There could be several reasons why your commercial property investment is not performing as well as it should. There are always external factors like the economy, world politics, etc. Maybe something else You could possibly be too busy, or are you a lazy commercial property investor?
I have worked with many commercial property investors over the years. They’ve all been intelligent, hardworking people who have made good decisions. However, sometimes they become a bit lazy, ultimately costing them money. In this blog post, I will cover some situations that lazy investors often encounter. Please note that if you are easily offended, I advise you not to continue reading.
Annual rent increases:
One of the first things I’ve noticed is that many investors fail to implement annual rent increases as per the lease agreement. While there may be valid reasons, such as a downturn in the economy, keeping rents in sync with the market is essential. Ignoring annual rent increases can result in missed opportunities for increased cash flow.
Importance of Lease Length:
While having the most extended possible lease is generally desirable, other factors must be considered. The condition of the building, the economic situation, and future plans for the property should all be considered. Understanding these factors and their implications for lease length is crucial for investors.
Unnecessary clauses in the commercial property lease:
Many investors include unnecessary clauses in the commercial property lease without fully understanding their consequences. Clauses like demolition clauses and first refusal to purchase can significantly affect investors. It is essential to consult with a lawyer and ensure that these clauses align with your plans for the property.
Commercial property rent fluctuations and market Trends:
Investors must stay updated with rent fluctuations and market trends. Charging the same rent for a property rented out two years ago may not be aligned with current market conditions. To avoid extended vacancies and ensure competitive pricing, it is essential to keep an eye on rent trends in the area.
Importance of Proper Maintenance:
Maintaining your property is not just about avoiding expensive repairs. It also helps keep your reputation as a good landlord. Tenants talk, and a bad reputation can lead to difficulties in attracting new tenants. Proper maintenance policies ensure that your property remains in good condition and keeps tenants satisfied.
Dealing with rent defaults:
Landlords often make the mistake of not dealing with rent defaults promptly and hoping that the situation will improve or that becoming complacent can lead to financial losses. It is crucial to act quickly and organize a meeting with the tenant to understand the reasons behind the rent default. Negotiating a plan to catch up on the rent can help turn the situation around and maintain a positive tenant-landlord relationship.
Planning with new commercial real estate leases:
When planning for the future of your property, consider whether it might need redevelopment or significant refurbishment in the next few years to get a higher and better use of the property. Long leases may not be suitable if you have plans for substantial changes. Having a strategy and allowing vacancies can facilitate property improvements and increase income.
Are you a lazy commercial property investor? Of course you are not. Being a successful commercial property investor requires diligence and attention to detail. Avoiding the pitfalls of laziness can lead to increased profits and a positive reputation in the industry. By implementing proper lease management, staying updated with market trends, and maintaining your property, you can maximise the potential of your commercial real estate investments.
In summary, be proactive with your commercial property investment in order to get the best possible investment returns. More importantly, not leave any money on the table when it is time to sell.
Written by Con Tastzidis
Con is Managing Director of multi award-winning Commercial Real Estate brokerage and consulting company CST Properties since 2001.
With over 40 years of hands-on experience, Con Tastzidis has etched an indelible mark in the Hotel, Tourism and leisure commercial property and business sectors. Having engaged with national and international hotel and property companies/owners, Con possesses a profound understanding of the intricate dynamics that drive success in this arena.
Con is the author of several books, including Amazon top-selling book “Real Estate Investing For The Residential Investor-The- The 7 Myths of Commercial Real Estate Explained”. In this book, Con outlines many of the successful outcomes he has achieved in both good and adverse economic conditions for his clients. More importantly, how working with Con can work for you. Con has been featured in several national and international media outlets, including FOX, CBS, NBC, ABC, CNN, and BLOOMBERG.
If you would want to work with Con, he can be contacted through this link Feel free to contact Con Tastzidis at CST Properties.