Once your commercial real estate holdings reach a certain level, you’ll probably want to hire someone to handle everything. Even if real estate investing is your full-time job, it’s highly doubtful you’ll be able to handle everything yourself. You’ll need professional landscapers, electrical contractors, licensed plumbers, and a small army of workers to handle the everyday tasks. What about overseeing the properties? Perhaps a property manager or assistant could handle all of those decisions that are starting to give you constant headaches.
As you diversify your commercial real estate portfolio, you’ll quickly notice that expenses are not always the same. A landscaping company might charge $50 per month to maintain the grounds of a 2-unit apartment building. The same company might charge $1,500 per month to maintain the grounds for an office building. The more you earn, the more you’ll be expected to pay. Most professional services don’t charge a flat hourly rate. They often charge per job. The more a property earns, the more the pros are going to charge to maintain or repair it. Banks often pay insane fees for professional services. The pros know the banks can afford it. But can you?
When dealing with professionals, contractors, or just about anyone, you need to be a master negotiator. Don’t be afraid to negotiate for a better price. Just because an office building across town is willing to pay $1,000 per month for landscaping, that doesn’t mean you have to. If you don’t like the price a company quotes you, find another company. Whether you’re looking for an HVAC company, a landscaper, or a rental agent, you’ll find that prices vary greatly from one company to the next.
Let’s say your negotiating with a property management service to handle the rentals for your apartments and office building. The first thing you should ask is what services the company offers. The company might screen and approve new tenants, and take care of any evictions. Is that all the company does? Perhaps you also want the management service to act as a liaison between you and maintenance companies. If the hot water goes out in one of your apartments, the tenant should be able to call the property management service. The service should then call a plumber to handle the hot water. What about property inspections? Most leases state that the landlord can inspect the property at regular intervals. Do you want to inspect every apartment or should the property management company do it? Let the property management service know exactly what tasks you’d like it to perform. If the company won’t do everything, find one that will.
Managing your commercial property also means increasing the income. There are several ways you can increase the income from commercial properties. Add new amenities for which you can justify increasing the rent or lease payment. If you own an office building, make sure you provide the latest technology and a worker-friendly environment so your tenants never want to leave. Install USB ports and mobile phone charging stations in employee breakrooms. Install free coffee and cappuccino machines. On holidays or other special occasions, have flowers delivered to every tenant’s front desk or receptionist. The little things go a long way. If you’re pocketing $25,000 per month from an office building, you should be treating the tenants with kid gloves to ensure that they never consider moving elsewhere.
If you own commercial buildings that you rent or lease to retail businesses, make sure you give the tenant every reason to stay. Pave or reseal the parking lot as often as necessary. Ensure that there are enough handicap parking spots. Make sure the landscaping and grounds are immaculate. For the safety of the workers, visit the property after dark and see if the parking lot needs more lighting. If you own several commercial buildings in the same vicinity, hire a security company to drive among the properties and make its presence known. The more comfortable and safe your tenants feel, the less likely they are to consider moving elsewhere.