Wednesday, May 29, 2013

Property Management - Self Managing

The concept of ‘self managing’ a commercial property may make sense in certain situations.  If you have the ability and resources to provide the necessary services for the property, there is no reason you shouldn’t consider managing the property on your own - and pay yourself to do so.
What might this look like and are there issues that need to be addressed?  As with professional management, it needs to include the first 3 elements – Asset Management (AM), Financial Management (FM), and Physical Maintenance.  Since you are the owner,  the AM/FM component becomes more of an internal exercise, as you are basically accounting (reporting) to yourself.  Tenant communication is probably the biggest key, and you should attempt to provide it a level which is comparable to professional management. That doesn’t mean it needs to be overly complicated and detailed – but rather efficient, clear, and easily understandable. On the leasing function, you may opt to involve a real estate brokerage to handle new leasing placements.  In this scenario, you might retain the responsibility of negotiating any new deals, lease preparation, and completing any work required to deliver the space.
Bear in mind, you are wearing a lot of hats in self-managing. You need to do a good self assessment to ensure you are up for the task.  In preparation, consult with your professional advisors (lawyer, accountant, & of course r/e broker) to make sure you are able to deliver the service needed on all counts.
Should you pay yourself – ABSOLUTELY!  There is no such thing as 'Free Management’ and it should be costed at levels consistent with whatever is typical in your market. If done properly, it is often a  ’win-win’ for owners and tenants, given the vested interest both have in the property.
Again, seek out experienced commercial realtors within your  market to discuss prospects on ‘self-managing’ your property. 

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