3 Common Reasons Your Commercial Real Estate Investment Isn't Working Well (And How To Fix It)

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3 Common Reasons Your Commercial Real Estate Investment Isn't Working Well (And How To Fix It)

Dealing with an under-performing, vacant, or poorly-tenanted investment property can be frustrating at best and financially devastating at worst.  If you’re experiencing issues with your investment location, it might be from one of these three common reasons. Look at the problems below and we’ll show you the fix for each. Let’s get your property back to its full investment potential!

 

Common Reason #1 For Property Problems: You’re Doing Everything Yourself.

It’s common to feel as though you should personally attend to every need of your property or tenant. When your building is vacant maybe you put together a quick brochure and post it to Craigslist. When your tenant has a problem, you drive down to the building and try to do the repairs yourself. Two issues with doing this: First, there’s not enough time to do this with every property you own, and second, you’re not an expert. It might feel like you’re saving money by not having to pay a real estate agent, property manager, or commercial vendor. Instead, you’re losing thousands of dollars in time. Also, you will often see longer vacancy times, subpar rental rates, and lower-quality tenants. Connect with industry experts who deal with these issues on a daily basis and have the professional training and tools to navigate such situations.

 

Common Reason #2 For Property Problems: Not Maintaining The Property

Often times, we see landlords have a “good enough for now” attitude. Sure the exterior paint is a little faded, but it’s not peeling yet, so it’s still good enough for now. Okay, the parking lot is getting a little rough, but there aren’t any dangerous potholes yet so it’s still good enough for now. Yes, the roof has a few leaks but a couple buckets during the rainy seasons stop any damage, so it’s still good enough for now. Eventually, you will have to fix these problems. They will not go away by putting them off. You might feel like you’re saving money off the bat by extending the “good enough” until the last possible second. In reality, the final repairs will be more costly than fixing items right away. It is much cheaper to slurry coat vs. re-paving a parking lot that has been left unmaintained for too long. It is easier to have your roof up kept on a regular basis than have to replace a roof that is in disarray.

Another unwanted, and overlooked, side effect of poor property maintenance is that a high-quality tenant doesn’t want to occupy a “good enough” quality building. You don’t go to a 24-hour diner for filet mignon, and you shouldn’t expect a credit-tenant to show up paying market rents at your okay-ish building. If you want to receive full price rent from a trustworthy company, you have to be that type of landlord in return.

 

Common Reason #3 For Property Problems: You’re Choosing The Wrong Tenants

This final point connects with the first two reasons we just talked about.  Tenants should be chosen based on strict criteria, in-depth screening, and a review of the business. Having an expert commercial real estate broker represent your well-maintained property will bring in tenants that you desire.  A qualified broker will get tenant financial information for at least the previous three years, require an appropriate security deposit to cover any future damages, and advertise a lease rate that filters out tenants in search of a “deal”. We also tell our clients to receive a personal guaranty of lease from the business owner, assuring that you will receive rent for the entire lease term no matter what happens with the company. Having a flaky tenant that pays rent late, pays under-market values, or vacates the property before their expiration date are detrimental to your cash flow.

If you’ve been dealing with one (or all) these problems, we want to help you. Call us at 949-366-2020 to avoid these common problems forever!