Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.
Issue link: http://cire.epubxp.com/i/102789
THE STATS A link to an informal property management survey was sent to CCIM members by email and was also available through the CCIM Facebook page. It is by no means scientific; responses do provide an up-close look at how small-property managers go about their businesses. Property Types Profile • Respondents are pretty evenly divided between Strictly 3rd-party residential, retail, office, and industrial. However, property those who own or manage residential — apartments, managers Owners who 31% condominiums, and single-family homes — tend not managed their own properties to own or manage other property types. The reason? 69% It's hard to say, but residential property management is not as straightforward as it seems. "To find and hire employees who truly know the apartment business is not as easy as Location hiring a commercial, retail, or office property manager," REGION % OF RESPONDENTS says one multifamily property South 39% manager. In addition, there is Midwest 14% a wide variety of multifamily product types and classes that East 13% require differing skills. "For West 28% example, B and C multifamily ownership and management International 6% isn't overly complicated, but execution isn't easy," says one third-party manager. • Those who own or manage nonresidential property often own or manage all three types: retail, industrial, and office. Medical office is the speciality property most often mentioned. Typical Portfolio Descriptions • "I own two small multitenant retail/office buildings and I also manage six multitenant industrial and office buildings in this area. These building are all less than 20,000 sf and less than 10 units." • "We manage a small portfolio of retail, office, and medical office tenants. The largest is 57,000 sf with four tenants; the smallest is a 3,000-sf single-tenant office building. The total is 15 buildings with 34 tenants." Favorite Software • Third-party property managers and those Portfolio Size Less than half of the managing larger portfolios use a Yardi product. respondents specifically • Almost everyone else relies on QuickBooks and stated their portfolio size Excel files for their lease tracking and accounting chores. Quicken and Rent Manager are next by building. in line. More than 20 • Other property management programs cited properties 25% are Property Boss, which interfaces with QuickBooks; On-Site, an online leasing plat1–5 properties form; and Promas. Rent Sentinel and Property 11–20 53% properties Solutions are two multifamily-specific programs 8% mentioned. Maintenance work order sys6–10 tems mentioned include Angus Solutions and properties 14% CleanTelligent. 34 January | February | 2013 Tracking Expenses Of course even creditworthy national tenants can be a challenge, says a property manager who oversees small retail centers. "National tenants are always fnding ways to re-analyze their [common area maintenance] and amount owed," she says. Good record keeping helps support the case for CAM expenses. "We budget each year and present a reconciled CAM budget based on actual expenses and projections at the beginning of the year and charge a monthly estimated fee. It is reconciled based on actual expenses at year-end," says an owner of retail and ofce properties. Recording expenses also helps smallproperty managers keep their maintenance costs in line. In fact, few respondents list maintenance as a problem, indicating that small-property managers and owners seem to have maintenance issues fgured out — thanks in part to the ability to track expenses more consistently year to year with accounting and property management sofware. "Using real estate management software gives us the beneft of being able to evaluate the maintenance costs of a specifc property and compare that to its income," says an owner who manages 650,000 sf of industrial space in small buildings. Of course, he adds, "Every day there is an emergency for someone. We have a perspective on [the problem's] severity and a willingness to step up and make the repairs. Te worst thing to do is to put of building maintenance." Owners and managers of class B and C properties ofen cite maintenance as their biggest challenge, particularly for multifamily properties. "Te size [of these properties] makes the economies of scale, particularly for labor, disadvantageous. It's very difcult to hire good people based on the budgets these smaller buildings have," says a property manager of a 33-unit class C multifamily property. The cost of in-house maintenance staff is a tough one for landlords to swallow in the current economy. "Currently, we are experiencing some growing pains where we could have a substantial cost Commercial Investment Real Estate