Commercial Property Management – Checklist for Property Management Handovers

When you take over the management of a commercial or retail property today, the information that you gather from the outgoing property manager or landlord will be critical to the establishment and future success of your property management processes.

Information is Critical

Lack of information in the handover process means problems and potential errors in the future. On that basis you should have a specialised handover process that you can implement on and with the handover of every property type within your local area. A checklist will help your activities as you bring in the new property to the management portfolio.

Here are some ideas to incorporate into your handover checklist:

  1. Get complete and comprehensive details of all leases and licensed occupied areas within the property. You will need to check these against the tenants physically in occupancy and the rental invoices that are raised for tenancy payment. Everything has to cross relate accurately.
  2. Copies of lease documents should be checked against the original documentation. Also look for side agreements for any extension or variance documentation relating to the original lease.
  3. Copies of correspondence relating to existing tenancy matters should be handed to you. Ask for this specifically and drill down on the details of each matter.
  4. Get copies of the current rental invoices and cross reference these to the tenancy schedules for the property. It is not unusual to come across in errors in the tenancy schedule or the rental invoices.
  5. The tenancy schedule should be checked against the actual leases and other occupancy papers and the signed documentation between the landlord and tenant.
  6. Check all outgoings charges and expenses that are applied to the tenancies within the managed property. The charging process should be shown on the rental invoices; you will need to check this amount and the process of recover that is adopted. It is not unusual to see errors in the outgoings recovery with tenants in managed properties. The process of checking will involve you getting copies of the current outgoings budget and the recent outgoings reconciliation.
  7. The arrears that apply to the property and any tenancies should be identified as part of the handover. They are sometimes discharged at the time of settlement, although the question should be raised in case you are taking over the ongoing pursuit of the arrears with any existing tenants. If that is the case you will need copies of all previous correspondence and claims.
  8. Current vacant tenancies within the premises may be the subject of lease negotiation. You will need copies of the lease offers that are or have been made and the status of the existing negotiations.
  9. Details of the maintenance issues within the building will be required. The essential services within the building will be critical maintenance contracts to identify early in the Handover. Any threats to the stability and function of essential services should be identified and addressed immediately. The maintenance contractors for the building will understand the function of the existing plant and machinery; get details of these contractors and then set up meetings as quickly as possible.
  10. Ask about any orders or notices that apply to the property or any part thereof. Check out any encumbrances, rights of way, or easements that apply to property usage.

So these are some of the main items that apply to the property management handover process. There will always be more issues and items to look at although these items listed above are the big ones to immediately get under control.

How To Write Your Own Rental Property Inventory – A Step By Step Guide

Property inventories are written documents that record the condition and contents of a property. They are often written for properties that are to be rented out as proof of the property condition at the time a new tenant moves in. The tenant is supposed to look after the property while he or she is staying there and the value of the property inventory comes at the end of the lease when the landlord and tenant refer back to the document to see whether any changes have occurred to the property.

There are property inventory services companies who write property inventories professionally. However, anyone can write a property inventory. So if you are a landlord who would like to save money and do your own inventory the only things you need are not much more than a pen, paper and a digital camera. I assume you already have a computer and printer to print out the document so that it looks neat and professional.

1. Recording the information

Go to the property with a pen and paper and record relevant information for each part of the property. This should be done systematically so you fully record information for one room or one part of the property before you go to the next room. For each room that you enter have a process going in which you methodically look at each aspect of the room. You may do this literally from top to bottom such as you examine the ceiling first, then walls then the contents and finally the flooring so that no aspect of the room is left unrecorded.

For each part of the room record relevant details, for example, if you are examining the ceiling record things such as its colour and any special features such as any special decorative plaster work. Similarly, if you are examining the flooring relevant things to record are what type of floor it is such as whether it is carpeted, varnished wooden floor or tiled etc. The key thing to remember is that you should be as descriptive as possible to fully describe and identify the item you are recording. You should also include any marks, imperfections or blemishes so that the inventory is fair and accurate.

A similar process is also carried out for the contents of the room such as furniture. For example, if there is a sofa in the room write down what type of sofa it is such as whether it is made from leather or fabric and how many people it can seat and whether it is in a new condition, good condition or poor condition. For electrical items such as washing machines additional details such as the model and serial numbers should also be noted.

