Growth: A Guide For Landlords
Managing Your Own Portfolio
Page summary: Commercial landlords managing their own property portfolio can increase their yield by saving on property management costs. But this is dependant on the landlord’s ability to effectively and efficiently play the role of the property manager. Whether a single entity or a conglomerate of investors form “the landlord”, there needs to be a clear strategy on how to increase revenue potential from the property(ies). On this page, we have outlined how landlords can get the most out of managing their own property portfolio.
Read time: 10 Minutes
What’s on this page? We’ve outlined it for you below.
1. Introduction: Buying Commercial Property Is One Thing; Managing It Is Another
2. Keep An Eye On The Metrics To Maximise Yield
3. Think About The Legalities Of Managing A Portfolio
4. Discover The Ways To Get The Most Out Of Your Portfolio
5. Understand The Challenges Of Finding (And Retaining) Tenants
6. Establish Property Management Processes And Systems
7. Conclusion: Leveraging Technology Is The Best Approach To Save Time And Money
Introduction: Buying Commercial Property Is One Thing; Managing It Is Another
It may seem like a relatively easy task to manage your own commercial property assets – the assumption typically is to collect rent and arrange repairs, and call it a day. There is a lot more to managing commercial property than that.
As a landlord opting to managing your own portfolio, you need to be aware of legal compliance, as well as the end-to-end property management service. Or in other words, what commercial property managers do on a daily basis. Rent reviews, lease agreements and structures, and outgoing and budgeting outlines are all activities that are crucial to running a smooth commercial property management operation.
Keep An Eye On The Metrics To Maximise Yield
In order to reap the financial rewards of a commercial property portfolio, having a holistic understanding of how properties are performing is key. Establishing and keeping an eye on metrics and KPIs will allow for growth and the resources to scale your portfolio.
Here are the KPIs that landlords – similarly to commercial property managers – should focus on:
1. Vacancy levels
The ability to stay informed and make the right decisions will come with understanding occupancy levels data. Are tenants renewing their leases? Are they signing on for longer terms? These are the questions that need to be pondered among property owners.
2. Assessing rent levels
Having knowledge on rental yields in the same area is important information to have handy when thinking of the best ways to elevate tenant retention. Regularly analysing and comparing rent against competitor properties will also help to provide relevant data to inform landlords on what to do with their portfolio.
3. Repairs and maintenance
It can be time and resource consuming to shop around for tradespeople and compare prices, so having a robust system to document varying levels of cost across trade disciplines will put landlords in good stead. Using property management software that integrates with relevant, industry leading maintenance apps will boost efficiencies and allow landlords to focus on addressing tenant requests are they are filed.
4. Tenancy schedules
Staying well across the portfolio’s tenancy schedules is absolutely paramount – tenant numbers, tenancy renewals and tenancy terms are all important figures to understand. Modern commercial property management software provides the reporting functionality required to visualise this data to elicit necessary action.
5. Arrears and cashflow
It is a given that having a bunch of rental arrears owed to landlords by tenants will seriously impact cash flow. Minimising and reducing the number of tenants in arrears and keeping on top of collections should be a priority.
6. Revenue and growth
Landlords may watch occupancy levels closely but it is important to know the actual revenue yield? Monitoring your revenue growth will show you precisely how your business is performing year-on-year. Where are you doing well, and what could be improved? This critical thinking is important.
7. Profit and loss (P+L)
P+L statements are the clearest indicator of the health of a business. It’s crucial for landlords to have a system that can provide reporting around money coming in and money coming in. While spreadsheets do the job, landlords are better off using a property management software platform that integrates with accounting software, which will provide the financial insight required to make informed business decisions.
Frequent analysis of a portfolio is a good course of action to take for landlords who look to maximise the potential of their commercial real estate. Many property owners make the mistake of glossing over the review cycle of their annual property tasks, but taking time to conduct a thorough analysis of their portfolio typically surfaces weak areas that need addressing, and highlight strong aspect of a portfolio. This is important to know what to keep doing, and what needs amending (or reviewing).
Think About The Legalities Of Managing A Portfolio
Landlords must be aware the legalities involved in managing their commercial property portfolio. Things such as tenant rights, lease documents, contract stipulations and clauses are unique to every commercial property, so having a well-rounded understanding of the key factors involved in managing commercial property is important. It is a good idea for landlords to engage a legal firm to help with the production of all necessary documents, and to gain the legal knowledge required to run their own portfolio.
Discover The Ways To Get The Most Out Of Your Portfolio
Return on investment (ROI) is typically the number one motivator for commercial property investors – that is, the year-on-year yield offered by a property portfolio.
Commercial property investors often overlook the immediate changes they can make to their existing properties in a bid to increase profits, such as making their commercial properties smarter. Here are some things commercial landlords can do to get the most out of their portfolio:
1. Improve communication with automated property management software.
2. Implement platforms, such as the internet of things (IoT), to know when things break, without tenants having to always report maintenance tasks.
3. Stop “too hot/too cold” areas and enhance tenant experiences with real-time communication and feedback systems.
4. Upgrade now to save down the line with renewable, energy efficient solutions.
Understand The Challenges Of Finding (And Retaining) Tenants
As commercial property owners, landlords face a number of tenant challenges that are unique to the commercial market. The positive news is that if you’re a landlord currently facing these issues, or you’re looking to manage your own portfolio, you are not alone.
It’s important to think strategically as a landlord to ensure that properties don’t remain vacant for long as to not lose out on generating rental income. The savvy navigational skills required to rise above tenant retention and tenant sourcing aren’t all that difficult, but there are some key things to keep in mind such as economic changes, development peaks and troughs, as well as shifting tenant demands.
Having a far-reaching tenant acquisition strategy puts landlords in a strong position to attract quality commercial tenants who fit their ideal profile: i.e. tenancy duration, business growth prospects, etc.
This can be achieved by implementing a robust online campaign that is targeted to the right demographics, which can be executed across a number of platforms. Owner assist outlets, commercial leasing websites and relevant social media platforms are all critical touch points to cover.
Establish Property Management Processes And Systems
Landlords opting to manage their own property portfolio need all of the tools they can get their hands on. Without the luxury of outsourcing to an agency, landlords have to be accountable to themselves to make sure that the maximum potential of their portfolio is tapped into.
There are a number of key processes and procedures that landlords need to enlist to their daily tasks that are in addition to collecting rent and managing arrears. Things such as getting the legal, lease agreement paperwork drawn up, routine inspection structure, tenancy schedule management and maintenance task administration, and rent review execution have to be taken care of and accounted for as an integral part of the landlord-owner’s self-management of their portfolio.
If these activities are done correctly, efficiently and transparently, landlords can gain total control of how their properties are performing. Cloud-based property management software eliminates costly mistakes by automating the property management process and provides deep financial insight, so landlords can run relevant reports to gain deep insight into the performance of their assets.
Conclusion: Leveraging Technology Is The Best Approach To Save Time And Money
Moving away from paper-based systems to a more proactive method of property management is the key to driving business growth in today’s ever-changing, ultra-competitive property landscape. This is true for property management agencies, but just as true for landlords managing their own portfolio, too.
Landlords who adopt property management software to manage their property portfolio unlock a suite of tools to use to their advantage in understanding how to maximise profits. Financial tools such as profit and loss can be evaluated through the figures of the portfolio’s rent income and arrears. A cloud-based software system grants always-on access to landlords, as information can be accessed remotely.