Could self-managing your commercial property cost you?

By Kristian Morris

We get it; it’s hard to pay a percentage of your income to a real estate agent when you don’t understand what you’re getting. So, let’s talk about the money you might be leaving on the table when you self-manage your commercial tenancy.

How we help extract more value from your commercial property

As a commercial property owner, your goal is a stable and predictable income. However, there is more to maximising revenue than acquiring a tenant and signing a lease.

In self-managing commercial properties, many owners rely on ‘set and forget’. Some of our clients inherited commercial property and retain it for income without trying to maximise the value inherent in the property.

Here’s how we help you to navigate the complexities of commercial property management

1. Lease analysis

Most commercial leases should have a fixed duration with an option to extend the lease for a fixed period. There are strict rules about what is known as ‘exercising an option’. Many DIY landlords aren’t aware of the option exercise period, which means you could miss out on revenue. Additionally, commercial leases should be structured with regular rent increases.

2. Negotiation and rent level

Unless you’re fully aware of the market for your type of commercial property, you won’t know with any certainty what rent you need to charge so that it’s attractive to tenants and profitable for you. Pitch it too high and you’re missing out on great tenants. Pitch it too low and you’ll miss out on the revenue you deserve.

3. Selecting the right tenant

We vet tenants carefully, including checking business history, income statements and trade references. If they’re an organisation, we check credit references and ensure they are a legitimate organisation.

4. Legal considerations

Commercial leases are more complex and come under increased scrutiny by governments regarding compliance. Generally, it’s difficult for the landlord or the lessee to break a commercial lease so you need to be sure it’s set up so it protects you. We know commercial leases inside and out so we can ensure you get the results you need.

5. Maintenance and compliance

Owning a property isn’t like owning shares. You as the owner must manage some or all of:

• Building structural repairs and maintenance
• Cleaning services
• Fire compliance
• Car park and common amenities
• Water supply and heating
• Air conditioning and environmental

As commercial property specialists, we know which service is the owner’s responsibility and which is part of the tenant’s lease obligations. We also analyse any service contracts to ensure our owners get value for their money.

6. Rent collection

You want strong cash flow, and for that to happen your tenant needs to pay on time. We’ve learned over our many years in commercial property that working with a tenant and demonstrating that support is available is effective should your tenant fall into arrears. In this case, we implement a payment plan and make sure we follow up to ensure the tenant and payments are on track.

7. Marketing to attract tenants

Our experience shows us what types of property attributes attract the broadest range of tenants. We market your property to agreed potential tenant types to achieve the maximum potential lease income for your commercial property.

8. Periodic reporting and planning for the future

Our automated systems identify important milestones throughout the life of the lease. These milestones can help you and us plan, whether it’s to prepare your commercial property for sale or to renegotiate the lease.

Should you be in the fortunate position of owning more than one commercial property as part of your SMSF, we can help you maximise value. Generally, we recommend a 3-, 5- or 7-year plan for the asset depending on whether you intend to retain the property forever, sell in the near future or redevelop the site. Each option needs strategic planning so you can optimise value. For example, if you intend to sell within the next few years, you don’t want long leases at a low rate, as these can restrict your options.

Let us help you with your commercial property

As dedicated local commercial real estate agents, we can help you extract more value from your commercial property. Please get in touch to discuss your circumstances and assets so that we can give you personalised advice. Whether it’s commercial leasing, management or sales, we’re here to help you with your Sydney-based commercial property.

Contact us at Ray White Commercial Sydney City Fringe.

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