Owner-Management Myths Busted

By Daniel Di Gregorio June 06, 2017

The two biggest myths in the commercial property business exist around owner-management of commercial property. Owner managers often treat the management of their commercial properties as a ‘second job’ and make re-active decisions when faced with various scenarios arising from their portfolio. When we ask ‘why do you owner-manage?’ It’s apparent that two prominent myths exist around the owner-manager strategy.

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Myth #1: Management is easy, just collect the rent and arrange the odd repair.

Effective commercial property management is so much more than just rent collection and repairs.

You need to consider implications on the capital value of the asset when making decisions surrounding letting up, lease renewals, assignments or lease variations. All too often a landlord who has enjoyed a successful relationship with a tenant over a long period, finds themselves making decisions or agreeing to tenants requests that negatively impact the capital value of the property or even restrict the way in which the landlord can deal with their own property, perhaps consciously or unconsciously. Often, the impact of these errors come to light when financiers value the asset or the owner decides to sell the asset.

 Other pitfalls for owner managers include:

  • Compliance of essential services. Failure to comply with strict government regulations surrounding essential service maintenance, can lead to building orders being served on owners and fines imposed by council. More confronting insurance claims for building damage may be refused by insurers and potential liability claims from property users.
  • Recovery of all outgoings tenants are liable to pay or reimburse. Most commercial leases will have an extensive definition of what is defined as an outgoing, which extends beyond the well-known recoveries such as council rates, water rates and insurance premiums. In most cases this can include, repair and maintenance, to landlord fixtures to prolong life cycle, insurance excesses, and even administration and management costs.

Myth #2 – Self-management saves money

Probably not. When you send a bundle of invoices and bank statements to your accountants, most of what they charge relates to their time sorting out your files. Or perhaps your solicitor needs to be briefed on a matter and most of their time is spent researching the background information surrounding the matter than actually working towards the solution. All this adds up to hours of work for consultants charging on an hourly rate. When you engage a managing agent this is all done for you as part of the fixed management fee, not hourly rates.

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Whether you are managing your property or have assigned a property manager, it wouldn't hurt to get a second opinion.

Talk to us today.

About GormanKelly's Property Management Services

At GormanKelly, we consider the management of your property as our primary job, and we work pro-actively to identify the opportunities and challenges within your portfolio so the best strategy and decision making can be adopted. Owner-managers regularly rely on GormanKelly's Sales & Leasing team and seek  general consultation services surrounding their portfolio.

Our accounting systems and electronic filing systems make sourcing accounting information and historical files searches for any legal matters simple. Information is communicated to your consultants in an accurate and efficient manner to ensure clarity around decision making and to achieve efficient outcomes - saving you money.

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Daniel Di Gregorio

Written by Daniel Di Gregorio

As a Director of Property Management, Daniel continues to share his expert guidance and outstanding knowledge with his many long term clients and the GormanKelly team.

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