5 avoidable risks for commercial property owners - part 2
Every investment has some level of risk. Unlike my nephew who is trading Bitcoins and other cryptocurrencies, commercial real estate is probably a less risky investment.
Commercial real estate does require some level of attention to keep your risks at bay.
In my previous article, we discussed risks one and two: having the wrong form of title and not periodically evaluating your insurance coverage.
Below are risks three through five:
Turning a blind-eye towards maintenance
The lease dictates who is responsible for maintenance of the building. However, the prudent owner keeps track of all the maintenance even when it is the tenant’s responsibility.
It can be difficult to foresee all potential issues, but it is much better to be proactive rather than reactive. Being non-responsive to maintenance creates more problems such as a potential impact of the value of the property, loss of a tenant or even a lawsuit brought by a tenant.
The second part of maintenance is equipment replacements and upgrades, which require planning and setting aside funds. It could easily cost $10 thousand to replace a package HVAC (heating-ventilation-air conditioning) unit on the roof.
A property management company can well be worth the cost of a quick response to tenant maintenance requests as well as help with planning for future replacements and upgrades. An excellent property management company will also know the basics when it comes to safety and security.
Lack of common-sense safety & security
The lack of reasonable safety and security measures is a lawsuit waiting to happen. Having a safe and secure building should be a priority of the owner with the well-being of others a top concern. There is also the exposure to liability, potential building code violations, and insurance policy violations.
Building maintenance practices and potential safety and security show a direct correlation in many cases. Proper maintenance reduces the safety and security risk.
Trimming or removal of bushes close to the buildings, increasing the brightness of lighting or adding lighting are simple fixes. The upgrade to a keyless entry system, a security system or video surveillance system may be worth the cost when life and property are at stake.
The moving target of the ADA (Americans with Disabilities Act)
It seems changes are made annually to the ADA guidelines. As a commercial broker and property owner, it is overwhelming to keep up with this vital legislation.
My first suggestion is to obtain an ADA inspection survey from a CASp (Certified Access Specialist) to determine accessibility of your commercial property. The detailed survey will highlight the readily achievable barriers to address immediately as well as those barriers which are not readily achievable.
The ramifications of not addressing ADA upgrades not only include the safety, security, and convenience of individuals with disabilities to enter and use the facility but exposes the property owner to litigation by not providing accessibility.
Burt M. Polson, CCIM, is an active commercial real estate broker. Reach him at 707-254-8000, or firstname.lastname@example.org. Sign up for his email newsletter at BurtPolson.com.