You need a property manager to professionally manage a commercial or retail property. Our property manager will be the main point of contact between you, as the owner, and the tenants. We act under a Power of Attorney to collect rents, fill vacancies and effect move out or Exit Packages when needed. We also provide maintenance as needed from HVAC to, maintenance of windows and common areas to parking lot striping.
Our job is to:
Collect the rents and other payments from your tenants. This is typically simple until a tenant does not send the rent check. A good property manager will get the tenant to pay the rent, one way or another!
Our routine is to hire, pay, and supervise personnel to maintain, repair and operate the property, e.g. trash removal, window cleaning, and landscaping. Otherwise, the property loses its appeal, and customers may not patronize your tenants’ businesses. The tenants then may not renew their lease. As a consequence, you may not realize the expected cash flow with other companies. We will give you a cash flow chart, and an online account protected with a username and passcode which will give you real-time data as to where your money is in transition to your bank account.
- We advertise and Lease any vacant space, as soon as possible.
- Keep an accurate record of income and expenses, and provide you with a monthly settlement report, in addition to your daily account data.
We will always:
- Handle and resolve problems, e.g. late payments.
- Communicate day to day as needed. You want someone with strong interpersonal skills to effectively deal with tenants. That is our strength.
- Offer a contract for at least one year, but if you allow 3 to 10 years then the percentage rate will often drop as well. The contract will spell out the duties of the property manager, compensation, and what will require the owner’s approval.
Agent’s Fee: you will have to pay someone to manage and lease the property. You may have one company to manage the property and a different company to lease the property. However, it’s best to work with one company that handles both managing and leasing to save time and money, as well as maintenance needs.
Management fee: the fee can vary between an average of 4% to 6% of the base monthly rent for a retail center, depending on the amount of work needed to manage the property*. Plus there are other fees to consider.
*For example, it takes much less time to manage a $2M retail center with just a single tenant than a $2M retail strip with 12 tenants. So, for the center with 12 tenants, you may have to pay a higher percentage to motivate the property manager. You should negotiate the fee as a percentage of the base rent instead of the gross rent. Base rent does not include NNN charges. Ideally, you want a lease in which the tenants pay for their share of property management fee.
Late fee: when a tenant pays late, he is often required by the lease to pay the late fee. The property manager is allowed to keep this fee as an incentive to collect the rent, at times having to track down an errant tenant at night.
Leasing fee: this fee compensates the property manager to lease any vacant space, due to costs of advertising mainly but also for the added time needed to check out a tenants screening and application carefully. In a typical lease contract, the leasing company an agreed upon percentage of gross rent over the life of the lease. It also wants the leasing fee to be paid when the new tenant moves in. In addition, the leasing company wants 2% of gross rent when the lease is renewed as a one time fee, due to changes in the lease and involvement in obtaining and notarizing the signatures. The tenant may also ask for Tenant Improvement (TI) credit, typically between $10-20 per square foot to pay for construction expenses. So if a new tenant with a 10-year lease goes under after one year then you may lose money. We watch your back.
As the landlord we would:
- Pre-approve a long-term lease (10 years or longer) only when the tenant’s financial strength is solid. Otherwise, it may be better to reduce the lease to 3-5 years.
- Make sure the new lease has a provision for some kind of rent escalation, preferably based on Consumer Price Index (CPI), i.e. inflation which is 3-4% a year instead of lower fixed 1-2% annual increase.
- Consider TI request from the tenant as one of the factors to approve a lease. The TI credit depends on whether you need the tenant more or the tenant needs your property more.
You can see that it’s very important to minimize tenants’ turnover rate as it has a direct impact on the cash flow of your commercial property. A good property manager will help you achieve this goal.
Monthly Report: each month the property manager should send you a report on income received, expenses incurred, and property status. In addition, we offer a free online monitored account with live updates. You should Review all reports to see if the numbers make sense.
- We provide a report showing both rent and fees balanced.
- We manage a Trust Account for your property and have a monthly report with this noted.
- If you instruct the property manager to send you the excess cash flow then you will also get a check.
Owner’s Approval: the management contract should specify the dollar limit for exceptional maintenance expense, above this preset amount would require an owner’s approval. This amount varies from landlord to landlord as well as the type of property. However, it’s typically somewhere between $500 to $2,000 dollars per retail or office rented and used typically for any emergency needs.
Communication with property manager: in the first few months, you and the new property manager should communicate often to make sure things go smoothly. You should give instructions in writing, e.g. email, to your property manager and keep records of all your correspondence. If the property manager does not do what you instructed, you may refer to your records and minimize disputes. Bottom line is we need and value your business. We work for you, never against you.
Donald J. Leske Sr.
BCI PROPERTIES, LLC
9702 South Tacoma Way, Lakewood WA 98499
Office: (253) 531-1010 | Fax: (253) 531-5358 | Cell: (253) 241-6695
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