5 Property Management Tests for Commercial Property Owners and Asset Managers

five Property Management Tests for Commercial Real Estate Owners and Asset  Managers

With current depressed real estate values as well as rents,  capable property management is more important than before. It is the main  contributor to value in stagnant areas, because while there are prospects for  rent growth on the horizon, lease increases could be two to five years off --  depending on the market. Management focuses on conserving and building worth  NOW.

Most commercial real estate owners outsource the property  supervision functions to a general brokerage firm that offers property  management solutions or to a specialized property management company.  Unfortunately, choice of the property management firm is often made with very  little due diligence within the qualifications of a firm, the person who will  actually be doing the controlling, and the knowledge of the specific market  where properties reside. Image standing on a busy sidewalk and handing a  stranger the suitcase stuffed with cash. In essence, that is the same as  selecting a supervisor without due diligence, because you are handing the equity  within the property to a mere passerby for care and custodianship.

How do  you measure the job a management company is doing? This short article attempts  to help you figure that out, because it makes actually less sense to settle for  poor service from a sub-par management company then it does to blame all  properties' issues on th e management company.

Below are five tell-tale  tests to check the performance level of your management (if your management  service is in-house, this test may also apply).

Test #1 Few, if any,  ideas for enhancement come from the property manager for ways to improve the  physical property as well as leasing situation.

You hired a caretaker,  not a director. Managers understand the word "proactive".

Test #2  Property operations reports are irregular and hard to decipher.

There is  no reason for this and the situation is easy to fix. Have an Excel schedule  designed to supply only the information you want, or select one of the  comprehensive and off the shelf software programs available. Examples of  typically the latter are the MRI, Yardi, Quicken or Property Options software  programs.

I prefer real-time, online file-sharing between the owner or  perhaps asset manager and the property manager. This setup does dual duty - you  can access the information anytime you need this for a lender, partners, upper  management, etc . Plus, current reporting will insure that the property manager  won't wait until your day before a property report is due to actually do  something related to your own real estate. A simple, inexpensive service like Go  to My PERSONAL COMPUTER can set up a multiple user system and discuss management  reports.

Test #3 The person you'd hired to handle the property seems to  have disappeared and someone else is managing often the asset.

You have  experienced "bait and switch", a situation the location where the well-rounded  resume of an experienced manager lands the business for your firm but then it is  it goes to an underling or maybe trainee for handling. This happens in both very  large national companies and in small local Property management Hudson Valley NY firms. Protect yourself  through putting a "Key Man" clause in the agreement that gives a person an 'out'  if the person you thought you'd employed isn't actually on the job, or  quits.

Test #4 The actual management firm location is some distance from  the handled property and you are not certain how often the property is actually  visited by a property manager.

Nothing, absolutely nothing, takes the  place associated with property site visits. A property manager's responsibility  includes continuing routine contact with tenants. That way, when lease renewal  period comes up, there is no unnecessary re-negotiation or delay. Personally, I  favor hiring property managers who live and work in the same market since the  property over a big- name firm in a nearby town. If there is not a qualified  property manager in the local market and you should use someone in a nearby  city, be very particular about requiring periodic on-site visits and what you  want to understand after each visit. Your manager needs to talk to the exact  tenants face to face before problems arise, and emails, twitter posts or phone  calls are no substitutes!

Test #5 You receive normal reports about the  property, but no information about the real estate market where property  sits.

Your manager is doing half the job. To create educated decisions  about assets, an owner or resource manager must understand how their property  compares to others in the market and factors are impacting the local scene. A  market condition statement is not a canned demographic service report from a  membership service - it is a first- hand, feet on the road report  analysis.

A good property manager is invaluable and should get incentives  for peak performance. If the above tests reveal that your current management  doesn't measure up, it is time to have a heart-to-heart discussion. Incorporate  the above requirements in to the management agreement. This way, if there is no  improvement, you are free to look for other options one of the competitive firms  vying for business.