Commercial Property Management for Profit

When a person is involved in apartment building investing, there are several ways to increase their profits. Collecting rent from tenants is profitable, but there are many other ways to create a profit from a commercial real estate property.

There are common ways to increase income from your property, such as forced appreciation, increasing rent and creating other ways to raise the profit margin. This may entail adding laundry facilities to bring in extra profit as well as attracting potential tenants to the property.

Decreasing the vacancy rate always brings more profit, and it can often be accomplished easily through advertising. And, if advertising isn't enough, an offer of a special move-in deal is certain to attract potential tenants. Increasing occupancy will of course bring in more profit as the more units that have a tenant, the more profitable rent funds there are coming in.

The commercial property management can decrease verifiable expense flow in several ways. Things as simple as using low wattage light bulbs, using electric timers for lights in common areas and using motion detectors on lights in hallways are all items that will not hamper the tenant in any way, but will save a substantial amount of money. There are also the options of using regulated thermostats and reducing the hot water temperature to increase profits. These options can make the investment more profitable, but should not impact a tenant's life enough to dissuade them from renewing their lease. In some cases, lowering the hot water temperature is actually preferred by tenants who have small children or an elderly person in their rental unit.

There are also ways to increase cash by increasing rents and decreasing expenses using lower cost financing.

These are all simple, low or no cost ways of creating income from your commercial real estate. But, there are many other ways of generating income that are also low or no cost, such as adding soda machines. These are things that while they generate income also bring more advantages to the tenants. Buildings that are tenant friendly and well kept are ones that keep their rental units filled. Those buildings have tenants who feel their apartment is their home, complete with that make their lives easier.

About the Author:

David Jackson is a real estate investor and author who has found a niche in apartment investing. Find out how you can buy apartments while being broke and with no money of your own. You can also register for his newsletter claim a free CD here.

Property Management - Yes or No?

You just bought a small apartment building. Do you hire a good property management company or do you try to manage your rental property yourself? The best answer to that depends on what your goals are and what your skills are.

Your Goals

Do you want to be a landlord or an investor? Of course, the choice isn't that black and white, and you can be both to some extent. However, before you start spending all your time dealing with rent-collecting and fixing broken toilets, consider how that will affect your ability to go out and find more good investment properties. Certainly much of the time spent at your apartment building could be spent on finding more buildings - if you had a manager.

It's worth noting that wealthy investors often spend more time finding the deals than doing the day-to-day things necessary to operate their rental properties. They hire good property management companies, and not just because it frees up their time for more valuable things. It also has to do with the question of skills.

Property Management Skills

It may be tempting to do everything yourself. In fact, this may not be a bad way to start out investing in rental real estate. There is no question that if you do it right, you can reduce your expenses and so generate more cash flow by not hiring a property manager.

In fact, you may need to do the managing yourself in order to have any cash flow. In this case, you may have paid too much or financed the property wrong. Even if you plan to manage a property yourself, you should always buy in a way that the income covers all costs - including management fees if you decide to pay them. Any other way is too risky.

If you are thinking you'll do your own managing, can you do what is necessary? This is an important question. Do you have what it takes to collect from tenants who are late with their rent? Do you know who to call and how to negotiate for cleaning and maintenance? Of course you can learn whatever you need to know, but if you're not willing to learn, you are better off hiring a manager.

Consider too, whether property management will really be as expensive as you think.Sometimes a good property manager will save you money. A company with experience, for example, may have tenants calling all the time looking for apartments. This means they can fill your units quickly, and without the expense of advertising that you would have had if you were on your own.

When there is a vacancy, a good property management company will (hopefully) have a carpet cleaner and housekeeping crew in there within days to get the unit ready to rent. If they get the place re-rented two weeks faster than you would have, that's two week's extra income. Good property management can pay for itself in time and money savings.