If being a commercial real estate landlord were easy, everyone would be doing it. Okay, maybe not everyone, but a lot more people might be inclined to pursue this business opportunity!
But the reality is, not everyone is cut out for this commitment for various reasons. A thorough understanding of what it means to be a property owner in 2020 is essential for first-time landlords and veterans alike to thrive in their endeavors.
Here are six things we believe you need to understand in order to become a successful commercial landlord:
There’s no substitute for business knowledge.
From day one, successful property owners treat their investments like running a business. From setting up a formal legal entity to getting legal counsel, they know that property ownership is not a hobby. It’s a serious pursuit and requires the right outlook.
A business plan is another way to take an enterprise to the next level. Create one (or hire someone to do so on your behalf) and solicit expert feedback. On a similar note, create a budget and stick to it. Even if you’re only investing your own funds, hold yourself to the same level of scrutiny as if you had investors in the mix.
People skills are critical.
While technology makes it easy to run a business from anywhere in the world, not all tasks can be handled this way. In fact, quite often you need to have face-to-face conversations with vendors, tenants and partners to keep things running smoothly. You may encounter people from a variety of walks of life, which means you’ll need to be confident talking to a plumber and banker alike. The best landlords know how to navigate these interactions with aplomb.
Know how to deal with adversity.
Unpleasant surprises are inevitable in property management and the most common are maintenance-related. Many are unavoidable — even the most streamlined investment can need emergency repairs. So don’t skimp on saving for such a rainy day expense. Establishing this account from the outset can offer peace of mind so that you don’t have to dig into personal savings or rely on a credit card.
Take legal matters to heart.
It’s true that what you don’t know can hurt you, especially when it comes to the law. Navigating the nuances related to local ordinances, building codes and other red tape can be no small feat. That’s why it’s important to establish a relationship with an attorney or firm early in the game so you can get help when it matters the most. This is not the occasion to DIY!
It’s good to be picky.
No matter the nature of the property, choosing a tenant is often the single most important decision a landlord can make. Reliable tenants make the job easy, while nightmare ones can cost you your mental wellbeing. Trust your instincts and don’t be afraid to put your foot down if something seems amiss.
Landlords reap what they sow.
A landlord’s behavior toward a tenant is often mirrored in the tenant’s behavior toward the landlord. For instance, checked out owners tend to get aloof tenants, which means they may be lax in paying rent on time. Likewise, landlords who call tenants the day rent is due often get called for minor maintenance issues. While neither approach is bad per se, just know that how you respond can send a message to the tenants — and that can work for or against you.
Also, know that approaching unpleasant situations with understanding and compassion can work in your favor. If you put people first, they will sense that and be more likely to give you the benefit of the doubt if and when the time comes.
Empathy isn’t just good karma — it can be good for business. Commercial real estate investors who operate with their tenants’ success in mind can reap rewards. For example, if a tenant is looking to expand their footprint, he or she might look to you as the first resource. And that can mean more income for you.
In short, commercial real estate can be lucrative. But mismanagement can invite disaster for any investor, no matter how experienced. So play by the rules — and play to win!
On that note, we are here to help you make the best and most informed commercial real estate decisions and maximize profitability. Why work with us? Commercial properties are unique in so many ways and you need professional management on a “business-to-business” level. From lease negotiations to property maintenance, we are proud to be the best choice in your region!
We also employ systems that are second to none. These services include property maintenance and compliance, retail vacancy marketing and tenant placement, rent collection and accounting, on-call property managers, web-based portals for property owners and tenants and other perks. Contact us to start the conversation: https://www.propertymanagementinc.com/
