If you already own or are planning to own commercial real estate, having the right property manager is an important decision. In fact, a good property manager is just as important as having a good tenant in your property.
A property manager has the potential to make or break a commercial real estate business. If you get the right one, then you can be sure that your monthly cash-flow continues. However, the wrong property manager can severely damage your business.
So, what should you know about your property manager?
Experience
It’s important to know how many properties they have managed in the past and how many they manage at present. To do this, you can ask for references from previous properties. You should also check out the properties they currently manage. Are they in good shape?
Find out how many employees they have. If they are managing many properties or units by themselves, will they cope with having more to manage?
Regular inspections
A good property manager will be prepared to routinely inspect your properties. There should be a thorough inspection of the whole building once a year and a quarterly inspection of the outside of the building. The property manager should also be aware of all the relevant building regulations
Most good property managers will accept these inspections as part of the agreed fee.
Reasonable fees
Are the fees reasonable? Most will charge between 7% and 10%, but it is important to know on what the fees are based on? Are they on actual rents collected or on rents that could be collected? There can be a big difference!
Maintenance issues
You also need to know how your property manager will care for maintenance issues. You should set a limit on how much can be spent on maintenance without your permission. Many commercial real estate owners suggest between $250 and $350 (CAD). Of course, sometimes emergencies happen and there may not be enough time to consult with you for emergency repairs.
You should always get receipts for materials purchased for maintenance and repairs.
A clear timeframe for payments
You should arrange for regular monthly reports on the payment or rents. Many good property managers will use automated software for these reports. You should also know when you will receive your portion of the rents.
When choosing the best property manager, it is always important to make sure that they are ones you feel happy working with. After all, you are putting your investment in their hands.
