Alright owners…when’s the last time you looked at the leases for your tenants? (Hint: you really shouldn’t have to – that’s what property managers are for!) If you’re still overseeing your own leases and going it alone… then you’re in luck. Today, I’m covering three easy ways to save money as a commercial property owner.
To illustrate this, I’m actually going to reference a client our agency recently worked with. For the sake of privacy, let’s just call this unfortunate soul “Busy Property Owner”. Desperately behind on his books, Busy Property Owner asked us to go back and do a reconciliation of the past five years… and what we found was just too scary not to share. Busy Property Owner didn’t make any unusual or grievous mistakes. He just missed a few simple things, and still, he left over $50,000 on the table in less than 5 years’ time. Don’t be like Busy Property Owner. Keep reading, and keep your money with these simple tips.
- Save money by paying property taxes in November. In over five years, Busy Property Owner never once paid property taxes on time for the largest possible discount. Big mistake, as this can save you 4% yearly – trust me, 4% adds up over time, especially when we’re talking multi-million dollar investments! In addition to not receiving the maximum discounts, Busy Property Owner didn’t pay taxes until sometimes months after they were due. The properties were then taken to auction and the owners literally had to pay fees to get their OWN PROPERTIES BACK.
- Always apply the rent bumps.In the same example provided above, for five YEARS Busy Property Owner never once increased rent. Huge mistake. Just imagine how much this affected his cash flow! Why, he could have been increasing the rent sometimes by as much as one, three, or even ten dollars a square foot. It’s equal to giving your tenants free money. Just. Don’t.
- Increase your CAM reimbursable.You probably saw this coming… Yes, sadly, Busy Property Owner never touched the CAM rate increases, so they stayed the same for five years. Don’t cry for him. It just means that when costs for vendors and various services increased, our favorite Busy Property Owner was forced to pay out of pocket what tenants would typically reimburse. Again, unrecoverable.
Finding money is sometimes as simple as 1. managing your leases wisely (or having someone do it for you) 2. not being forced to pay fees and 3. charging the tenants as much as you can.