Make it an asset, not just a building
FOR many of us, property represents our greatest asset, our income stream and our nest egg.
When it comes to putting a dollar value to that asset however, it’s not just the bricks and mortar that make up its value, it’s the strength of your leases, its positioning in the market (high exposure/premium choice) and the quality of your management.
In a hard commercial market, and Cairns has had its ups and downs, the natural reaction for many owners is to take what they can, get tenants in on whatever terms they can and batten down the hatches.
Rental increases and outgoings contributions fall by the wayside and a full property becomes the new goal, not necessarily a profitable property.
Experienced asset managers have seen time and again cases where this kind of scenario plays out and, while it might pay the bills, it can hurt financially when it comes to sell.
It’s at that point that a prospective buyer starts to count the cost of below market rents, deferred maintenance and short leases and overly generous terms, and it’s at that point that the final price of your asset can be affected.
Asset managers can help owners turn around those undervalued assets, make the most of their income potential and ensure that, when the time is right, achieve the best result, not just a result.
Professional commercial real estate offices should offer the following services:
■ Sourcing qualified tenants and retaining a viable commercial mix.
■ Ensuring shorter vacancy periods.
■ Providing better tenant retention.
■ Ensuring the property is maintained to a high standard by personal inspection of the property and developing positive rapport with tenants.
■ Increasing the value and longevity of the investment.
■ Taking away the stress of self-management.
Best of all, these services are all tax deductible and in some cases can form part of the lease agreement with tenants.
Whether you are managing your property yourself, looking to retirement or are even considering your first investment purchase, make it an asset, not just a property. Ted Baczkowski is the asset manager at Colliers International Cairns