Why a Property Manager creates an Annual Budget and How Will This Help You?

Are you wondering why your chosen commercial property management company creates an annual budget? Creating this document is necessary because it shows you how much money a manager uses to run the real estate you live or rent a commercial space in. It provides you with a detailed breakdown of the costs of electricity, water, heating, cooling and others.

Why Is an Annual Budget Important to You?

An annual budget is not only important to the commercial property management company you hire, but it is also vital to you and the profitability of your real estate. It gives you insights that you could’ve missed when a manager doesn’t present you with one. It offers detailed information about the cash flow of the property and where the manager is allocating funds.

A clear presentation of where the money comes and goes will allow you to plan for future expenses and improvements. You get to set money aside for renovations such as re-paintings, re-floorings, strengthening of foundations, re-roofing and other improvements that attract new occupants and keep current ones happy.

It’s All in the Details

Keeping and attracting occupants is all about paying attention to details; the smallest things matter when it comes to managing property. With an annual budget on hand, you get to identify which parts of your real estate need more funds. This allows you to allocate more or reduce money on repairs or maintenance to keep each rented space profitable.

When you know how much money you need to spend on repairs, maintenance and renovations, and how much to set aside for emergencies, it is easier to manage property. This enables you to plan for the future of your real estate and the occupants in it.

The Best Managers are Meticulous

The best commercial property management companies are detail oriented and meticulous. They know the industry inside and out, and have insights that keep them ahead of the competition. Their managers have the experience and expertise to improve occupancies and keep your occupants happy throughout their stay. Managers who are meticulous can determine if a part of your property needs maintenance, repairs or replacements to improve them. They can see potential problems coming and find flexible solutions that turn these into opportunities for growth.

A property manager that creates an annual budget is a must for your property and tenants. This shows that they are detail oriented and have a concrete plan on how they will manage your real estate.

Elements to Manage Commercial Property Risks

When you invest, there is always risk involved. You weigh the conceivable problems and potential profitability for each decision you make. Investing in commercial property is just as risky as any other business endeavor and determining the probability of failure or success is not an exact science. Commercial property management companies all agree that there are certain strategies and elements that allow you to mitigate some of the risk you may face.

Evaluate the Neighbourhood

Commercial property management companies will tell you to avoid making an impulse purchase of real estate without evaluating its neighbourhood properly. The surrounding area will impact the value of the real estate you purchase, whether you are buying or selling.

Prospective tenants will consider the location of the property you lease. Some of the things they will look at include:

1.       Quality of schools nearby

2.       The crime rate of the neighbourhood

3.       Accessibility to the business district, shopping centers, places to see, restaurants and others

If the property is lacking with respect to meeting the needs of potential renters/occupants, you may have trouble filling vacancies.

You may have to spend more to purchase prime property that has a lot of potential and value. However, the investment you make should reward you in the future.

Look Out for Future Developments

The development of city districts, commercial centers and housing areas may positively or negatively affect the value of the property you want to purchase. These developments may attract people across several demographics. You may have bought real estate in a desirable area, but it may lose value due to the effects of an urban development project in the property’s area.

Market Knowledge

The real estate market is difficult to predict. Some people have a knack for making the right decisions, while others have to do extensive research to obtain information that will help them buy a property with good value. You must have knowledge of the market to succeed in a commercial property investment and reduce risk probabilities. It’s important to read the latest news from various sources and look out for any influx of buyers or queries about properties in the area you are interested in. Doing so will allow you to make an informed decision about buying a property.

Seek Professional Advice

To reduce some of the risk of investing, hire a commercial property management service provider. These professionals have the experience and expertise to walk you through the entire process of buying property and making the right business decision. They also go the extra mile by helping you manage the real estate you end up purchasing. They will advertise, list the property and fill vacancies for you.

By using this approach, you will reduce some of the risk that is possible when investing in commercial property. Real estate is a precarious industry. It’s best to seek and follow the advice industry experts to become successful.

Ways to Maximize the Profit of Your Property

When you have an income property, you want to get as much money as you can out of it. So it pays off to make the extra effort to be creative or to be diligent – and in some cases, come up with an initial investment to get things rolling. Whether you deal with residential property management or corporate property management many of these suggestions can help you to get more money coming in.

RENT OUT UNUSED STORAGE/PARKING SPACE: If it’s in a warehouse and it’s a large space, section it off and rent it out for separate smaller storage spaces – if it’s a smaller space, rent it out as is for storage. If you have a huge unused parking space, advertise monthly parking in specific sections, painting the lines for those areas differently. If the storage space or garage space is at a residential property and is not being used by tenants, rent it out to non-tenants. Is there a business nearby that could use more parking or storage?   

