One of the factors that are often ignored is the place of property management in the creation and maintenance of immediate and long term value.

At Arizona Commercial we provide each investor with the opportunity to contract with our Property Management Group. We think this offering is good for our clients and can help them with more than management; it can help with property values as well.

Here are five questions to ask a commercial property management company…before you sign the agreement.

Question One: What is the level of commercial investment and property management experience of the company?

Just about anyone can make the “claim” to being a property manager but does the company and the manager have actual commercial real estate investment experience? If a property management company does not understand commercial real estate investment, they will most likely not understand their role and responsibility in creating value for the owner.

Question Two: How many properties are currently being managed by the company or manager?

The answer to this can tell you a number of things. Experience typically comes from having a track record and if a company or manager does not have several properties of the type you own, do not consider them. Experience equates to skill. Proficiency is a derivative of experience.

Question Three: What are the specific property management accounting systems used by the company or a manager?

Commercial property investment begins with the purchase but will rise and fall on the strength of ongoing accounting and tracking of all expenses related to the investment. Does the property manager or company have an accounting system, preferably accounting software and what kinds of account reports will be supplied to the owner?

Question Four: Does the Property Management company or manager have a full-time dedicated staff including maintenance personnel?

When something goes wrong…and, it will…does the property management company have skilled maintenance personnel available 24/7/365? There are essentially two types of maintenance, general and emergency. General maintenance has to do with regular and ongoing repairs to such needs as landscaping, painting, parking, etc. Emergency issues involve unpredictable maintenance arising from out-of-the-ordinary circumstances such as flooding due to plumbing failures, electrical and leaky roofs, as examples. Having a property management company with a full-time dedicated maintenance staff is critical to general and emergency maintenance.

Question Five: What are the costs for full-time management and how do they contribute to financial performance, short term and long term?

The answer to this question is paramount to understanding the true value of property management to an owner. Property management should contribute to property value by (i) protecting the owner from surprise expenses, (ii) protecting the property from the expense associated with ignored deterioration and (iii) protecting the performance of the investment for future refinancing or sale.

These are by no means all of the questions you might want to ask a property management company or manager but they are the foundational questions owners need answered before executing a management agreement.