So You’re Buying a Commercial Property – Have You Thought About Who Will Manage It?
So, you’re buying a commercial property and laser focused on getting the deal across the finish line, but did you know that this is also the time you should be thinking about an important detail that is often overlooked? This is the time to start thinking about the management of your asset. It may seem as if this decision can wait, but there is value in having a contract squared away before you get to closing.
Four Reasons You Should Have A Management Contract in Place Before Closing
- The management company may be able to assist with due diligence during the buying process including pre-purchase inspections, budget planning and understanding your operational needs and expenses.
- It allows for a seamless transition for tenants and operations.
- It gives the company time to review leases, establish processes, and build relationships with tenants.
- It also allows for immediate action on maintenance, rent collection and regulatory compliance and provides time to gain access to critical systems, mitigating risks to the building and its operations.
Getting Started: How to Find, Vet and Hire a Property Management Company
Begin With Your Broker
Brokers have large networks and knowledge of the reputable companies in your area. They can tailor recommendations based on your property type and market.
Considerations
When vetting a property management company, consider companies that have expertise with your property type. It’s important to check references, reviews and credentials, such as affiliations with the Institute of Real Estate Management (IREM) or the Building Owners and Managers Association (BOMA).
It’s also important to consider accessibility, responsiveness and value. For instance, accounting services are sometimes located out of state and in different time zones, resulting in limited access. Working with a local company may provide access to on-site accounting services with dedicated team members familiar with your account. This type of personalized service facilitates communication and even tailored accounting services. A company with local expertise may also be more familiar with market trends and regulatory requirements.
Additionally, in terms of value, consider the firm’s vendor network. This can be pivotal in ensuring that your property can secure not only the best pricing, but timely service. A management company that has established relationships with known vendors can help you gain access to services more quickly. The best management companies will also evaluate service contracts periodically for potential savings. You’ll also want to consider the capability of the maintenance team. A robust maintenance team means you won’t be without coverage when your technician is ill or on vacation.
Other considerations include evaluating the technology and tools used for reporting, communication and maintenance tracking, and the company’s management strategy.
Request & Review Proposals
Once you’ve considered and determined your priorities, it’s time to request proposals. Evaluate the proposals based on pricing, experience, qualifications, references and compatibility with your property’s needs.
