There are several significant differences between residential and Commercial Property Management. Usually, new commercial property managers begin with commercial properties due to their relative simplicity. However, when one wishes to jump into commercial property management, there are several things to know first. Read on to learn more.
The primary difference between the two is the type of relationship being established between the property owner and the commercial property management. In the case of residential leases, the landlord signs a contract with the tenant. The commercial leases dictate what the tenant can and cannot do on the property. This is why the commercial manager has to be well versed with the law and all applicable local rules and regulations. They are also expected to have an in-depth knowledge of the different kinds of leases set in place. Before a manager is hired, one needs to go through a thorough background check to assure that they are not liable to the property owner or the leaseholder.
Similar to residential property management, the primary duties of commercial property management are the collection of rents, escrow accounts, and collecting expenses. While the tenant expenses may differ slightly from those of residential property managers, it is still expected that both parties will share them. The landlord collects monthly dues from the tenants and then disburses them to them according to the schedule laid out in the agreement. These expenses include security deposits, cleaning, maintenance expenses, and gas and utility expenses.
With commercial property management, one expects the tenants to be responsible for paying the necessary bills and fees outlined in the rental agreement. These include water and electric bills, gas, telephone, or internet fees. Tenants are also expected to pay a security deposit and insurance for damages to the property or the apartment. The monthly lease also requires the tenants to make their payments on time, submit copies of credit references, and refrain from littering the apartment or leaking the property’s plumbing.
As the management of residential units, the rules and regulations governing commercial properties are far more stringent. Unlike residential rental units, which various tenants can share, commercial properties are designed to be sold off quickly and are often designed with high occupancy rates. Hence, to avoid foreclosure, property managers exercise their right to rent out the property continuously to ensure that they get maximum rentals. To do this, commercial property managers provide that the lease has clear terms and conditions and is signed in written form by all parties.
In addition, many real estate management firms employ property managers to handle other responsibilities for them. For example, these firms may hire accountants to conduct financial records on behalf of them. Alternatively, real estate firms may hire payroll processors, legal secretaries, property maintenance workers, and property managers to take care of the day-to-day tasks involved in running an office.
Many investors looking to invest in commercial properties often fail to understand the difference between investment property management firms and real estate managers. While both manage properties, they differ in several ways. While investors tend to take risks more actively, property managers are more conservative. They try to minimize risks by ensuring the buildings have up-to-date management systems and collect rents on behalf of investors. On the other hand, real estate managers seek stability by providing facilities cleaned regularly. The wiring works correctly and by hiring qualified staff to take care of the maintenance of the buildings.
Property management firms perform other duties as well. Apart from taking care of the rental income, they also undertake the responsibility of improving the building and maintaining its state. As a result, they have to be aware of the tenants’ requirements and ensure that they meet them. In turn, if the tenants find them challenging to deal with, they may leave the property immediately.