Commercial rental properties in Southern California are excellent investments. They represent an excellent way to diversify a growing real estate portfolio and they provide owners with both short-term income and long-term appreciation.
In our experience as a Southern California commercial property management company, Bell Properties has noticed that a lot of investors are surprised at the amount of work that’s involved in leasing, managing, and maintaining those investments. It seems like the passive investment that it’s often celebrated to be.
Your commercial real estate, however, needs a lot of attention and oversight. Especially if you want to succeed.
At Bell Properties, we’ve established ourselves as leading management partners in both residential and commercial real estate. If you want to maximize your commercial property returns, make sure you’re working with an outstanding and effective property management company.
Like us.
Here are some of the investment benefits that Bell Properties and other tremendously talented Southern California commercial property managers can provide.
Let’s Start by Identifying a Profitable Commercial Property in Southern California
At Bell Properties, we always recommend that you partner with a property management company before you even invest. Why is this necessary? Because we can prevent you from buying the wrong space.
The right commercial space for you will depend on your investment goals, but there are a few things that stand out as qualities that all profitable commercial investments have. We know how to identify:
Good locations. You understand that location is everything, and that’s especially true with commercial real estate. Your future tenants are running businesses out of the space they rent from you, and those businesses have to be easy to find and access. There needs to be good parking. Depending on the business type, they’ll want nearby coffee shops and restaurants. Or, they’ll want locations that are close to public transportation.
Usable space. Choose an investment property that’s easily renovated. You have no idea what your eventual tenants will need in terms of layout and functionality. So, choose a commercial property that can be easily altered. If cubicles will need to be constructed, for example, or conference rooms carved out of a large open space, evaluate your investment for whether that would be possible and cost-effective. Your Southern California commercial property management company can help you imagine the possibilities and buy something that allows for many different options.
Functionality. At Bell Properties, we always look into any zoning laws or regulations before our clients buy a commercial property. We want to know what current or previous businesses used the space for.
Building age and condition. Is the property in generally good shape? If there are more than cosmetic improvements that will be needed, factor those costs into your budget as you’re making an offer. We’ll help you crunch the numbers.
Buying the right commercial property is necessary to a profitable investment experience, and a property management company that specializes in commercial spaces can help with the due diligence that’s necessary to choose a profitable investment.
Creating and Managing Commercial Lease Agreements
Leases tend to vary when we’re talking about Southern California commercial properties, and you’ll have to negotiate the type of lease you’re willing to sign with your tenant. If you’re not sure which lease type would be most beneficial to you as the property owner, you’ll need to rely on your property manager for help.
There’s a lot of detail involved in a commercial lease, and there’s no one-size-fits-all. There are also fewer legal requirements than with residential leases. The laws are a little bit different, and there are fewer tenant protections for commercial properties.
Your commercial lease is likely to be extremely customized.
Most commercial lease terms are for more than a single year. You’ll likely sign a lease for between three and 10 years. The renewal options are also flexible. Talk to your Southern California commercial property manager about the best terms to protect your property and keep your investment profitable.
Here are a few of the most common lease types that we see and negotiate at Bell Properties.
Net lease. Typically a net lease will result in your tenant paying property taxes, insurance, and maintenance in part or in full. Those expenses are covered in addition to the monthly rental amount. So, you’ll have fewer financial obligations as the owner of the property but you’ll have to adjust your rent to compensate for the additional costs that your tenant is agreeing to take on. A net lease comes with some specific nuances, too. You can set up a double net lease or a triple net lease, which might include the payment of maintenance.
Percentage lease. You’ll charge your tenant a rental amount that’s based on a percentage of the tenant’s sales or profits. In this type of lease, you’ll be as invested in the tenant making money as they are. These are less common, but certainly an option as you decide how to structure things at your property.
Full-service lease. This is a lease wherein the tenant will pay rent, which is inclusive of utilities and any other services that the tenant might pay for as separate bills. This is common in office buildings, where you might have several different tenants and you keep all the utilities on one common account and then include those costs in your rental amount.
Every commercial lease agreement needs to include the rental amount and any other costs or expenses inclusive or exclusive of that rent. You’ll need a commercial lease agreement that includes who is responsible for maintenance, common areas, parking, etc.
There might be renovations or build-outs requested by the tenant, as well. If your space needs to be adjusted to meet the business needs of your incoming tenant, you’ll want to negotiate who pays and who oversees the work. We do that for you at Bell Properties, so make sure your property manager is willing to take on that role as well.
Benefits of Southern California Commercial Property Management
Working with a commercial property manager such as the team at Bell Properties is good for business. It saves you time. It saves you money. It actually helps you earn more money.
How can commercial property management help you maximize what you earn and reduce what you spend? In some of the same ways we help residential investors.
Better marketing of commercial rental properties
Property managers have a deep understanding of the local commercial rental market. Expect your property management company to be familiar with comparable spaces in your area and relevant economic data that will inform your rental values and marketing strategies. Look for them to provide a detailed assessment of how much you’re likely to earn, who is likely to rent your property, and what you can expect for lease terms and maintenance. This helps you minimize vacancy costs.
Bell Properties is excellent when it comes to strategic marketing and advertising. We have a process in place for listing your property, networking with potential tenants, showing the space, and negotiating the lease terms.
Appropriate lease enforcement - holding tenants accountable
It’s normal for commercial property owners to focus on their immediate needs today. You might find yourself willing to overlook a few late rental payments or some shoddy work in order to keep your rental income consistent and your tenants in place. A good property manager will think long-term, and help you see the bigger picture. You can expect a stronger lease that protects your interests. You can also expect better lease enforcement.
At Bell Properties, we’re constantly keeping an eye on your commercial investment. We want to make sure that your tenants are paying rent and other bills on time, sticking to the expectations and responsibilities spelled out in the lease agreement, and taking good care of your property.
This is why you hire us. To protect your investment.
Managing commercial tenant relationships
A fantastic Southern California property management company will understand the value of commercial tenant relationships. Bell Properties will identify, screen, place, and retain the best possible tenants for your commercial space. Your property management partner will be responsive, provide resources, and hold tenants accountable. Maintenance needs will be responded to quickly, and you can expect routine inspections from your management partner.
Professional tenant relationships and open communication leads to happy, long term tenants. While we want to hold them accountable, we also want to provide an exceptional rental experience so they stick with you and continue to renew their lease agreements.
Avoiding vacancy and turnover
Failing to attract, place, and retain good tenants is a major pitfall to commercial property self-management. If you have a large mall or an office building with 10 spaces and half the units are empty, you’re going to lose a lot of money. Property managers understand how to keep vacancy rates to a minimum. We will negotiate better deals, set competitive but profitable market rents, and work with you to increase the overall occupancy rate for your property.
These are some of the best reasons to work with a Southern California commercial property management company, whether you’re about to invest or already working with a property. Please contact us at Bell Properties Commercial Real Estate.
