What best practices and property management strategies can help commercial real estate owners maximize the ROI on their repairs?
Some see multifamily, office and retail property repairs and replacement needs as a pain, and drain on resources and cash flow. Others approach them as an opportunity to elevate their returns, and have a plan to maximize returns at every step, even when that means fixing something that’s broken.
1. Don’t Defer Property Maintenance
Deferred maintenance is not just bad business it has a negative impact on property value, and can become a serious financial liability. Tackle issues early, save money, and increase equity and income.
2. Leverage Your Property Manager for Contacts
No serious commercial real estate investor ought to be attempting DIY management. A good property management firm can pay for itself, even just from access to reputable and reliable contractors. These relationships can often ensure priority being placed on work needed, and help gain discounts to overall volume of work a management company orders from contractors.
3. Do it Right the First Time
Landlords wincing at the cost of making repairs certainly can’t afford to continuously re-patch and redo repairs because of poor quality short cuts. Do it right the first time. A great maintenance philosophy can go a long way to attracting and keeping the best tenants, and improving total returns.
4. Build up Reserves
Real estate investing is often chosen as a fast path to wealth and extra income by those that desperately need a quick fix. However, savvy commercial property investors recognize the wisdom and necessity of setting aside reserves for maintenance and repairs. Even if resources are tight at the beginning it is only smart to contribute to a reserve account monthly or at least quarterly in order to be prepared for replacements and regular issues that will arise. Being prepared will avoid running into a cash crunch and bringing down returns.
5. Use Renovations as a PR Opportunity
Renovations can actually become highly profitable investments in a macro way if they are turned into PR opportunities. This can be achieved through signage, local and even national news media.