TURN WALLS/FENCES INTO ADVERTISING SPACE: Make that empty wall space or fence into an advertising mecca by renting it out to local businesses. It can be as simple as hanging a banner or as detailed as having a professional painter make that space into a marketing mural. Use as many walls or fence lengths as you’re able to. It’ll brighten up a barren industrial property, and can bring in hundreds of dollars every month.

ADD LAUNDRY FACILITIES:  If you’re looking to attract quality tenants, give them what they want: in-unit laundry. It costs a bit at the beginning, but will pay off in the long run as you can raise the rents, enjoy faster rentals, and get those quality long-term tenants you always wanted. They’re also a good incentive. Offer the laundry facilities only to those who sign a 2-year lease instead of a 1-year lease – the convenience may even keep that tenant beyond the 2-year commitment.

ADD/UPGRADE COIN-OPERATED LAUNDRY FACILITIES: If you haven’t got laundry facilities on-site for a residential property, then install them – even if it’s just one washer and one dryer for a small property. No-one likes piling their dirty laundry into a car and going out to a laundromat, if they can drop them off downstairs, then just conveniently pick them up a hour or so later. If you already have a laundry room, make sure it’s regularly cleaned and maintained. In both cases, a change machine is a welcome addition!

BUY A KEYMAKER – Depending on the size of your property or properties, you can save a fortune making your own keys. For the initial investment of a key maker, and ‘No Duplication’ key blanks, you’ll be able to replace any key at any time – even Sunday night after a tenant’s keys just hit the elevator shaft floor! You can charge for replacement keys – say $5 each - and never worry when a tenant doesn’t turn in their keys. Just buy a new lock and make the extra keys yourself.

INSTALL VENDING MACHINES – Could be coffee, soft drinks, chocolate bars, candy, sandwiches – you choose what would be most appropriate for your space. In a factory or office building, all would be probably be welcome in a lunchroom. In a residential setting, they might be found in a laundry room or recreation room or even in back hallway to the parking lot. A workout room would be a great setting for a fruit juice dispenser.  All translate into more income for you.

Making extra money in some of these ways does come with an initial investment, but if properly handled and maintained, can be constant additional revenue streams which add to your profit margin. While there may be more options for residential property management people to take advantage of, there are enough to perk up the income of corporate properties as well. Choose one or several of these ideas and maximize the profit of your property!

The Top 5 Problems Landowners Experience

There are five main problems that landowners have to deal with when they rent or lease their property or properties. These are problems that can be easily solved with the right real estate property management company. However, some people try to save money by handling these challenges themselves, and end up wasting valuable resources and burning themselves out in the process. If you see yourself struggling with some of these issues, this might be a good time to take a step back and reconsider your choices when it comes to property management.

TIME - You only have so much time in a day. If you’ve invested in property and still have a full-time job, you don’t have a lot of time left over - especially if you have a family - to give your property the attention it needs. Even if you are retired or semi-retired, there’s a lot of work to do when it comes to the day to day issues of renting and maintenance. It’s a 24/7 commitment. Your time is better spend arranging financing for necessary renovations or looking for new investment opportunities.

DISTANCE – If you don’t live near your rental property, checking on it and even interviewing potential tenants takes a lot of time and effort. Now add in dealing with tenant complaints, maintenance issues, emergencies, even just collecting the rent on time. If you manage your own property or properties, you’d need to live close by to be efficient and time effective. And the best investments may not be right around the corner. This limitation can affect your long-term success.

INEXPERIENCE – If you don’t know anything about residential property management, you’re in for a series of nasty surprises. There is so much involved that you’ll be overwhelmed just finding out all you have to do. And you not only have to do it, you need to do it quickly, correctly, and legally. Hire a bad or lazy repair person, or take too long filling vacancies and watch your profits melt away. Legal errors will cost you if you don’t understand the housing laws, or if you take too long to fix a furnace in the middle of winter.

MANAGEMENT – There is much more to it than you realized, most of it dealing with people: tenants, repair people, accountants, maintenance people, and lawyers to name a few. Along with collecting rent, maintaining the property to code, and dealing with complaints and problems, there is payroll and a pile of legal requirements and considerations. Basically, you’re an employer with all the accompanying headaches. And I’ll bet that’s not what you signed on for when you invested.

TENANTS – Finding and keeping good tenants isn’t easy. A vacancy is money slipping through your fingers. You need to create enticing ads with good pictures to attract the kind of tenants you want. You must respond to emails, interview people, show the unit, review applications, pull and review credit reports, call references and past landlords, prepare a lease negotiate the terms, get the lease signed…and this is still no guarantee of getting a good tenant – especially if you’re not experienced with renting. Good tenants need a quick follow-up for repair needs. Bad tenants cost you time and money and a few rounds with the legal system to get rid of them! Until they’re gone, one bad tenant can cost you many good tenants, and a lot of money.

