Why you need dedicated Commercial Property Management to maximise your Investment Return
Entering the commercial investment property market can be a daunting experience for any Landlord. There are so many factors to consider; How do I choose the right tenant? Do I know what clauses are necessary to ensure I am protected in the lease? Do I have the time to chase arrears, ensure I recover all the outgoings and manage the repairs and maintenance? This is where your Commercial Property Manager is invaluable to you!
Below are just some of the areas where a dedicated commercial Property Manager like PURE can assist in the management of your commercial property.
Choosing the right tenant and attaining a profitable rent for your Investment Property – PURE has extensive knowledge on how to secure and retain quality tenants. We carry out background checks and maintain a great relationship to ensure good tenants stay. Our team have a intimate understanding of their property portfolios, so they can offer sage advice to clients on how to achieve the optimum market rates for their investment property.
Ensuring you have crucial Clauses in your lease – When you have secured your tenant and agreed the main objectives such as length of term and rental amount, you now need to decide what else to include in your lease to guarantee you are protected. From a landlord’s perspective, we believe there are four clauses that you need to ensure work for you before you sign your agreement. These clauses are
- Term of Lease – Does the length of the lease suit your long-term plans for the property? Do you want to include an option period for your tenant, or do you want to wait until nearer the end of the original term to decide if you want to release to the same tenant? An option period is often requested by the tenant, as it allows them to decide whether they want to renew their lease or not.
- Outgoings – There are two main types of leases you can choose; a Net Lease, which allows for the rent and the outgoings to be recouped separately, or a Gross Lease, which provides a total figure of rent and outgoings included in one monthly payment. A Net Lease provides the Landlord with better control over recouping all the costs incurred. The options here allow you to on charge the outgoings as they come in, or you can provide a monthly estimate of the costs, and then arrange an annual reconciliation at the end of the financial year. This is the preferred method for our clients. If you provide a tenant with a Gross Lease, including fixed annual increases along with the rent, there is no guarantee that you will recoup the full outgoings each year, particularly with a longer lease.
- Make Good – This clause is so crucial to get right from day one. So many tenants believe that their fit out is adding value to your property, but this is not always the case. Items such as flooring, tiles and built-in units can be very expensive to remove. If your tenant moves out without removing their fit out, and your new incoming tenant wants the current fit out removed, then it will be at a cost to you if you do not have a solid Make Good clause in your lease that provides clear instruction as to what should be removed or reinstated at the end of the lease.
- Termination Clause – Sometimes tenants get into arrears, usually with understanding and communication it can be resolved quickly. Unfortunately, in some circumstances it cannot, and the tenant needs to be vacated from your property. To ensure you do not suffer financially during this process, it is imperative to have a strong termination clause within your lease. Pure PM can advise you on suitable timelines for deadlines on payment of rent, and when you need to vacate a bad tenant.
- Security – The Cash Bond or Bank Guarantee should be suitable to cover the risk to the Landlord of the Tenant breaching their contract. This may be anything from 3 months to 12 months depending on the length of lease, the Landlords contributions or up-front costs, and the quality of tenant. Some publicly listed companies may not provide a security amount at all, however, you should ensure you are well protected with start-up tenants who have short track-records.
Financial Management of Your Investment Property – PURE has over 100 years’ experience between their team members, so they can provide comprehensive, cost effective management of all the financial aspects of your investment property.
Arrears – We have a very stringent arrears process that allows us to flag arrears quickly and act on them immediately. Communication with our clients and their tenants is key for us at PURE. This open communication is vital in sustaining little to no arrears at all times across all our portfolios.
Management of Outgoings – The management of paying invoices and recharging your tenants can be a very time-consuming process for busy landlords. PURE will arrange to have all of the property invoices such as water rates, council rates etc to be sent to our office, where we can arrange prompt payment and recharge to the tenants where applicable. All these payments and recharges will be visible to you in a monthly statement provided by PURE.
Maintenance and Repairs – This can be the biggest headache for any Landlord. PURE has a database of preferred contractors that we can rely on to attend emergency call outs, as well as providing quotes for larger maintenance and repair works. We manage this end-to-end service to ensure the works are carried out to the highest and most cost-effective standard.
PURE specialises in professional property management and can offer you exceptional leasing and property management service for your commercial property. Please call us on 1300 111 776 or email us at info@purepm.com.au to discuss how we can assist you further.