There are several reasons you might find yourself considering whether to hire a property management firm to manage your shopping center.
Perhaps you’re a new investor with little, if any, time to oversee a property?
Maybe you inherited property or portfolio of properties and need real estate experience to support your efforts?
Or it could be that you’ve self-managed your properties and grown tired of the relentless responsibilities.
Whatever the case, the decision to hire a property management company to handle your retail property should be weighed carefully. You’re contemplating placing a third party in charge of an extremely valuable asset. And the management company’s administration of this asset could have potentially enormous financial and legal ramifications for you personally.
That’s why it’s best to outline the pros and cons of such a decision.
Now, as a professional retail property management company, we’re certainly aware of the benefits our services provide. But we’ve also seen the situation from the other side of the coin. With nearly 300 properties under management, we’ve spoken with more than our fair share of landlords. And we’ve discussed at length the concerns landlords struggle with the decision to turn over their properties to an outsider.
This experience, however, has granted us the advantage of perspective. So, if you’re thinking about hiring a property management firm to care for your property, here are the pros and cons you should consider:
THE PROS OF HIRING A PROPERTY MANAGEMENT COMPANY
Saves You Time
If you’re like many retail strip center owners, your plate is already overflowing. You have a fulltime job. You own your own business. You’re overwhelmed caring for your family. Or perhaps you’re engaged with all of the above. Bottom line, there isn’t much time left over.
Meanwhile, servicing a retail shopping center is a HUGE time commitment. Overseeing tenants and vendors. Staying on top of maintenance. Collecting rent and paying invoices, mortgages, property taxes and the like. The responsibilities literally NEVER end.
But a property management company handles all of these responsibilities for you. Your property manager interfaces with tenants and supervises vendors. They monitor maintenance and ensure your property remains in peak physical condition. And the management company handles all property financials. The accounting department collects and records rent and CAM payments. And pays and tracks all invoices, mortgages, tax bills, and other payables.
Saves You Money
What’s a fair price for trash removal, sweeping or power washing? What if your parking lot needs a new slurry coat or complete replacement? Or your roof springs a leak? Or your HVAC system gives up the ghost? What’s a reasonable price for those projects?
As a landlord, you probably have no idea. And it would take TONS of leg work just to gather bids and establish a fair market price, let alone negotiate the services. And in the meantime, the issue is lingering. Which is either consternating your tenants, creating a hazard the could spell an enormous legal liability for you or both.
A property management firm, however, deals with these sorts of issues on a daily basis. A property manager can quickly secure bids, recommend your best option, and initiate the work in short order.
Increases Your Property’s Profitability
A well-maintained center is certain to attract customers. A well-patronize center is far more likely to host productive tenants that remain in place for an extended period of time, thanks to their consistent consumer draw. And a center fully leased to successful tenants is the key to maximizing your property’s profit potential.
A property management firm diligently monitors your center’s physical condition, oversees maintenance, and holds vendors accountable. The results of which ensures your property is appealing to your tenant’s customers, and in turn, keeps your tenants happy. And that means you can rest assured your property is achieving its peak profit potential.
Avoids Legal + Financial Non-Compliance Issues
There are no shortage of laws governing your property. And failure to comply with any of these myriad legally binding rules and regulations could spell fines, lawsuits, and other financially disastrous outcomes.
Additionally, federal, state, and local governments are working hard to ferreting out revenue. Any miscues in handling financial documentation, income reporting, or tax filings could result in massive fines, penalties, and worse.
With a property management company handling your property, you don’t have to worry about any of these issues. Your property manager will keep you appraised for legal statues and other legislative changes that impact your property. And help you navigate the process should such laws require modifications to your shopping center. This includes ADA compliance, which has been an enormous financial thorn in the side of scores of retail property owners.
Additionally, a property management firm’s accounting departments logs, tracks, and fully documents every aspect of your property’s financials. These efforts yield the most complete financial record you could hope for. And at year-end, you can simply turn over your general ledger to your CPA!
Minimizes Your Tenant-Related Headaches
Tenants are demanding and relentless. And their constant barrage can be irritating and emotionally draining. Additionally, it can be awkward and uncomfortable to play the role of the “bad guy” in turning down a tenant’s request or enforcing the terms of their lease.
A property manager, however, acts as a buffer. All tenant communications funnel through your manager. And your manager will exercise a “firm but fair hand” in imposing your will.
Enhances Your Property’s Investment Value
A fully leased, well-maintained, financially stable shopping center populated with successful tenants represents an incredibly valuable asset.
And the services a professional property management firm provides is your best opportunity to achieve this status with your retail property.
THE CONS OF HIRING A PROPERTY MANAGEMENT COMPANY
Property Management (Might) Cost Your Money
If your property is not leased on NNN leases agreements, you must pay a monthly management fee.
**As a brief aside… CBM’s leasing expertise can also assist with converting current tenants to NNN leases. For more info on CBM leasing, visit our website leasing services page: cbm1.com/services
Additionally, if your property is on NNN lease agreements, but there’s a vacancy, you may have to make up the portion of the management fee not covered by the missing tenant.
If your property is fully leased on NNN leases, however, your management fee is bill back to your tenants as part of your NNN charges.
You Must Give Up a Measure of Control
Some landlords like to collect monthly rent. They like to pay all the bills. They like to see, personally, all the monies coming in, and all the monies going out. Some landlords like to communicate directly with tenants, to the negotiated agreement and cut their own deals. This level of direct oversight and active involvement provides these landlords the assurance that the buck stops with them.
In working with a management company, however, you must relinquish some control. You don’t see the rent checks coming in or the bills going out. Instead, you see a monthly financial statement that charts these collections and payments. And you must have a measure of faith in the management company diligently executing their duties.
Are you’re the sort of landlord that insists upon personally monitoring every aspect of your property? Are you only comfortable relying only on yourself? Is so, then professional property management is probably not for you.
How Can CBM’s Property Management Services Benefit Your Retail Property?
If the PROS outline above outweighed the CONS in your mind, you should consider hiring CBM to manage your shopping center.
For more information, visit: cbm1.com/services