The answer to all of these problems is simple. Hire a good residential property management company. They will handle every management issue from renting to maintenance…from emergencies – they get the 2am call that a pipe has burst – to evicting the nightmare tenant. They know the ins and outs of vetting and keeping tenants, all the legalities involved in any situation, and have the best repair people on call. They will lift the weight of property management from your shoulders, and let you relax and watch your investment grow. If you haven’t before, now might be the time to look into finding a good real estate property management company. 

Ideas for Landlords on How To Keep Good Tenants

Retaining good tenants is a key part in successful residential property management! The only thing better than a good tenant, is a good tenant who’s there for the long term! In some ways, keeping good tenants can be harder than finding those tenants in the first place. As any good property manager and landlord knows, having good, long term tenants is not only important for regular rental income, but it also cuts back on your time and paperwork.

There are many different things you can do to keep these people. Here are a few tried and true suggestions for you to consider:

Go the Extra Mile.  A tenant is like a customer, so make some effort to keep them happy. Have a welcome basket waiting for new tenants to ease the stress on moving day. This starts things off on the right foot. Send a card at Christmas to thank them for being your tenant and to wish them well. It takes little effort but lets them know they’re appreciated and respected.

Be Clear on What You Expect From Tenants. Give them a list of rules and regulations that apply to living on the property in terms that apply to their wellbeing. It should include everything from parking and noise expectations, to leaving laundry in the washer or dryer and how garbage is to be dealt with. It’s easier to be a good tenant if you get some guidance.

Open Communication is critical. Never ignore calls, texts, or emails from tenants. If you can’t answer immediately, return those communications as soon as possible. If you don’t agree with their requests, talk the issue through and try to reach a compromise. When you’re around your tenants, be friendly and approachable.

Take Care of Problems Quickly. Fix that sticking window or loose tile as soon as you can. It may seem minor to you, but it’s a daily irritation to a tenant who lives with it. If it’s not something you’d fix yourself, send a contractor. If you need to order parts, or if it’ll take extra time, tell the tenants so they know their concerns are not being ignored.

Keep Your Property Maintained. Clean the hallways, stairways, and elevators regularly. Trim those hedges and cut that lawn every month. Visit the property regularly to check for any things that need fixing or repairing and take care of them – don’t wait until they’re brought to your attention. A well-maintained property is a nice place to come home to.  

Use Quality Appliances, Fixtures & Fittings. It not only gives the property a feeling of value and worth, it makes tenants feel that they’re getting their money’s worth. Using quality materials also means less repair and maintenance, so less annoyance for tenants, and less work for you. Also, if tenants feel proud of where they live, they’re bound to stay.

Get Rid of Bad Tenants. This is the dark side of residential property management. If they’re irritating to you when they don’t come up with the rent, or give you attitude, just think how much worse it is to have to live near them! If they fail to pay rent, indulge in illegal activities, constantly ignore noise restrictions, or cause damage to your property, you have every right to take action. If they don’t leave, in many cases, the good tenants will.

Consider a Tenant Retention Plan. What would you give to have a good tenant sign another lease - or after 3 years or 5 years, or even 10 years as a tenant? Consider offering things that enhance their ‘home’ space: a maid service for 2-3 hours, a professional carpet cleaning, refreshing a room by painting an accent wall in an acceptable color. Let them know that long-term tenants are valued.

Tenants who feel valued and appreciated, usually stay longer. The way to make this happen is by hiring the right property manager. A good property manager is actively involved in all aspects of a maintaining a property and a major part of that is tenant satisfaction. The most costly part for any real estate property management is constant turnover – or, heaven forbid! – empty rental units. In the long run, it takes less time, effort, and money to keep the tenants you have happy, than it would to be constantly looking for new tenants. So take a few suggestions and make some positive changes!

Tips for Property Managers

Property managers have a responsibility to their tenants. They have a duty to make sure that a tenant is comfortable throughout their stay. However, some property owners treat their lessees poorly, these lead to conflicts and complaints. The way you treat your tenants and manage your property plays an important role in keeping the room or house you rent profitable.

If you are a bad owner, word of mouth of how poorly you run your property will spread, limiting or eliminating your prospects.

These tips will help you become a better property manager.

Address Problems Immediately

Conflict between property owner and tenant may stem from small problems such as leaky plumbing, creaky floors and other minor details. Show your tenants that you care about their comfort and well-being by addressing these problems as soon as they happen. In any industry, customer service will mean the difference between a satisfied and dissatisfied client.

