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The advantages of outsourcing in real-estate management
Effective property management is very important especially in the case of commercial real-estates, as they serve not as much as capital investments, but their purpose is to generate profits.
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While in the case of single offices, warehouses or apartments some investors deal with that on their own – although also here professional knowledge and experience come in hand, the management of larger objects, such as high-rise buildings, tenement houses, commercial real-estates (shopping malls) or even the entire property portfolios by a single person can be difficult, to say the least. In such circumstances, a much better solution is to entrust the management of office, residential or commercial spaces to professionals, whose scope of duties include among others: • Real-estate administration – ensuring regular cleaning services and technical • • • • upkeep of the building or of the premises, supervision over maintenance, overhaul and modernisation works; Tenants – related services – establishing long-term relations and on-going services, registry-keeping, rent collection, holding of residents’ meetings; Optimisation of costs – negotiating contracts with suppliers of utilities and modernisations of buildings; Real-estates’ marketing – the development of a positive image of an object in order to attract new tenants and customers; Managing of documentation – the extending of contracts with tenants and suppliers of utilities, archiving of contracts, handling the correspondence; • I nternal control – repor ting, accomplishing audits and verifica tion of budget plans; monitoring of the accounting. WHY IS IT WORTH THE WHILE TO USE OUTSOURCING IN REAL-ESTATES’ MANAGEMENT? The main advantage of outsourcing in real-estates’ management is the opportunity for the investor to actually obtain the expected revenues. Thanks to an extensive network of contacts and a long-term experience, the managers
The main advantage of outsourcing in real-estates’ management is the opportunity for the investor to actually obtain the expected revenues. Thanks to an extensive network of contacts and a long-term experience, the managers of renowned offices can develop the strategy aligned both with the potential of a given property, as well as the investor’s needs.
of renowned offices can develop the strategy aligned both with the potential of a given property, as well as the investor’s needs. On the basis of such strategy, they implement such activities that gradually and steadily increase the value of a real-estate, generating the expected gain for the investor. The optimisation of costs applied at the same time allows to save funds spent on maintenance of a real-estate. We all know that time is money, and management outsourcing allows not only to reduce the expenditures on the property maintenance, but also to save the investor’s time, as he does not need to deal with the on-going services for the tenants, upkeep of the premises or the budget analyses. In a nutshell, outsourcing in real-estates’ management is the synonym of higher profits and savings of both time and money. FACTS AND MYTHS REGARDING REAL-ESTATES’ MANAGEMENT Today, investing in real-estates is a popular way to increase revenues and to invest capital. As this process requires time, knowledge and involvement, several investors decide to outsource the property management. In the course of years many myths emerged in relation with this sort of services. Which of the statements regarding real-estates’ management are not true and what this process really looks like? Management is an on-going property administration. There is a general misconception regarding the limited role of a manager, who deals only with on-going services in respect of a real-estate. People tend to think that his scope of duties comprises only quite prosaic tasks, such as co-ordination of cleaning services, the replacement of bulbs, the land scaping or the remedying of any failures. Undoubtedly, such activities are necessary to keep the property operating, but they absolutely do not constitute an exhaustive list of the manager’s duties, as he is responsible not only for the technical condition of the object, but also for its financial standing or the local market image. In reality, property management requires co-operation with external companies, rendering for instance cleaning or security services, as well as with suppliers of utilities. It entails also the need to represent the condo minium in relations with various institutions and offices. The primary obligation of managers, however, is to develop and implement strategies leading to the increase of the property’s value and to optimise the costs of its maintenance. On a daily basis, the main task of the manager is to stay in touch with the tenants, to investigate their needs and to report to the owner. Management applies only to office and commercial premises. There is a general conviction that pro-perty management is a type of service addressed to the owners of commercial and office spaces, in particular in larger objects, such as modern office buildings and shopping malls. In reality, outsourcing in real-estate manage ment refers in the same extent to offices, stores as well as apartments. We need to remember that residential apartments
Harmony Office Center, managed by NAI Estate Fellows.
are also commercial properties, thus they serve not only as a capital investment, but they are used to generate income. Issues related to the real-estates’ management, such as budgeting, marketing or costs’ optimisation are equally important in the case of stores, where investors want to win new customers, as well as in the case of offices and apartments, which should be attractive for the tenants and yield the profits their owners expect.
Property manager versus administrator. The task of a property administrator, sometimes erroneously referred to as the manager, is to make such decisions and to execute activities related to them in such manner to maintain a given property at least in a non-aggravated condition. The role of an administrator is focused mainly on on-going issues, while the property manager must – on top of that – also co-ordinate the matters related to the owner’s assets. The property administrator is exempted from activities consisting in the investment of the development funds and in the planning of the buildings’ modernisation. The above-mentioned erroneous conviction about not very demanding obligations of a manager is related to another myth concerning qualifications necessary to perform such function. In reality, not everyone can become a good property manager, as this profession requires an intra-disciplinary knowledge from several various fields, such as the law, economy, finance and marketing, as well as an appropriate training and experience. Another important characteristics is also the skill to handle well crises situations, to establish contacts and to build long-term relations. a building convenient for tenants (and at the same time helps to retain customers in the object) is indeed closely related to the function of a manager. That includes any festive and holiday decorations, the outlook of the reception desk, the catering, events or even smartphone applications (increasingly popular) that help residents use the building’s facilities. When it comes to marketing sensu stricto, it is subjected to strictly sales-related needs. The advertising of a leasable area with the use of banners, outdoor advertisements, digital tools, leaflets, and radio or press commercials is responsibility of the object leasing department, which bears also the costs of such activities.
Marketing and management or marketing and leasing? A fashionable academic programme called “marketing and management” has popularised an opinion that these two specialisations are inseparable. There is a bit of truth in this statement. A marketing of an object that serves comfort and makes the utilisation of Author:
Grzegorz Lisewski, Director of Managing Department, NAI Estate Fellows
Property management Real estate leasing Property purchase / sales Portfolio management Audit and due dilligence Project management Financial and accounting services Investmental advisory
