Looking after your own commercial property may seem like an appealing option but when you consider what could go wrong, you may be better off engaging a professional.
The two biggest myths in the commercial property business exist around self-management.
Looking after your own commercial property may seem like an appealing option. “Why reduce my investment return by paying an agent to do a job I could easily do?”, you may ask. But for many property owners, it doesn’t take long to discover that self-managing is not as simple as it seems and many end up worse off financially.
Myth #1: Management is easy, just collect the rent and arrange the odd repair.
Effective commercial property management is so much more than just rent collection and repairs.
You need to consider legal compliance, essential services, rent reviews, lease structure for asset enhancement, potential defaults, appropriate charge back of outgoings, financial reporting for tax time, and that’s just the start of it.
Strict government regulations and the requirement for stringent compliance means if you haven’t got everything absolutely covered, you leave yourself open to significant risk. For example, did you know that failure to comply with essential services legislation means you may not be covered in the event of a building insurance claim?
Myth #2: Self-management saves money
Probably not. Have you factored in the cost of using accountants to prepare financial statements for tax time and lawyers to provide advice, billed at top rates and in 15-minute increments?
Perhaps you may inadvertently cause yourself loss through missing a critical rent review, adversely affecting the capital value of your property through a poorly structured lease agreement, or forget to recover claimable outgoings from the tenant. (Depending on the lease, management fees may even be recoverable from the tenant.)
If you feel it’s time to move away from self management, GormanKelly would be pleased to help.
Benchmarked by Macquarie Bank against 70 commercial agencies, GormanKelly has been ranked as one of Australia’s pre-eminent commercial management firms.
It is involved in all aspects of commercial property – property management, selling, buying, leasing, valuations and project development consulting.
GormanKelly’s specialty is private client portfolio management, and general property advice for private individuals, families, corporate and government organisations.
No matter what clients’ needs are, its approach is always the same. It aims to excel in every detail of the process, and be a joy to deal with.
Find out more at GormanKelly.com.au or call (03) 9810 7200.