“Tips On Increasing Profitability When Managing A Commercial Property For Lease”
Do you want to earn more from your property for lease?
Having a property for lease business can be very profitable. You just need to keep your good tenants long term and collect their rent.
It’s that simple but…
This kind of business has potential shortfalls and challenges if it’s not managed correctly. You may even encounter days when your business is having an insufficient cash flow. To help minimize the impact of this scenario, you need to figure out how you can earn more from your property for lease.
That’s why in this blog post I’ll be giving you several tips on how you can increase your property for lease for business profitability.
Earn More When Managing A Property For Lease
As a commercial property manager or property owner, your main goal is to get the most profit out of your investment. This includes learning every aspect of what it takes to make your properties profitable while keeping expenses to maintain the property at a minimum.
Keeping your properties up to date, clean, and in good working order for tenants commonly allows you to charge the highest rents or for you to get market value rents for your property.
In this article we’ll discuss tips that could help you earn more from your properties and get the highest rents possible. However, before we talk about the tips that could help you earn more from your property let’s talk about what is a property for lease means first.
What Is A Property For Lease
A lease agreement or contract is a contractual agreement between the lessor and the lessee. This agreement allows the lessee to use the lessor’s asset for a specific length of time in exchange for a certain amount of money. The lessor’s asset could either be a property, building, or a vehicle.
A commercial property for lease is a building or land intended to generate a profit either from a capital gain or from rental income. Common examples of commercial rental properties or property for lease are
- office buildings
- industrial property
- medical centers
- retail stores
- multifamily housing buildings
As a commercial property manager who’s looking for a way to increase the income of your property for lease, let’s take a look at the tips that can help you to earn more from your rental properties you are managing…
Tips To Earn More With Your Property For Lease
Making a profit for the commercial properties you are managing is the key to having a successful commercial property management business.
When evaluating your commercial properties for profitability there are some easy tips or recommendations to follow to get the most profit out of the commercial properties you manage…
1. Decrease Vacancy
The first tip or goal to making your commercial property profitable when managing a commercial property is to have 100% occupancy. The fastest way to earn money from your property for lease is to decrease vacancy. The best and easiest way to decrease vacancy is to find tenants who would stay in your property for a longer period of time.
If one of your tenants moves out of your property this will cause you a loss in rent revenues as well as costs to make the rental space available for a new tenant. Negotiating long term leases with commercial tenants helps to avoid recurring costs associated with tenant turnover.
Even if a tenant is moving out it is best to be on top of this process and find a new tenant that will fill the vacancy when the rental space is available. To do this, start advertising the vacancy as soon as the tenant informs you that they will move out from your property.
If your property for lease has high vacancies you may consider lowering your rent. A lower rent would easily attract possible new tenants.
Another way to decrease vacancies is to ask exiting tenants what they were most dissatisfied with the space they were renting. In doing this you will be able to correct or up grade the problem areas identified so your new tenants will not have the same complaints.
You can also decrease vacancies by offering incentives to your tenants who were able to provide you new tenants. The way this normally works is that the current tenant gets to stay longer or gets a one time discount on a rent payment while your property gets new tenants to fill in your vacancies.
2. Minimize Turnover
Once you find the types of tenants that you are looking for it is in your best interest to do everything you can to convince them to stay in your property longer.
Here are some tips to retain your tenants:
- Treating tenants with respect and professionalism
- Making sure the tenant’s concerns are valued
- Dealing with their issues urgently
- Having a good tenant/landlord relationship with them
Build a reputation that proves that you are the type of property manager who puts great value in taking care of your tenants and meeting their needs quickly and efficiently.
When looking to minimize turnover at your properties it is best to ask the present tenants if there is anything you can do to the property to make it more desireable. Tenant feedback can be the basis for upgrading the building or space and can also be a good evaluation on how you have performed your property management duties for the property.
Here’s some ways where you can allow you tenants to evaluate you as their property manager.
- Send postcards which ask for feedbacks from tenants
- Tell tenants that they can contact you if they are ever dissatisfied with your services
- Contact tenants on a monthly or quarterly basis to make sure all of their requests and needs have been addressed and completed
3. Increase Rent Strategically
The easiest way to increase profitability is to be able to increase rent you are charging your tenants. Sounds easy but when faced with constant rent increases tenants will look to move out or seek other buildings that are more affordable.
Rent increases can be beneficial but there are a lot of things that you should consider before you go that route to increase profitability. Increasing your rent every now and then without proper reasons could drive your tenants away. To avoid this, here are some tips that you could consider before you increase your rent.
- Communicate an offset to new costs (such as HOA fees) and upgrading the rental property (such as painting the exterior or upgrading old windows)
- Ask tenants if they want something and let them select in a list which will justify the rent increase and will also increase the market value of the property
- Make improvements necessary for maintenance or have immediate return on investment
The most effective way to increase rents is to show that the increased rents will benefit the present tenant and make the building or space they are renting in better condition.
4. Be Diligent In Late Fees
You should have a strict policy when dealing with late rent payments to increase your profitability.
And be sure to apply this policy across the board.
When late payments happen, consider accepting late payments only with additional late fees. Have a policy that after a certain number of days late, that you proceed with the eviction process. For some property managers that could be even 1 day late (depending on your lease agreement).
Tell your tenants that you will only accept the late rent payments if they pay the penalties for late payments.
Final Thoughts On Increasing Profitability With A Property For Lease
In this article, we talked about the tips that could help you earn more from your property for lease.
We talked about things like decreasing the vacancy rate, retaining your good tenants, and strategically raising rent. We also talked how to manage late payments.
If you have questions regarding the tips on how you can earn more on a property for lease, you can add them in the comment section below.
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