Commercial real estate is typically at the heart of a healthy investment portfolio, but there are some challenges to yielding high returns, such as rent collection and therefore an unstable revenue stream.
But is it really possible to take the stress out of renting your property to make sure you maximise your returns?
While common sense and a good property manager prevail (should you choose to outsource the day-to-day management of your properties), there are a few key steps to note down to take the stress out of rent collection.
Set the terms and cultivate a transparent agreement
It’s crucial to set the terms of the agreement in the early days of the landlord-tenant-property manager relationship, and a good legal team can help to achieve that.
Getting a Heads of Agreement drawn up is a great way to essentially propose (or draft) key terms, which can be revisited or tweaked as required for sign off.
Within the HoA there should be transparent, clear stipulations to ensure a smooth transition to drawing up the appropriate lease documents.
Seek the right legal advice
Further adding to the significance of a transparent agreement is ample legal advice. Make sure to always have a legal representative present when drawing up key documents.
This is just as important for the tenant as it is for the landlord.
Highlight two-way obligations
Outlining tenant obligations in the beginning is paramount and professional – make sure your legal team highlight finer details pertaining to you (the landlord), too.
If the tenant request fit-out works to suit their intended use, you will need to stipulate that regulatory approval is required before any works are commenced.
Consider engaging an experienced property management agency
Great property managers are like the gift that keeps on giving – both the landlord and tenant benefit from a skilled property manager.
If you look to engage a property manager, you have to budget for maintenance and management fees.
Introduce pre-lease inspections
Conducting a pre-lease inspection of the property is important for both landlord and tenant. Taking a number of photos and reporting the state of the property pre-handover will form part of key documentation in the lease.
Typically, what the owner should do as a final step action is to check and test the mechanical services of the building, and to make sure that if self-managed or outsourced to a property manager that there are stipulations around service agreements to make sure the tenant is getting the most out of their tenure.
If landlords execute on the five points outlined above – historically speaking – tenants will have a very clear understanding of owner expectations, and this will naturally lead into
The most important thing for landlords to do is to be organised and transparent, and this will make for a smooth tenant-owner relationship, and a stress free lease.
Read the full case study below on how the Salvation Army use Re-Leased Property Software to get the most out of their organisation