Commercial property management is a valuable investment strategy that can help you build wealth over time. But for newcomers, it can be intimidating. It takes a long time to refine your approach and improve your profitability, but the right changes can put you in a much better position.
Sometimes, all it takes is a handful of strategic changes to maximize your returns – but what are the best changes to make?
Hire a Property Management Company
One of the best moves you can make is hiring a commercial property management company. These companies specialize in managing your commercial real estate from beginning to end, handling everything from marketing and attracting tenants to evicting tenants if they violate your agreements.
These are just some of the benefits you’ll enjoy from the relationship:
- Faster filled vacancies. Because your commercial property management company will be working diligently to keep your property occupied, you’ll enjoy the benefits of faster filled vacancies. Even amateur investors realize that empty properties are a financial drain – so it’s incredibly valuable to keep them filled.
- Better tenants. Better yet, your property manager will be thoroughly screening and evaluating your tenants before bringing them into your property. That means you’ll find better fits for the property, which in turn means a more reliable stream of revenue (and hopefully, better retention rates).
- Reliable maintenance. It’s important to keep your property in good condition – that much is obvious. But with a management company on your side, you can practically guarantee that the proper maintenance is being responsibly handled.
- Time savings. One of the best benefits of hiring a property manager is that you’ll save time. You won’t have to get your hands dirty with the typical responsibilities of property ownership.
- Less stress. You’ll also experience less stress. While this won’t boost your returns directly, it will help you live a better life – and not feel burdened by the responsibilities of property management yourself.
Plan for the Distant Future
Next, plan for the distant future. Many new commercial real estate investors are focused on near-term cash flow, or the development of a given area in the next few years. While these are certainly important considerations, it’s often better to focus your priorities on the long-term future. How will this area change in the next 10 years? The next 20 years? What are the long-term trends in commercial real estate and how are they going to impact your purchasing choices?
Diversify Your Portfolio
Most investors have heard the advice that it’s important to “diversify your portfolio.” Even if you’re specializing in commercial real estate investing, this is good advice. A diversified portfolio will give you more stable returns – and expose you to less risk.
These are just some of the ways you can do it:
- Residential property. In addition to investing in commercial real estate, consider investing in residential real estate. These two broad niches tend to develop differently and can balance each other out.
- Different types of properties. There are many different types of properties you can buy in the commercial real estate world, serving different populations and different industries. Consider adding multiple types of properties to your holdings.
- Properties in different cities. Different cities have different local real estate conditions. It often pays to purchase properties in multiple cities so you can benefit from the perks of both – and avoid catastrophic losses if one city suffers a significant economic downturn.
- Non-real estate investments. Of course, you can also diversify your portfolio with non-real estate investments. Stocks, ETFs, mutual funds, bonds, and even alternative investments can all be worth considering. Make sure you evaluate your risk tolerance and rebalance your portfolio regularly.
Collect Tenant Feedback
Too many commercial real estate investors see their tenants as inconsequential – but it’s important to take their opinions seriously. Collecting tenant feedback and acting on that feedback is a great strategy to keep your tenants happier – and make the changes that will benefit your investments for years to come.
Finally, it’s important to remain flexible with your commercial real estate strategy. Over time, you’ll see a multitude of changes. Your priorities will change. Your knowledge and experience will evolve. Your properties will develop in ways different than what you expect. The conditions of your area, and of the commercial real estate market overall, will change. It’s best to remain adaptable and be willing to adjust your goals and expectations along the way.
Commercial real estate remains one of the best investments to add to your portfolio, but there’s no guarantee that your strategy will pay off right away. For most investors, it takes years of gradual changes and lessons learned to maximize returns. Be prepared for that – and keep making tweaks to boost your profits further.