Potential Costs to Consider When Managing Your Commercial Property
Owning commercial property is considered more profitable than managing residential housing units. With commercial property rental services, you stand to have desirable business hours, objective price considerations and professional relationships. New and growing businesses are always looking for commercial properties to let, more so in quickly developing areas. However, to properly manage a commercial property, you need to have an objective eye on which costs you will have to deal with regularly. Here are five potential costs that a commercial property manager has to cater for.
As you make follow-ups on current property investment trends, you also need to be at par with commercial property insurance services. Gone are the days when you only insured a commercial property against theft and fire. These too still apply and are mandatory in most cases, but you should also consider cover to cater for rent loss and insure your portfolio and owner’s liability. As much as insurance is an expense you have to meet for a while, it becomes the best investment you ever made, mainly when risk covered against occurs.
Any property, whether residential or commercial, incurs maintenance costs over time. The difference is that, at times, for commercial buildings, this is inclined towards the property owner as the building may have several tenants. The positive side to this is that you can add maintenance fees as part of incidental costs for tenants so that you are not directly utilising the property’s income for maintenance. This is unless a tenant requests for special renovation, which they might have to pay for instead of passing the cost to the property owner.
Just like maintenance costs, repair fees can at times, be added to commercial property rental services, depending on the circumstance. There are times when the repairs are as a result of a tenant’s incident where he or she might be asked to pay for the costs. Other times, repairs might be general where the property owner needs to step in and handle the bills. An example is when an external factor causes commercial property damage such us in damage caused during theft cases.
Common Area Costs
Common area costs are expenses that are as a result of people being in the same geographical area. A typical case is during winter when the snow comes down and covers the landscape, making it hard for people to access a building. In this instance, the common area cost will be that of scrapping off the snow. Such costs fall on the shoulder of property owners, unless they include it in the tenants’ payment agreements. Either way, it the property owner who will have to deal with the services and not individual tenants.
Utility expenses include water, telephone and landscaping bills, among other examples. There are tenants who prefer using their own outsourced service providers and pay for their utilities individually. However, if a tenant ends a leasing contract and moves, he or she may leave without cancelling utility service contracts. The property owner has to pay for such costs as the bills will automatically be redirected to him or her. A property manager should ensure that such services are ended as soon as a tenant leaves to avoid unnecessary expenses and complications.
Managing a commercial property is not hectic, and the salary is often a good one. However, as a commercial property owner or manager, you also need to watch out for general costs as listed above to make sure that your work runs efficiently. Many times, tenants play a significant role in catering for these costs but in the event that you do not have many tenants to enjoy the economies of scale, you will need to keep a critical eye on such expenses.