June 17, 2022 | business
Do You Need Professional Commercial Property Management?
Commercial properties can be a great investment, but they are not always an easy endeavor. There are people and companies that can make your life a lot easier: property managers.
As a real estate investor, you have two main options. You can either hire a property management company to take on the day-to-day operations of your investment or do it all yourself. There are pros and cons to each, but your final answer will truly depend on your business and your personal capacity.
Hiring a Property Manager vs. DIY Management
Investing in a commercial property is more than just purchasing a building and renting it out to a tenant. There’s a lot that goes on behind the scenes that can make or break an investment, like:
- Maintenance and upkeep of the property
- Filling vacancies and marketing the property
- Keeping up with legal requirements
- Managing finances
As an investor, these duties can fall on your shoulders or those of a property manager.
If you choose to do it yourself, these things will be mainly your responsibility. On the plus side, you won’t have a property management company eating away at your profit margin every month. But on the other hand, you’ll be responsible for every aspect of your property management.
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Advantages of Hiring a Commercial Property Manager
What can a commercial property manager do for you? Here are a few advantages.
1. A property manager will free up your schedule.
Arguably, the biggest advantage to hiring a property manager is that they free up your schedule to tend to other things.
If you come from the world of residential real estate investment, you may be tempted to go the DIY route. But commercial properties can be very different from managing one tenant in a rental house.
Keeping up with a commercial property is often a major time commitment. Essentially, with bigger properties come bigger problems. You’ll certainly save money overall, due to economy of scale. But without a property management company, you will be losing out on time that could be spent doing other things— things that would ultimately generate more money than what you would pay a property manager.
Instead of spending time keeping up with your property, you have time for tasks like:
- Keeping your other full-time job or running another side hustle
- Scoping out other properties to grow your business
- Weekends and vacations
As you read through the other advantages of property managers, think about the time that it would take for you to run the property yourself. Is that time better spent elsewhere?
2. They will help you take care of the legal aspect of your property.
Being a landlord means you need to be familiar with all of the laws and regulations regarding real estate on the local, state, and federal levels. It can be hard to keep up with the legal documentation. A property management company can help you with most legal aspects of leasing out your land and keep you compliant.
3. A property manager will keep records and manage finances for you.
Corresponding with tenants, record keeping, and tracking finances from a commercial investment property— especially one with numerous tenants— is a full-time job. A property management company will be able to keep track of all of this.
They will keep up with tenants and give proper notices for rent that is due, move-out times, evictions, and more. They’ll keep appropriate records to protect you as a landlord and make sure your financial books are organized and profitable.
4. A property manager will be on call so you don’t have to.
Nobody wants a call in the middle of the night that a bathroom pipe has busted. These types of calls usually come at the most inopportune times and can add a lot to your plate if you have other things in life going on.
It will be your property manager’s job to answer and respond to all calls like this. They’ll likely have a team that they can dispatch quickly to resolve issues before they become major problems. Additionally, the property manager will likely have a roster of contractors and vendors that they know and trust for larger jobs, meaning you won’t have to worry about hiring the right person for the job each time something goes wrong.
Not only does this make your life easier, but it typically provides a better experience for your tenants.
5. You don’t have to be an employer.
Many times, operating a large commercial property— such as an apartment complex— is too much for any one person to handle anyways. This means that you will still have to hire help, such as an on-staff maintenance crew, leasing office personnel, etc.
So on top of being an investor, you would now be an employer as well, worrying about tasks like hiring, payroll, benefits, and managing your staff. When you contract a property management company, these positions are usually filled by their employees or contractors. One less thing for you to worry about!
6. A property manager gives you more location independence.
If you were to go the DIY management route, you will likely be tied down to that location. You’ll always need to be nearby to respond to calls and emergencies. This not only limits what you do with your free time and where you can live, but it also limits your future investment locations.
Hiring a property manager allows you to step away from the property anytime you need. In fact, you don’t even have to live in the same city— or state— if you have someone running the entire operation for you.
Advantages of Managing Your Own Commercial Property
1. You’ll have complete control.
If you’re someone who has very specific ideas on how you’d like your property (or properties) to run, it can be nerve-wracking to trust another company to make the same choices you would. There’s no sense in hiring someone to do the job if you need to be in constant contact with them anyway!
Your company’s reputation can make or break your business. If you’ve worked hard to build your business, managing it yourself can give you some peace of mind.
2. You can eliminate costs.
The biggest advantage being your own property manager is the cost savings. Commercial property managers don’t come cheap, and handling all of the managerial tasks yourself can increase your overall profits. If you have significant experience in the commercial property industry, chances are that you have all the skills needed to manage properties—and you won’t have to pay someone else to do it!
If you feel like you lack experience with a particular aspect of management, this is where hiring another professional might come in handy. For instance, hiring a bookkeeper to handle expenses. This still cuts your costs down because you’re hiring one position—not an entire agency.
3. You might avoid contractor headaches.
Maybe you’d prefer to be an employer! Hiring and managing your own employees—instead of contractors—means you can own the process from start to finish. You can reward employees who go above and beyond, choosing qualified candidates that can help you grow your business. This in turn can make it even easier to buy that next property. You’ll also have the knowledge and experience of your current employees to rely on as you build or manage the new building.
4. You can respond faster.
With your boots on the ground, you won’t have to wait for reports to come in from your management company—you’ll know exactly what’s going on and when, and you’ll be in a better position to move quickly. If you have a complicated property or demanding tenants, a faster response time can be invaluable.
5. You can still build your company.
Growing your company without a commercial property management company is absolutely possible. If you can hire trusted employees to help manage your company, you’ll be able to free up your own time to work on strategy, property scouting, and other company-growing activities. You’ll have to build your own roster of professionals to manage your properties, instead of hiring a management company with all of those services included, but it may be worth it in the long run.
The Big Decision
Keeping a commercial investment property up and running can be complicated! Whether you manage it yourself or hire a management company, the ultimate goal is to grow your business. Depending on the particular details of your business, these advantages might sway you to one option over another!
You Have Options
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