PM Article - 10 Landmines to avoid when managing your own commercial property

10 Landmines to avoid when managing your own commercial property

Owning commercial property in the Northern Corridor can be a lucrative venture, but the day to day management of these assets is not without its challenges. The following is a summary of the ten most common problems we have seen encountered by property owners who choose to self-manage.

1

Legal Pitfalls Property owners who self-manage may inadvertently expose themselves to legal issues, such as violating lease agreements, missing notice periods that leads to their tenants being free to walk away with minimal notice or recourse. Legal battles can be financially draining and tarnish the property’s reputation.

2

Inadequate Tenant Screening

3

Maintenance Neglect

4

Without the resources and experience of a professional management company, property owners may struggle to conduct thorough tenant screenings. Poor tenant selection can lead to unpaid rent, property damage, and costly eviction processes.

elf-managing property often means handling maintenance issues personally. Neglecting S routine maintenance or delaying repairs can result in deteriorating property conditions, tenant dissatisfaction, and increased repair costs in the long run.

Rent Collection Challenges ollecting rent can be a headache for self-managing property owners. Late payments, C partial payments, or non-payments can strain cash flow and hinder the property’s financial performance.

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5

Outgoings management

6

Financial Mismanagement

7

Inefficient Time Management

8

he most common mistake we see made by self-managed owners is they default to gross T leases that include outgoings. This has been particularly costly in recent years, where annual outgoings increases have far exceeded CPI and owners have been forced to make up the difference.

ithout a professional financial background, managing property finances can be W overwhelming. Budgeting errors, inaccurate financial reporting, and poor expense management can jeopardize the property’s financial health.

Property management demands significant time and attention. Self-managing property owners may find it challenging to balance property responsibilities with other commitments, potentially leading to overlooked issues and diminished property performance.

Lost Potential from Market Reviews Property owners can’t be expected to be up to speed with the real time market values and often undervalue their lease renewals to avoid conflict. This compounds exponentially when it comes time to sell their property, where every $1,000 of lost income could mean $16,000 in lost sale value.

9

Tenant Relations Strain

10

Legislation Changes

Handling tenant disputes, complaints, and requests personally can strain relationships.

Mismanaged conflicts often escalate, resulting in legal action, property damage, or tenant turnover.

Property legislation relating to commercial and especially retail leasing has seen an increasing rate of change in recent years. Navigating these changes since COVID has been difficult and we have helped a number of owners recover from a legislation blind side.

When things run smoothly, managing your own property can be a rewarding exercise but you need to be ready for the time, money and frustration you may need to invest if things go wrong.

We have helped many owners navigate the minefield over the years and invite you to reach out if you think you may have one of these problems in your path.