How is your property manager performing?
I find myself confronted with a classic example as described in my recent two-part article, "The maintenance money pit." Entering my third month of a new asset management account engagement of a portfolio of retail and multi-family commercial properties has proven challenging.
I am excited to help the ownership improve their investment, increase its value, bring it into compliance and improve tenant relations for starters. Using my skills, knowledge, and expertise as a commercial real estate broker, asset manager and property manager are rewarding as the ship slowly turns in the right direction.
Many investors utilize the services of a property manager to handle not only the everyday tasks of collecting rent, paying bills and fielding tenant calls telling you their toilet is clogged, but many will provide strategic planning of preventive maintenance items as well as equipment replacement.
Your property manager will create a strategic maintenance and upgrade plan for multi-family properties as well as other classes of commercial properties; however, most single-family residential houses may not need something as elaborate.
A property manager is more focused on the day-to-day operations, basically maintaining the value of the property through collecting rents, paying bills, interacting with tenants and maintenance personnel, following and helping prepare the budget.
An asset manager is more focused on increasing the value of a property or a portfolio of properties through financial analysis, acquisitions and dispositions, re-tenanting, performing capital improvements such as a facade improvement program or adding space, securing financing and negotiating with vendors and new tenants on behalf of the owner.
Many asset managers have been property managers while it is also good for property managers to know some of the duties of an asset manager. I have managed many investment properties and portfolios in my career and focused more on the asset manager duties for my clients, which usually includes some property management duties as well.
According to Building Engines, below are nine key performance indicators your property manager is serving you well:
A high tenant satisfaction rating.
A low tenant turnover rate and knowledge of why tenants sign-up or leave.
Keeping up with certificate of insurance compliance with commercial tenants.
Efficiency in staff and interactions with tenants.
On top of revenue collection includes rent collection, applying increases and billable hours and reconciling expense pass-throughs.
Expenses are under control and within or under budget.
Work order completion rate should be high to maintain tenant satisfaction.
Incidents resulting in a financial loss are mitigated and under control.
Inspection completion rate is high, which comes with a precursor of understanding what inspections to complete.
A property manager and asset manager are both vital personnel an investor should have on their team along with their commercial broker. It may not be readily apparent, but the knowledge, effectiveness, and efficiency of your team and management staff directly affect the value of your investment.
As I am discovering all the possibilities for positive change with my new asset management account being the catalyst for the many rewards realized by the tenants and the ownership brings me satisfaction with what I do.
Burt M. Polson, CCIM, is a local real estate broker specializing in commercial, luxury estates and wineries. Reach him at 707-254-8000, or firstname.lastname@example.org. Sign up for his email newsletter at BurtPolson.com.