Do not wait until a problem arises; always perform regular maintenance to prevent leaky faucets, loss of insulation, air leaks, faulty locks and others. Make replacements when you think that you need to do it. Inspect the room or property regularly to determine if you need to fix or replace anything.

Make Renovations and Improvements

The improvements you make on your property will increase its value. Sprucing up the kitchen or living room will go a long way in attracting and keeping quality tenants. You do not need to make a full renovation, sometimes it just takes a fresh coat of paint or additional pieces of furniture to liven up a dreary apartment. The renovations or additions you make will also improve the quality of your tenant’s stay.

Communication

Communication is a vital skill when it comes to dealing with tenants. You need to learn how to mix friendliness with firmness, especially when you start making demands. Rapport with a tenant will keep you on good terms with them. An open line of communication with your tenants will make it easier to identify their needs and wants, or find a compromise to prevent conflicts.

Go the Extra Mile

Going the extra mile may be as simple as keeping the surroundings clean or making renovations without additional charges. This shows how you care about your tenants; customer service will enable you to develop rapport. Doing more for your tenants will keep them satisfied with you as their property owner.

The way property owners manage their property and deal with tenants may either take your business to the next level or lead to its closure. Focus on the needs of your tenants and make them comfortable, as long as you do this, they will want you as their manager.

Residential Investment Tips for First Time Buyers

Hundreds of thousands of people across North America are happily living off money made from investment properties. If you do it correctly you can join them. But it’s much more complicated than just buying a building. There’s a lot you need to know and do before you take the plunge. You also need to understand a bit about the dark side of residential property management – but we’ll point out a great way to handle that!

Don’t rush into it. You need to go into property investment with your eyes open – knowing what the potential gains and risks are. That means doing research, as well as getting advice and help from professional property experts. Do your research in person as well as on the internet. Talk to anyone you know who owns investment property. Sit down with them to get a first-hand look at what it really entails, the good, the bad, and the ugly. As for those property experts, they should include an independent mortgage broker, and a real estate agent with investment experience.

You’re not buying a property, you’re buying a business. And this isn’t always the easiest paradigm shift to handle. It’s not simply a case of sitting back and watching the money roll in. You have responsibilities to shoulder and legal aspects to understand. You need to factor in municipal rates, interest rates, and operating costs like property insurance and taxes. A good way to handle this is to draw up a business plan with all the details you should consider, and set realistic goals. Are you willing to handle the day to day details of an investment property? If not, hire a good residential property management company. It’ll save you money - and headaches - in the long run.

Look for an ‘income stream’ instead of capital growth. Before you buy, you need to work out – and understand – the ‘yield’ of a property. Yield is the actual income you expect to receive – the rental income relative to the property’s value. To figure out the yield: total up all property costs (include closing fees, renovation fees, etc.). Take the estimated annual rent amount and divide it by the cost of the property. Multiply this by one hundred for a percentage – and this is your net rental yield. Balance this annual ‘yield’ against the price your property could be sold for in the next five to 10 years. Now you can see if the property is worth investing in.

Buy Where Renters Want to Live. You may get a great deal for a property in a small town, or in what appears to be a good area – but if it turns out no-one wants to live there, you’re in trouble. When scouting around for a rental property, look for areas of a city that show signs of growth and economic sustainability. Find out which areas have jobs available and people moving there for those jobs. Is there a school nearby, is transit handy? If you’re not familiar enough with all the different parts of your city, hire a real estate agent who’s experienced with investment needs.

Understand Your Monthly Costs. There are more than you may have realized when you first decided to buy an investment property. Those costs include: mortgage payments, interest and property taxes, maintenance costs, possibly garbage pick-up, water usage, or strata fees. You should also have an emergency fund to take care of unexpected repairs or vacancies. Those monthly costs may also include a property manager to handle the business end of things.

A Property Manager is Your Best Friend. Good property managers are worth their weight in gold! They’ll deal with the many day-to-day details of running your property and handle the dark side of rentals - like the call in the wee hours of the morning when a water pipe breaks, and dealing with the ‘tenant from hell’ who just doesn’t get it! – all for a small monthly fee. They’re proven to generate higher rent incomes, have connections in enough industries to handle any situation, and understand the applicable legalities. Shop around when it comes to choosing your real estate property management. And ask around. People are more than happy to recommend a good property manager.

If you’re considering buying an investment property, and hadn’t really looked into it too much, your head might be spinning right now! But if you are serious about this, you can now move forward in the right way, with the right people, to make this dream a successful reality.