Tuesday 14 August 2018

Asset Management – ‘to self-manage or to outsource: that is the question’

You have just bought a fully Leased commercial asset as a long-term investment.  Now what do you do about the management of the property? You would like to be hands-on, so decide to manage it Yourself: ‘what could go wrong, it’s a pretty new property’.

A lot it would seem - phone calls during the middle of the night, leaking roof, an insurance claim from external cladding falling on a passer-by, Tenant wants a rent reduction, the Tenant starts to fall behind in his rental payments, the Tenant shuts up shop in the middle of the night.

Yes, self-managing Your asset will cut short-term costs and will enable you to be ‘hands on’ with Your asset.  However, the lack of experience and expertise can make the world of commercial property management overwhelming, time consuming and leave you vulnerable to a potential lawsuit.

A competent and experienced Asset Manager has the industry specific skills, knowledge and resources to manage Your investment and ensure that Your returns are maximised.  A good Asset Manager is worth their weight in gold and will also ensure that their fee is recoverable from the Tenant’s outgoings or built into the rental costs.  Effective Asset Management creates value for Your Asset and Your Tenant particularly with long term Tenant retention and stability.  Industry statistics report that 88% of Tenants believe that a quality Asset Manager has a strong impact on their decision as to whether they will renew their Lease or not and has a very big impact on their employee retention. Done well, Asset Management will lead to Tenant’s staying longer and will also have a positive impact on their business performance.

At minimum, Your Asset Manager should be reporting to you monthly on the Asset, the Tenant and the financials, managing maintenance requests, regularly and empathetically communicating with you, the Tenant, suppliers and tradesman, holding regular inspections, collecting rent, chasing and reporting on arrears, managing compliance of the Asset, market the Asset for new leasing, renewals and options and budget and manage the outgoings.

Recoverable Management Fees

Some property owners feel they’d rather take matters into their own hands as a way to avoid paying the associated fees involved with having their property professionally managed. However, they may not be aware that these fees can be recovered through the Tenant’s outgoings. Should an owner for some reason not wish to recover the fees through Tenant outgoings, then the fees are tax deductible (see your accountant for further information).

Tenant Screening

Tenants paying rent on time.  Tenants renting for longer durations. Tenants looking after the property and treating it with respect. Sounds ideal? This can be achieved by Your Asset Manager thoroughly screening applicants in the initial deal negotiation phase. A good Asset Manager uses their experience and expertise to work on behalf of the property owner to avoid unfavourable Tenants. Filtering any unfavourable Tenants at the early stages will save time and avoid future headaches for property owners.

Professional Advise and Feedback

To minimise vacancy rates a proactive Asset Manager will advise a Landlord on property improvements, achievable rentals, market conditions and marketing strategies to best help Lease their property. Providing a workspace that meets today’s employee expectations is critical to keeping Tenants. It is essential that Your Asset Manager is keeping up to date on workspace trends and on what the requirements of Your Tenants are and more so, reporting back to you on this.

Knowledge of Relevant Laws and Legislation

The Real Estate Industry is governed by a wide range of strict laws and regulations, which often differ from state to state. Up-to-date Asset Managers have a deep and thorough understanding of the current laws and legislation and will work to ensure their Landlord and their property is best protected at all times.

Maintain Tenant Satisfaction

A great Asset Manager seeks to develop and maintain a positive relationship with not only property owners but also with their Tenants. As a property owner, ensuring Tenants are satisfied with the property and in particular the management of it is crucial to ensuring longevity of tenure. When a Tenant feels they aren’t being listened to or aren’t having their issues addressed, they are more likely to move elsewhere resulting in loss of income for the owner.

Handling the Rent Collection Process

On the topic of creating positive relationships with Tenants, collecting rent is at times the biggest hindrance in allowing this to happen.  A professional Asset Manager acknowledges the importance in a Landlord receiving their rent on time and therefore acknowledge it to be their job to chase down outstanding rent, and when required issue breach or eviction notices. Understanding the laws, the Tenant’s Lease and handling rent collection with professionalism and firmness, whilst still delivering an exceptional customer experience, is a sign of a great Asset Manager.

Oversee Maintenance and Repairs

When it comes to appointing an Asset Manager to handle Your property’s maintenance and repairs you want to ensure they have the knowledge, support and contacts to be able to effectively deal with the smallest issue, such as a broken tile, to a full Asset refurbishment. Keeping Your property well maintained is preserving Your asset and its value – prevention is better than the cure! Your Asset Manager will have access to a team of maintenance and contract staff, all of whom should have been screened prior to being appointed, including checking their qualifications and safety records.

Site Inspections

Not all property owners live near their properties which can make it difficult to regularly inspect them. You may ask why would you need to inspect Your property? What happens if the Tenant has subleased the property, is carrying out an illegal business, put holes or walls up, doing something that makes the property non-fire safe compliant? You won’t know unless you inspect the property.  Having a capable Asset Manager carry out these inspections for you at least twice yearly and providing you with a detailed report will provide you with peace of mind.

Your Asset Manager, should be Your biggest asset

For further information contact Elyse on 07 3148 9901 or at pm@yourcommercial.com.au

 

Your Property | Your Asset Manager | Your Commercial