Appointing a commercial property manager: the must-read guide for success

If you’re an experienced landlord, you’ll know that outsourcing your commercial property management is a critical step to maximising ROI, freeing up time and headspace and providing the lifestyle you want to live. Free up your time and create a passive income stream by getting a manager to take care of it – it’s a no brainer really.

So why do landlords have such terrible trouble finding property managers they can rely on? Our guess is that they haven’t quite nailed the appointment process yet. Simple though it may sound, finding a top class commercial property manager is harder than it may seem.

Let’s look at the common issues…

• The revolving door of property managers

With larger real estate agencies especially, you may feel like you’re enjoying the security of a large brand but this can get old very quickly. Especially when you’ve had to explain your objectives, financial goals and property management plan to the 3^rd manager in the space of 18 months. At HKC, our clients never have this problem – your commercial property manager is a director of the business. It’s a relationship you can rely on.

• Residential Vs Commercial – it’s a job for a specialist

Never ask a residential property manager to do the role of a commercial property manager. This is a surprisingly common mistake and a major faux pas that can result in a serious loss of income or even legal difficulties. New landlords often don’t realise that commercial property management is a specialist role. Professional commercial property managers keep up to date with changing legislation and understand the obligations of the role for both tenants and landlords.

• Financial complexity – getting the numbers right

Successful investing is all about the numbers and commercial property is no different. We’re not suggesting your property manager needs a Phd in Mathematics from Melbourne Uni but having a sound working knowledge of accounting procedures and financial obligations is critical to maximising returns. There’s a lot of careful budgeting involved in commercial property management. You need to know that your property manager is financially competent and understands the detail.

• Communication is key

The key to any successful business relationship is communication. All too often landlords complain that their property manager is simply missing in action. Unanswered phone calls and emails, missed meetings and a lack of reporting can lead to a lot of frustration. A top class commercial property manager will be an active communicator with regular reporting, updates and excellent strategic advice.

So now we know what to look for, how do we go about appointing the right commercial property manager for you? Here’s a simple process to follow.

Step 1- Select the right commercial property management company

• Make a list of your requirements and put the word out on email or social media. Ask associates if they can recommend a really great commercial property manager that would fit your criteria.
• Check out company websites for blogs, videos and testimonials. You’re looking for a proven track record of success and the best companies will have plenty of evidence to support their claims. Plenty of positive Google reviews will help here too.
• Narrow your selection down to no more than five companies and set up an interview.

Step 2 – Set up an Interview and ask the right questions

Recruiting a company is no different to recruiting an employee. Generally, you’ll be speaking to a director during this stage but you might end up dealing with a junior as your manger – be aware of this and make sure you understand exactly how to deal with it. Here’s a list of the five most important questions to ask:

• Does your company specialise in commercial property management? If not, keep looking!
• Who exactly is going to manage my property? This is the revolving door question…with significant turnover of staff in the property management industry, you might be interviewing the director of the company, but who will actually be managing your property?
• What sort of reporting systems do you have in place? For example, at HKC we have an online portal for commercial property management that landlords can log into 24/7 and understand at a glance all their lease details, rental payments and more. Everything is in place to ensure the landlord can understand their position.
• What is your approach to dealing with difficult tenants? The answer you’re looking for here is “tough but fair”. The property manager needs to build trust with tenants and support their requirements in order for their business to succeed. The property manager, however, is obviously representing the interests of the landlord and needs to be highly capable of managing tenant issues as soon as they arise.
• What strategies will you put in place to ensure continuity of lease? For example, at HKC, we communicate early and often before a lease renewal. We send out multiple letters to ensure we understand the tenants’ intentions in good time and therefore able to start the process of finding a new tenant early if needed before the existing lease expires.
• Can you supply references? Yep, there’s nothing like getting it from straight from the horse’s mouth. Talk to a client and make sure you’ve got the manager with the right approach for you.

Step 3 – Make the appointment

Appointing your new commercial property manager is a fairly straight forward process. Issue your manager with an “Authority to manage” which will include fees, terms and conditions and the process will get underway fairly quickly. Expect a lot of meetings, phone calls and emails in the early stages to ensure the property manager understands all the requirements. Your time will free up fairly quickly, however, once the right processes are in place. And you can start enjoying your low-touch, high return passive income enormously!

Talk to HKC Property Consultants about managing your commercial property today.