What makes a high-value rental property? Here are a few points to consider: Full occupancy, one hundred percent on-time payments, low turnover, responsible, clean, trustworthy tenants, a good location, excellent local management, and responsive, quick, and knowledgeable repair and maintenance crews. But mostly, you’re looking for a healthy ROI that pleases you and your investors.
What would it take to have all of these? Or maybe it’s enough to have more than half of these items more than half the time to maximize a rental property’s potential. What’s involved in achieving these levels? Where do you start, and how does scenario building aid in making better choices for existing properties and prospective opportunities? Many times, it’s worth listing each of the areas that are working and those that aren’t. Then, for each property and service item, evaluating how outsourcing the day-to-day leaves more time to find/build/gather investors for the next venture. CREM Management provides the services that increase rental properties’ potential while also beginning the data build to make the best decisions. With each step, the goal is to maximize value and minimize liability.
One Hundred Percent On-Time Payments
Stuff happens. Life gets in the way of perfection. But how do you achieve a higher percentage of on-time payments from your tenants, hoping that you are at full occupancy.
Make it easy to pay—Offer apps, electronic payment platforms, automatic payments, electronic fund transfers or even credit card payments. Offer anything else that will substitute for your client’s tenants having to write out a paper check, put it in a paper envelope, stick a stamp on it, and walk it to a post office box. For the younger readers, that was how people paid bills in the old days.
Offer competitive rents and good enough services that, given a choice, your client’s lessees would rather pay them before anyone else.
Keep the property spotless! An attractive, clean, well-landscaped office building, apartment complex, or shopping mall will invite people to want to take care of the place and take care of their landlords. CREM Management believes cleanliness helps cash flows, enhancing resale values…the ultimate goal for your rental property’s potential. “How much can we get for it?”
Low Turnover from Your Responsible, Clean, And Trustworthy Tenants
It’s a fact: High turnover is one of a property owner’s worst nightmares. It’s disruptive, costs money, and tears resale values to shreds. How does an owner avoid it? Besides a great location and a strong economy, one of the best guards against high turnover is a sound system for interviewing and evaluating prospective renters, be they a corporation looking for three floors in your client’s high-rise or the mom-and-pop grocery store owner wanting a prime corner in the downtown area. A good property management company will have an excellent system and a stellar track record for good results in finding tenants.
A Good Location
Everyone knows the top three points for maximizing a rental property’s potential. They are the same as for any property—commercial or residential. Location, Location, and Location. How is that determined? Comparables. The country’s, state’s, counties’, or city’s real estate rules. Tax base. Eviction rules. Openness to new businesses and growth. Proximity to populations that use the property (e.g., a retail mall near a residential development or a warehouse near a port). Some are obvious. Others are hidden gems that, because they are not obvious, might provide the biggest upside if the purchase price is low. A management company with its ear to the ground will sniff out high-potential properties.
Great Local Management
Let’s say you find a fully occupied property where the rents are competitive, tenants pay on time, the location is excellent, and the grounds are well-kept. The local property manager can make or break the value of your rental property. Are they reachable, responsive, and respectful? Do they know the best facilities managers, and do they hire people with a sense of responsibility toward keeping a good team? Are they competitive in how they pay, not overpaying but paying fairly? Has the local management been around a while, or are they turning over too quickly? Consistency and longevity mean they are doing a good job for the building owner and the tenants. They are loyal and professional. They are “keepers.” And they heighten a rental property’s potential.
Responsive, Quick, and Knowledgeable Repair and Maintenance Crews
Every repair person worth their salt is so busy they forget their own names. That is, if they’re really good. The reason? Responsive, quick, and knowledgeable repair and maintenance people are in high demand and in short supply. Do not overlook this almost forgotten aspect of building ownership when looking at ways to maximize rental property potential. It’s as good as having a trustworthy car mechanic. You won’t need them until the car stops running. And then you need them right away.
CONCLUSION
Rental properties can be amazing sources of income, from a single apartment building to a whole downtown full of office buildings, to shopping malls, and standalone or connected parking lots. Or they can be massive headaches, with every second of the day a struggle against the slings and arrows of commercial real estate ownership at its worst.
CREM Management helps property owners identify properties with excellent potential. Then, they crunch the data to evaluate various scenarios that will yield the highest return on an investor’s capital. It’s science and art combined. Maximizing rental property potential combines enabling on-time rent payments, preventing high tenant turnover, and sniffing out a good (maybe hidden) location. Rental property values increase when the “secret formula” also includes attention to the minutiae some firms miss.
Find a management company that takes pride in scoring great local management teams with spotless track records. Who are their facilities managers? How sophisticated and tech-savvy are they? Commercial real estate is part of the infrastructure that makes the world tick. It must offer investors a decent return. Maximizing that return is the healthiest thing for the world economy because every warehouse, port, manufacturing plant, and office building has to pay its investors, or they can’t afford to build anymore.
Then where will we be?
Contact CREM Management to find out how to maximize your rental property’s potential.
