Investing in commercial real estate is sometimes regarded as a strategy to generate passive income. However, this is a little misleading. Managing a commercial asset involves a large amount of effort that must be carried out to keep the property in excellent operating condition. Outsourcing property management tasks to a professional manager who knows commercial real estate management is one of the only methods to earn passive income.
What is commercial real estate?
Commercial real estate is simply a property that has the potential to create profit through capital gain or rental revenue. For example, commercial property can be an office building, a duplex, or a restaurant or warehouse. If you can profit by leasing or keeping it and reselling it, it's business property.
To understand what a property manager performs, first know what they are.
What is a Property Manager?
A professional property manager or property management business is someone responsible for overseeing the day-to-day operations of a real estate property. Depending on the size and kind of property, the commercial real estate management company might be one or two persons or a huge team that works onsite.
A multifamily property, for example, is likely to have an onsite crew since this property type needs more active management involvement. On the other hand, an industrial property may not require any onsite presence.
In short, the commercial real estate management company takes care of the property on behalf of the owner. The presence of a commercial real estate management company enables property owners to continue building and extending their portfolios without dealing with day-to-day property operations.
What Does a Property Manager Do?
For better understanding, a property manager's tasks can be separated into two categories: operations and finance.
Operational responsibilities of a property manager:
In commercial real estate management, the operational tasks of a property manager are all about keeping the property functioning efficiently daily. Depending on the type of property, this might include:
Financial responsibilities of a property manager
As a part of commercial real estate management, managing the property's finances is another key area of responsibility for a property manager. This covers acts such as:
What to Look for In a Property Manager?
A good property manager might be difficult to hire. But on the other hand, making the incorrect decision may be costly financially and in terms of reputation. To avoid this, property owners and investors should seek the following characteristics in a trained and qualified property manager: