Ways to Maximize the Profit of Your Property

When you have an income property, you want to get as much money as you can out of it. So it pays off to make the extra effort to be creative or to be diligent – and in some cases, come up with an initial investment to get things rolling. Whether you deal with residential property management or corporate property management many of these suggestions can help you to get more money coming in.

RENT OUT UNUSED STORAGE/PARKING SPACE: If it’s in a warehouse and it’s a large space, section it off and rent it out for separate smaller storage spaces – if it’s a smaller space, rent it out as is for storage. If you have a huge unused parking space, advertise monthly parking in specific sections, painting the lines for those areas differently. If the storage space or garage space is at a residential property and is not being used by tenants, rent it out to non-tenants. Is there a business nearby that could use more parking or storage?   

TURN WALLS/FENCES INTO ADVERTISING SPACE: Make that empty wall space or fence into an advertising mecca by renting it out to local businesses. It can be as simple as hanging a banner or as detailed as having a professional painter make that space into a marketing mural. Use as many walls or fence lengths as you’re able to. It’ll brighten up a barren industrial property, and can bring in hundreds of dollars every month.

ADD LAUNDRY FACILITIES:  If you’re looking to attract quality tenants, give them what they want: in-unit laundry. It costs a bit at the beginning, but will pay off in the long run as you can raise the rents, enjoy faster rentals, and get those quality long-term tenants you always wanted. They’re also a good incentive. Offer the laundry facilities only to those who sign a 2-year lease instead of a 1-year lease – the convenience may even keep that tenant beyond the 2-year commitment.

ADD/UPGRADE COIN-OPERATED LAUNDRY FACILITIES: If you haven’t got laundry facilities on-site for a residential property, then install them – even if it’s just one washer and one dryer for a small property. No-one likes piling their dirty laundry into a car and going out to a laundromat, if they can drop them off downstairs, then just conveniently pick them up a hour or so later. If you already have a laundry room, make sure it’s regularly cleaned and maintained. In both cases, a change machine is a welcome addition!

BUY A KEYMAKER – Depending on the size of your property or properties, you can save a fortune making your own keys. For the initial investment of a key maker, and ‘No Duplication’ key blanks, you’ll be able to replace any key at any time – even Sunday night after a tenant’s keys just hit the elevator shaft floor! You can charge for replacement keys – say $5 each - and never worry when a tenant doesn’t turn in their keys. Just buy a new lock and make the extra keys yourself.

INSTALL VENDING MACHINES – Could be coffee, soft drinks, chocolate bars, candy, sandwiches – you choose what would be most appropriate for your space. In a factory or office building, all would be probably be welcome in a lunchroom. In a residential setting, they might be found in a laundry room or recreation room or even in back hallway to the parking lot. A workout room would be a great setting for a fruit juice dispenser.  All translate into more income for you.

Making extra money in some of these ways does come with an initial investment, but if properly handled and maintained, can be constant additional revenue streams which add to your profit margin. While there may be more options for residential property management people to take advantage of, there are enough to perk up the income of corporate properties as well. Choose one or several of these ideas and maximize the profit of your property!

The Top 5 Problems Landowners Experience

There are five main problems that landowners have to deal with when they rent or lease their property or properties. These are problems that can be easily solved with the right real estate property management company. However, some people try to save money by handling these challenges themselves, and end up wasting valuable resources and burning themselves out in the process. If you see yourself struggling with some of these issues, this might be a good time to take a step back and reconsider your choices when it comes to property management.

TIME - You only have so much time in a day. If you’ve invested in property and still have a full-time job, you don’t have a lot of time left over - especially if you have a family - to give your property the attention it needs. Even if you are retired or semi-retired, there’s a lot of work to do when it comes to the day to day issues of renting and maintenance. It’s a 24/7 commitment. Your time is better spend arranging financing for necessary renovations or looking for new investment opportunities.

DISTANCE – If you don’t live near your rental property, checking on it and even interviewing potential tenants takes a lot of time and effort. Now add in dealing with tenant complaints, maintenance issues, emergencies, even just collecting the rent on time. If you manage your own property or properties, you’d need to live close by to be efficient and time effective. And the best investments may not be right around the corner. This limitation can affect your long-term success.

INEXPERIENCE – If you don’t know anything about residential property management, you’re in for a series of nasty surprises. There is so much involved that you’ll be overwhelmed just finding out all you have to do. And you not only have to do it, you need to do it quickly, correctly, and legally. Hire a bad or lazy repair person, or take too long filling vacancies and watch your profits melt away. Legal errors will cost you if you don’t understand the housing laws, or if you take too long to fix a furnace in the middle of winter.

MANAGEMENT – There is much more to it than you realized, most of it dealing with people: tenants, repair people, accountants, maintenance people, and lawyers to name a few. Along with collecting rent, maintaining the property to code, and dealing with complaints and problems, there is payroll and a pile of legal requirements and considerations. Basically, you’re an employer with all the accompanying headaches. And I’ll bet that’s not what you signed on for when you invested.

TENANTS – Finding and keeping good tenants isn’t easy. A vacancy is money slipping through your fingers. You need to create enticing ads with good pictures to attract the kind of tenants you want. You must respond to emails, interview people, show the unit, review applications, pull and review credit reports, call references and past landlords, prepare a lease negotiate the terms, get the lease signed…and this is still no guarantee of getting a good tenant – especially if you’re not experienced with renting. Good tenants need a quick follow-up for repair needs. Bad tenants cost you time and money and a few rounds with the legal system to get rid of them! Until they’re gone, one bad tenant can cost you many good tenants, and a lot of money.

The answer to all of these problems is simple. Hire a good residential property management company. They will handle every management issue from renting to maintenance…from emergencies – they get the 2am call that a pipe has burst – to evicting the nightmare tenant. They know the ins and outs of vetting and keeping tenants, all the legalities involved in any situation, and have the best repair people on call. They will lift the weight of property management from your shoulders, and let you relax and watch your investment grow. If you haven’t before, now might be the time to look into finding a good real estate property management company. 

Tips for Property Managers

Property managers have a responsibility to their tenants. They have a duty to make sure that a tenant is comfortable throughout their stay. However, some property owners treat their lessees poorly, these lead to conflicts and complaints. The way you treat your tenants and manage your property plays an important role in keeping the room or house you rent profitable.

If you are a bad owner, word of mouth of how poorly you run your property will spread, limiting or eliminating your prospects.

These tips will help you become a better property manager.

Address Problems Immediately

Conflict between property owner and tenant may stem from small problems such as leaky plumbing, creaky floors and other minor details. Show your tenants that you care about their comfort and well-being by addressing these problems as soon as they happen. In any industry, customer service will mean the difference between a satisfied and dissatisfied client.

Do not wait until a problem arises; always perform regular maintenance to prevent leaky faucets, loss of insulation, air leaks, faulty locks and others. Make replacements when you think that you need to do it. Inspect the room or property regularly to determine if you need to fix or replace anything.

Make Renovations and Improvements

The improvements you make on your property will increase its value. Sprucing up the kitchen or living room will go a long way in attracting and keeping quality tenants. You do not need to make a full renovation, sometimes it just takes a fresh coat of paint or additional pieces of furniture to liven up a dreary apartment. The renovations or additions you make will also improve the quality of your tenant’s stay.

Communication

Communication is a vital skill when it comes to dealing with tenants. You need to learn how to mix friendliness with firmness, especially when you start making demands. Rapport with a tenant will keep you on good terms with them. An open line of communication with your tenants will make it easier to identify their needs and wants, or find a compromise to prevent conflicts.

Go the Extra Mile

Going the extra mile may be as simple as keeping the surroundings clean or making renovations without additional charges. This shows how you care about your tenants; customer service will enable you to develop rapport. Doing more for your tenants will keep them satisfied with you as their property owner.

The way property owners manage their property and deal with tenants may either take your business to the next level or lead to its closure. Focus on the needs of your tenants and make them comfortable, as long as you do this, they will want you as their manager.

Residential Investment Tips for First Time Buyers

Hundreds of thousands of people across North America are happily living off money made from investment properties. If you do it correctly you can join them. But it’s much more complicated than just buying a building. There’s a lot you need to know and do before you take the plunge. You also need to understand a bit about the dark side of residential property management – but we’ll point out a great way to handle that!

Don’t rush into it. You need to go into property investment with your eyes open – knowing what the potential gains and risks are. That means doing research, as well as getting advice and help from professional property experts. Do your research in person as well as on the internet. Talk to anyone you know who owns investment property. Sit down with them to get a first-hand look at what it really entails, the good, the bad, and the ugly. As for those property experts, they should include an independent mortgage broker, and a real estate agent with investment experience.

You’re not buying a property, you’re buying a business. And this isn’t always the easiest paradigm shift to handle. It’s not simply a case of sitting back and watching the money roll in. You have responsibilities to shoulder and legal aspects to understand. You need to factor in municipal rates, interest rates, and operating costs like property insurance and taxes. A good way to handle this is to draw up a business plan with all the details you should consider, and set realistic goals. Are you willing to handle the day to day details of an investment property? If not, hire a good residential property management company. It’ll save you money - and headaches - in the long run.

Look for an ‘income stream’ instead of capital growth. Before you buy, you need to work out – and understand – the ‘yield’ of a property. Yield is the actual income you expect to receive – the rental income relative to the property’s value. To figure out the yield: total up all property costs (include closing fees, renovation fees, etc.). Take the estimated annual rent amount and divide it by the cost of the property. Multiply this by one hundred for a percentage – and this is your net rental yield. Balance this annual ‘yield’ against the price your property could be sold for in the next five to 10 years. Now you can see if the property is worth investing in.

Buy Where Renters Want to Live. You may get a great deal for a property in a small town, or in what appears to be a good area – but if it turns out no-one wants to live there, you’re in trouble. When scouting around for a rental property, look for areas of a city that show signs of growth and economic sustainability. Find out which areas have jobs available and people moving there for those jobs. Is there a school nearby, is transit handy? If you’re not familiar enough with all the different parts of your city, hire a real estate agent who’s experienced with investment needs.

Understand Your Monthly Costs. There are more than you may have realized when you first decided to buy an investment property. Those costs include: mortgage payments, interest and property taxes, maintenance costs, possibly garbage pick-up, water usage, or strata fees. You should also have an emergency fund to take care of unexpected repairs or vacancies. Those monthly costs may also include a property manager to handle the business end of things.

A Property Manager is Your Best Friend. Good property managers are worth their weight in gold! They’ll deal with the many day-to-day details of running your property and handle the dark side of rentals - like the call in the wee hours of the morning when a water pipe breaks, and dealing with the ‘tenant from hell’ who just doesn’t get it! – all for a small monthly fee. They’re proven to generate higher rent incomes, have connections in enough industries to handle any situation, and understand the applicable legalities. Shop around when it comes to choosing your real estate property management. And ask around. People are more than happy to recommend a good property manager.

If you’re considering buying an investment property, and hadn’t really looked into it too much, your head might be spinning right now! But if you are serious about this, you can now move forward in the right way, with the right people, to make this dream a successful reality.

Use Clauses & Exclusives – Know What They Mean

Finalizing a corporate lease in a multi-use facility such as a shopping mall or office building or complex entails more than deciding on the rent amount and length of tenancy. One area of importance to both property management people and the tenant are the ‘use clauses’ and ‘exclusive clauses’ within the lease. These clauses define the use of the space. Landlords prefer well-defined clauses whereas most tenants prefer clauses open to wide interpretation. The key to an acceptable lease is finding a balance whereby both the landlord and tenant feel their own interests are appreciated and safeguarded. 

‘Use clauses’ and ‘exclusive clauses’ set the limits for a tenant’s activities within their business rental space. The two clauses typically work together and come in many variations.

‘Use clauses’ tell a tenant what they can do, or what they can’t do. As well, these clauses can be broad in merely noting the type of business conducted, or they can be constricting in specifying the products or services allowed for sale. A permissive ‘use clause’ specifically lists what you can do, thus any services not listed are not allowed. For example, a postal outlet might want to expand its services to faxes and photocopying which seems like a logical progression. However, if those services are not listed, they’re off limits. A restrictive ‘use clause’ specifies what you cannot do. You may not be allowed to sell food in your business space. You can, however, sell books, or sportswear or anything that is not written down. In many cases you’ll find that a restrictive ‘use clause’ is connected to an exclusive ‘use clause’.

Not surprisingly, tenants prefer a broad use clause such as, ‘any lawful use’ or ‘any lawful retail use’. This openness allows them to update their business when necessary to keep up with an evolving marketplace.  

‘Exclusive use’ or ‘Exclusive’ clauses may apply to a specific geographic area and prevent a landlord from leasing to a new tenant who has the same business as an existing tenant. It can also ensure a landlord leases only to specific types of tenants. If you include an ‘exclusive clause’, make sure you also take into account reparation in case of a breach. This may include things like reduced rent, a lease term reduction, and a set amount of money for damages.

Who wants ‘exclusive clauses’? A major or ‘anchor’ tenant at a shopping mall wants to maintain exclusivity for their products or service. A group of dentists with a large practice may ask the landlord of their office complex to agree to rent only to compatible tenants like a denturist, a pharmacy, or a rental service for home care equipment.

When you’re using ‘use clauses’ or ‘exclusive clauses’, make sure that terms are clearly defined. For example, what exactly is meant by ‘groceries’? Does this just apply to food, or does this include paper products, soap, and diapers? What makes up a ‘sales area’? Is this the shelving space where products are displayed, or does it include the store aisles, and the check-out area? Taking the time to specify now, can save time and money for property management in a court case later.

Having a ‘use clause’ in a lease is no guarantee the tenant will abide by it. Businesses change - they may need to evolve or expand to keep up with changing customer demands. So it’s a good idea for property managers to regularly audit their tenants to make sure they’re compliant. A landlord during the due diligence period should review existing leases and ensure their new tenants are abiding by the terms that have been set out.

When it comes down to incorporating ‘use clause’s and ‘exclusive clauses’, commercial property management companies must consider many different issues in every lease. And to be honest, it’s not getting any easier. Today many businesses have expanded their products and services beyond the usual accepted parameters. Some grocery stores now have a pharmacy and a bank outlet as well as a wine kiosk. Corner drugstores sell coffee, food, stamps, and the latest electronics. It all lands on the shoulders of landlords and their lawyers, who must face the pressure this disturbing trend adds to the challenges of negotiating and drafting an acceptable and enforceable lease.

Unconventional Uses of Commercial Property Space

Times are tough in a lot of cities these days when it comes to keeping commercial space rented. There are vacant buildings, and blank store spaces in malls and shopping plazas, looking like so many empty promises. In every case, the emptiness impacts not only commercial property management, but also the neighborhood or shopping space these vacancies reside in – and not in a positive way.

The good news is that a lot of creative minds are finding new ways to utilize empty commercial space no matter where it is, or how big. Here are some innovative ideas on giving empty spaces new and profitable identities.

If you don’t mind putting in a bit of effort and money into renovation, building conversions are a good way to repurpose old warehouses. Section that space into separate offices or retail spaces, and rent to a number of different smaller clients, instead of one big client. One owner converted a distribution warehouse into a courthouse and parking garage. An old warehouse with refrigeration and freezer facilities is now used by a transport company which specializes in temperature-controlled time sensitive food transportation. In another case, a manufacturing plant found new life as a church and a school.

Turns out empty big box retail stores are a perfect location for expansions from community colleges or universities. The locations have good access to roads, plenty of parking, and can easily be changed into flexible classroom space.

Vocational schools fit well into shopping malls. Massage schools as well as make-up and hair dressing schools complement the shopping atmosphere. As well as paying the rent, there’s an influx of people coming in who who’ll end up frequenting the stores and food court.

Vacant mall spaces are also ideal for those not yet of school age. That’s why you’ll find daycares and preschool spaces popping up in local malls and shopping centers. Parents can pick up their children and conveniently get their shopping done in one trip.

Another trend sees government offices moving into shopping malls, mainly in the mall wings which are usually difficult spaces to rent. It’s ideal due to the availability of parking, public transportation, and the shopping space itself being a natural community focal point.

Medical clinics are finding homes in shopping centers, malls, and shopping plazas. Everything from emergency clinics to dialysis centers. Being in a retail location gives them visibility, provides easy access and they have all the parking spaces they need. If you’re considering this, make sure property management checks out the exclusion clauses of the space.

When long-term solutions are not readily available, inject some short-term marketing creativity to help pay the bills, brighten the space, and make these commercial spaces more enticing.

Pop-ups are becoming increasingly popular and are no longer limited to holiday sales. There are pop-up restaurants, and pop-up shops with every kind of product or service you can imagine. A successful online business may want a temporary tangible retail space for a special promotion –and end up as a viable tenant.

In between those short-term and long term tenants – fill that ugly gap with the help of local artists who’d love somewhere to display their art. It brightens up the space, generates interest, and may get someone thinking that this is not a bad place to locate a business! Whether or not you charge, it’s a much nicer venue for commercial property management people to show to a potential renter!

Long-term, short-term, temporary - it’s better to have someone in that retail space than to leave it bleak and empty. So, shake up those creative marketing juices of yours and try out some new ideas!

Ideas for Landlords on How To Keep Good Tenants

Retaining good tenants is a key part in successful residential property management! The only thing better than a good tenant, is a good tenant who’s there for the long term! In some ways, keeping good tenants can be harder than finding those tenants in the first place. As any good property manager and landlord knows, having good, long term tenants is not only important for regular rental income, but it also cuts back on your time and paperwork.

There are many different things you can do to keep these people. Here are a few tried and true suggestions for you to consider:

Go the Extra Mile.  A tenant is like a customer, so make some effort to keep them happy. Have a welcome basket waiting for new tenants to ease the stress on moving day. This starts things off on the right foot. Send a card at Christmas to thank them for being your tenant and to wish them well. It takes little effort but lets them know they’re appreciated and respected.

Be Clear on What You Expect From Tenants. Give them a list of rules and regulations that apply to living on the property in terms that apply to their wellbeing. It should include everything from parking and noise expectations, to leaving laundry in the washer or dryer and how garbage is to be dealt with. It’s easier to be a good tenant if you get some guidance.

Open Communication is critical. Never ignore calls, texts, or emails from tenants. If you can’t answer immediately, return those communications as soon as possible. If you don’t agree with their requests, talk the issue through and try to reach a compromise. When you’re around your tenants, be friendly and approachable.

Take Care of Problems Quickly. Fix that sticking window or loose tile as soon as you can. It may seem minor to you, but it’s a daily irritation to a tenant who lives with it. If it’s not something you’d fix yourself, send a contractor. If you need to order parts, or if it’ll take extra time, tell the tenants so they know their concerns are not being ignored.

Keep Your Property Maintained. Clean the hallways, stairways, and elevators regularly. Trim those hedges and cut that lawn every month. Visit the property regularly to check for any things that need fixing or repairing and take care of them – don’t wait until they’re brought to your attention. A well-maintained property is a nice place to come home to. 

Use Quality Appliances, Fixtures & Fittings. It not only gives the property a feeling of value and worth, it makes tenants feel that they’re getting their money’s worth. Using quality materials also means less repair and maintenance, so less annoyance for tenants, and less work for you. Also, if tenants feel proud of where they live, they’re bound to stay.

Get Rid of Bad Tenants. This is the dark side of residential property management. If they’re irritating to you when they don’t come up with the rent, or give you attitude, just think how much worse it is to have to live near them! If they fail to pay rent, indulge in illegal activities, constantly ignore noise restrictions, or cause damage to your property, you have every right to take action. If they don’t leave, in many cases, the good tenants will.

Consider a Tenant Retention Plan. What would you give to have a good tenant sign another lease - or after 3 years or 5 years, or even 10 years as a tenant? Consider offering things that enhance their ‘home’ space: a maid service for 2-3 hours, a professional carpet cleaning, refreshing a room by painting an accent wall in an acceptable color. Let them know that long-term tenants are valued.

Tenants who feel valued and appreciated, usually stay longer. The way to make this happen is by hiring the right property manager. A good property manager is actively involved in all aspects of a maintaining a property and a major part of that is tenant satisfaction. The most costly part for any real estate property management is constant turnover – or, heaven forbid! – empty rental units. In the long run, it takes less time, effort, and money to keep the tenants you have happy, than it would to be constantly looking for new tenants. So take a few suggestions and make some positive changes!