Try to be as descriptive and comprehensive as possible in your recording in order to produce an informative and detailed property inventory survey. At the end of the recording process you should have a description and condition of each item or aspect of the room.

2. Take digital photographs

As you go through each room, take digital photographs of notable things. This may be valuable items or electrical items. Take any photos that you think is important which should be recorded. A general overview photo of the room that pans the entire room is also helpful. You don’t need to restrict the number of photos that you take and in fact photos convey far greater information than words when it comes to property inventories. Therefore, take as many photos as you think are necessary. For the property inventory to be fair and accurate you should also take images of any imperfections, for example, if there is a crack in a window a photo of it should be taken.

3. Transcribe the information into a computer and print out the document to be signed

Once you have the raw data, input the text and images into your computer. You should layout he document so that it looks professional, clear and easy to understand. One way to lay out the document is to have three separate columns one column for the item, another column for the description and a third column for the condition. The document can also be organised room by room so that each room is given a separate section in the document. Photos for each room can be embedded at the end of the section for that room.

Basic details such as the property address, the names of the tenant and landlord should also be on the document. Blank spaces for gas, electric, water meter readings and the number of keys to be given is to be left on the document so that it can be later added by hand at the time the tenant moves in. The document is now ready to be printed and verified by the tenant on the moving in day. On that day the last details will be hand recorded on to the inventory such as the meter readings and the number of keys given. The property inventory document can then be finally signed and dated by the tenant.

How to Ensure Good Tenants for Your Property

There is no way that you can be sure that your tenants are going to take good care of your property. For this reason we have compiled a few tips that can be extremely helpful to you for making sure that your tenants are taking proper care of your property or household.

– Choosing the right tenants

Choosing the right and the most appropriate tenants is very important. As part of your vetting process, you must also make sure that you always contact the previous landlord of your prospective tenant. You should ask them whether their tenants were good with the property and if they would be able to allow them again.

– Cleaning instructions

In case you are in possession of any items that require some careful cleaning, you can supply this information to your prospective or future tenant. You can also write down all the instructions for cleaning on a laminated document so that you have to do this only once.

– Remove all your valuables and personal items

This means that you must take out all the items that have sentimental and financial value. You can also replace them with some cheaper alternatives.

– A large deposit

A large deposit can be very helpful in making sure that your tenant takes proper care of your property. You must at least take six weeks’ worth of rent as deposit and also make it clear to the client that if any damage is done on the property, the equivalent amount will be deducted from the deposit amount. This will easily ensure that the tenant takes good care of your property as if it is his property.

– Befriend the neighbors

It is important to befriend the neighbors as they can be all eyes and ears when it comes to overseeing your tenants when you are not around. You can also give them all the instructions and ask them to be highly vigilant when it comes to spying on your tenants. This is a very naughty step but a very effective step as well. It is one of the important things to remember.

– Regular inspections

Regular inspections must also be carried out for ensuring that your property is in good hands. For example you can visit your property once every three months and do an inspection. This will help you in the long run as it can increase your trustworthiness on the tenant which can have many long term implications.

Great Property Management Companies

Choosing the best manager for your property can promote your real estate investment or even break it. You find managers in all parts of the market and it is important to tell the good apart from the bad.

Messaging and branding

The outbound branding and messaging that the company uses is an important factor that can be used to determine what they are really like. To be able to understand them and their mode of operation. Then you need to ask questions.

Documentation

The first thing that you should get to know is whether the company is licensed and recognized by the right body. You need to ensure that you get to know what kind of properties they manage and then get references. You should never move on with the deal if the company does not want or is not able to give you the necessary documentation. When you see the documentation, then you can comfortably say that their operations are legitimate.

You should also get to know the following things about the company:

  • How they set and collect rent
  • How maintenance and repairs are handled?
  • If property inspections are done
  • Retention and marketing of tenants
  • How the tenant and owner funds are handled?
  • How they do tenant screening.

