basic rent does not include the NNN fee. Ideally, you will need a tenant to pay a share of their leased property management fees.
2. Late payment fee: When the tenant pays late, the lease usually requires him to pay late fees. The property manager can retain this fee as a reward for collecting rent.
3. Rental costs: This fee compensates the property manager for renting any vacant space. In a typical lease contract, the leasing company wants to have a 4-7% total rent during the lease term. It also wants to pay the rental fee when the new tenant moves in. In addition, the leasing company needs about 2% of the total rent when renewing the lease. Tenants can also ask tenants to improve [TI] credit, typically paying construction costs between $10 and $20 per square foot. Therefore, if a new tenant with a 10-year lease expires after one year, you may lose money. As a landlord you should:

• Long-term leases [10 years or more] can only be approved if the tenant's financial strength is solid. Otherwise, it may be better to reduce the lease to 3 - 5 years.
• Ensure that the new lease has certain rent escalation conditions, preferably based on the Consumer Price Index [CPI], which means that the inflation rate is 3-4% per year instead of the lower fixed 1-2% annual increase.
• Consider the tenant's TI request as one of the factors in approving the lease. TI's credit depends on whether you need more tenants or tenants who need you more.
• Negotiate a flat rate renewal fee, for example $500, instead of paying a certain percentage of the rent during the lease term. A company deals with leasing and management, making negotiations easier.
• Negotiation pays a lower percentage to the leasing agent, for example 4% when no external leasing broker is involved.

As you can see, it is very important to minimize dozens of problems. Turnover rate because it directly affects the cash flow of your commercial property. An excellent property manager will help you achieve this goal.

Monthly report: The property manager should send you a report on income, expenses and property status every month. You should look at the report to see if the numbers make sense. you should:

1. Request a report showing the rent received and the CAM fee.
2. Apply for a separate bank account for your property and send you a monthly bank statement. Without this, the property manager will deposit and consolidate all rents for all properties she manages into her company's bank account.

If you instruct the property manager to send you excess cash flow, you will also receive a check.

Landlord approval: The management contract should specify a US dollar limit for special maintenance costs, beyond which you will need your approval. This amount ranges from the landlord to the landlord and the type of property. However, it usually ranges between $500 and $2,000.

Communicate with the property manager: In the first few months, you and the new property manager should communicate frequently to ensure smooth progress. You should provide written instructions to your property manager, such as an email, and keep a record of all correspondence. If the property manager does not follow your instructions, you can refer to your records and minimize disputes.

If you want to work hard to make money, you may want to manage your property. However, if you want to work smart, your partner should be a good property manager.

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