The Hidden Operational Costs of Managing Commercial Property Yourself

When you’re tasked with managing commercial property, self-managing can often prove quite the challenge. You’ve often got a lot of work on your plate when it comes to operational costs, neglected maintenance, and legal liability from non-compliance.

While some like the challenge of managing commercial property, the reality is that a lot of these properties require a professional team or individual responsible for maintaining the property.

This guide will look at some of the hidden operational costs of managing commercial property yourself and how it might be more beneficial to outsource this service instead.

Extended vacancies and marketing costs

Without a professional network to rely on, self-managed properties may end up sitting vacant for a lot longer, which might not be something that you want when it comes to losing out on financial income.

Ideally, you want to have your commercial property rented out all year round, year after year. Realistically, that doesn’t always happen, but if you’ve got a commercial management company looking after your property, you’re more likely to fill the vacant periods a lot faster as a result.

Neglected or costly maintenance

When it comes to maintenance of your commercial property, you should have regular, professional inspections occurring to keep up with all of the ongoing maintenance that’s required.

A lot of minor issues can often escalate into major and expensive repairs, which is why you shouldn’t neglect these issues. However, that can naturally occur if you’re not being proactive when it comes to fixing those problems as they arise.

For maintenance on commercial property, having a management company do it all for you is a great way of mitigating the risks and reducing the chances of small problems turning into bigger ones.

Poor tenant screening and retention

Inadequate screenings can often lead to high-risk tenants, and often, they can be more of a problem than just leaving the property vacant. 

High-risk tenants can lead to evictions and, in many cases, unpaid rent. Low tenant satisfaction from slow service increases turnover costs. For a commercial property manager, they’ll be able to screen tenants with more success and ensure that the responsibility is upheld by the tenants. 

Legal and compliance risks

Failure to keep up with zoning laws, as well as safety standards and ADA compliance, can result in hefty fines. Not just that, but from a reputational standpoint, if you’re breaking rules and cutting corners, that’s not going to bode well for attracting any further tenants that are looking at your property.

The cost of your time 

It’s important to use your time wisely, and when it comes to the cost of your time, managing rent collection, repairs, and tenant complaints is time-intensive. Diverting your attention from other income-generating activities can be a detriment to you and your business, so it’s certainly worthwhile to explore the opportunities of a professional management company.

Vendor overcharges

Without established and bulk-rate vendor relationships, if you’re self-marketing, then you’re more likely to pay higher prices for maintenance services.

Incorrect rent pricing

Without accurate market data, properties may be underpriced (losing revenue) or overpriced, like increasing vacancy time. 

All these factors will frequently create a false economy where, despite avoiding management fees, the owner will almost spend more on repairs and lost rent by managing it themselves.