Burt M. Polson - Commercial Real Estate Broker

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12 Step Annual Check-Up for Commercial Property Owners - Part 2

You may be fortunate enough to have a commercial property investment that does not take much of your time to manage. In fact, some investments are just a matter of making sure the rent was deposited in your bank account that month.

Then there are properties that are much more hands-on. In either case it can be easy to overlook steps to take that could save you money or possibly cause issues that become a bigger headache later on.

In part one we discussed reviewing your leases and visiting your property. Today we will review steps three through seven of the 12 part check-up:

3. Service building systems - The building systems are the most important and costly systems of a commercial building. Keeping the maintenance up-to-date is not only important for building quality, but may also be required by law.

The roof, fire suppression (sprinklers, monitoring, extinguishers), emergency lighting, HVAC (heating-ventilation-air conditioning) units, elevators and parking lot sealing are a few of the systems to consider.

Fire sprinkler systems have monthly, quarterly, bi-annual and annual inspection intervals for different parts of the system while the backflow and standpipe is inspected every five years. Fire extinguishers need to be serviced annually.

The dry season is usually the best time to perform roof maintenance. Don’t wait for the drip to start over your tenant’s desk before planning an annual maintenance program.

Not keeping your parking lot sealed and cracks filled will only cause more problems in subsequent years that are much more costly than sealing.

4. Go out for bid - Reviewing your on-going contracts for landscaping, janitorial, property management, parking lot sweeping, roof maintenance and supplies are controllable expenses you can potentially reduce. Go through the competitive bidding process to find where you are overpaying and where renegotiations are in order or perhaps a change in vendor warranted.

5. Plan out next year - Each property should have a schedule that considers the life cycle of equipment and building systems and takes into consideration maintenance and replacement intervals. Review your schedule annually and update as needed.

It is also good to track when your loan may come due or have an interest rate adjustment, when tenant’s certificate of insurance expires, broker listing agreements expire, tenant option dates, etc.

6. Review energy savings measures - Technology changes rapidly as does building code requirements for new construction. Energy consumption is one of the largest expenditures in the operations of commercial real estate. Look for cost effective ways to reduce your building’s energy consumption while also gaining valuable rebates.

7. Refinance - This is a no-brainer. Have a relationship with several sources of financing depending on your need and review their current offerings regularly. You could create substantial savings in the short and long-terms with a restructuring of your debt.

You now have seven steps to work on to maximize your investment. The last article in the series will take you through the steps of meeting with those professionals on your team.

Burt M. Polson, CCIM, is a local real estate broker specializing in commercial, luxury estates and wineries. Reach him at 707-254-8000, burt@acresinfo.com. Sign up for his email newsletter at BurtPolson.com.

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