The other things that you should talk to them about include:

  • Their management fees
  • The management contract

The above should be done to about three companies that you may have shortlisted before you can hire them. You should remain vigilant and don’t settle for the first company that you come across regardless of how good they seem to be. There is really no harm in talking to other companies. Talking to others confirms that the initial preference was the best and you may even have some more questions. Young never know, the next company could actually be better than the first one.

If you do not take time to talk to others, then you will have nothing to compare with. It is important to have an idea about how other companies operate to be certain that you are indeed making the right decision. There are many databases that you can use to locate management companies near you.

You need to appreciate the fact that finding a manager for an investment that you made is a very important and big decision. You should do a thorough research before you settle for just anyone. There are many qualities that you should consider when you are picking a great organization.

You should try getting referrals from various sources. This is one of the best ways because you will know the experiences of other people first hand before choosing. You may get some amazing tips about the whole choosing process. Since referrals can sometimes be biased, you should get them from all corners. If you receive same referral about a certain company, it could very well be true after all, regardless of whether it is a good opinion or a bad one.

Commercial Property Managers – What Skills Do They Need and Why?

In commercial real estate agency, the property management division is a key part of the agency performance. In real terms the successful division can bring in significant and stable income to the agency on a regular monthly basis. That being said, a good commercial or retail property manager is highly skilled and should be selected for the property management role based on key performance criteria and hands on experience.

Far too many real estate agencies have average or poor performing property managers. In real terms this is a real threat to the stability of the division income, and the quality of the service provided to the landlords. Unskilled property managers do not last in commercial or retail property; it’s that simple.

Cadets and Training Processes

There is a place for ‘cadets’ that learn the roles and the skills of complex property management. The process itself takes a couple of years during which time the person should be exposed to all property types and situations under the guidance of an experienced manager.

So what does a good commercial or retail property manager look like and what skills will they have? To a large degree they will need to bring to you as agency principal, the skills needed for the managed property type and local area.

If the property manager does not know much about managing the required property type, then do not let them manage it; the errors made can destroy your relationship with the landlord and ultimately the management appointment.

Different Skill Sets

There is a large difference in management style and skill required between retail, office, and industrial property; industrial property being the easiest to manage and retail being the most intense and difficult. The skills required in a retail property manager is diverse and deep; they are the best in the industry.

Generally speaking, retail shopping centre managers today are also the busiest in the industry. The role is very hands on and unrelenting in intensity. Here are some core skills of a well skilled and placed property manager:

  1. The ability to read and understand leases and occupancy documentation for all property types.
  2. The marketing of the property to the local community and customers will be a factor that is critical to retail property. It this way sales are encouraged for the tenants; this underpins the rental for the landlord.
  3. Sound skills in financial analysis and reconciliation so a property performance tracking process can be set up for all managed properties.
  4. Good communication skills are essential. Property managers must be accurate, confident, and decisive, in keeping with laws, legislation, and the instructions of the clients that they act for.
  5. Attention to detail is required in all property negotiations and tenancy matters. Without good records and accurate information, the ‘wheels fall off’ the division and its services. Landlords soon see through mistakes and inaccuracy.
  6. Marketing of vacancies happens all the time in larger properties; importantly the frequency of vacant space is minimised and the times without a tenant are lessened.
  7. Income optimisation and expenditure controls are at the centre of property financial performance. The manager must know what is happening and why in all managed properties, when it comes to the cash flow and reporting to the landlord.
  8. All reporting processes and communications to the landlords we act for today must be detailed and accurate. Property compliance and maintenance, energy consumption, lease and vacancy matters, tenant and landlord lease covenants, outgoings performance, and environmental matters are just some of the factors that are controlled and reported on each month.
  9. Computer technology needs are increasing in the available property performance and management systems today. The property manager must be familiar with, and comfortable learning more about all the software and computer based technology that is used in the industry.
  10. Work hard and with focus each and every day. The hours that a manager will put in the job are long and intense; however they are the experts and should recognise the value that they bring to the job.
  11. Maintenance decisions and controls are made daily and should encompass the instructions of the client and the laws of property ownership and function. The manager needs to know what is required and should competently handle the decisions and communications with contractors, tenants, landlords, and fellow employees.

So how do you find one of these highly skilled people? They are out there and should be carefully sourced. They will be an asset to your agency function and performance.