So you just bought a new commercial property. Congratulations! You are now officially a property owner. But you can’t just buy the building and end it there. After all, you’ve only just started. Your job as a landlord has just begun. So here’s a list of things to do and manage after you’ve bought a new commercial property.
Get insurance
The first thing you should be sure to secure when you buy a new property is to get the proper insurance. Commercial property insurance protects your property from things such as fire, theft, and other property damages caused by outside forces and people. Having insurance ready can save your business’ funds and expenses in the future in case of huge financial loss or natural disasters. It’s important that you get insurance for your property as soon as possible. You never know what might happen and it’s always best to be safe than sorry.
Take advantage of tax reductions
Running a business can incur a lot of expenses. Luckily, the more expenses you spend on your business, the more you can reduce from your annual tax. Other than mortgage interest and property tax, you can also reduce business expenses. Depending on where you live, some states don’t require personal or corporate income tax, such as Washington. Take full advantage of these tax reductions and you might be able to pay off your mortgage faster or have more money to spend on business operations and maintenance.
Other than the usual tax reductions, you might also be able to accelerate the depreciation cost of your business. If you’re familiar with real estate, you’ll know that as a property and its assets get older and used constantly, it depreciates in value. All throughout your property’s “useful life,” you’ll be able to reduce depreciation costs from your taxes, or expenses that went towards maintaining assets as they get older.
You might even be able to increase these depreciation costs even more with cost segregation analysis and solution, and in turn, reduce your taxes. This is just one of many ways you can take advantage of tax breaks.
Hire a property manager
You can’t always be around to manage everything, nor should you be the only one handling everything. Hiring a property manager not only ensures that you have a trusted employee or proxy to take care of your business when you’re not around, but they can help you run your business through overseeing tasks like bookkeeping, tenants, repairs, and more.
Property managers are there to do just that — help you manage your property. Especially in a commercial business, property management is essential and should be one of your top priorities after you’ve acquired your own commercial property. Whether you’re starting a retail business or relying on rental income from tenants, a property manager can help to streamline your business operations and give you more time to focus on more important tasks.
Look for and manage your tenants
If your business relies on rental income, you can’t have income without first getting some tenants. Whether you’re renting apartments and living units, or business spaces for stores, looking for the right tenants is all about screening. You can focus your advertising efforts on specific types of businesses or demographics. If your area is near a lot of office buildings, you might want more restaurants or coffee shops in your property to generate more income. Alternatively, you can turn your property into an apartment block and rent units out to workers and families who could benefit from living near their workplace.
Hopefully, even before you paid for it, your property already has tenants lined up, waiting to move in. Tenant management is another thing a property manager can help you with and offer advice on if you’re unsure how to proceed.
Maintain your property
Possibly the most important thing you have to consider is property maintenance. Not only does it make your property appear clean and pleasing to the eye, but if you maintain your property well, it can increase or appreciate in value which contributes to its resell value if you ever decide to sell it in the future. Moreover, maintaining your property can help you keep rental costs up and expenses made towards maintenance and repairs can be deducted from your taxes.
It does come at a disadvantage in that you’d be the one managing these repairs and paying for them but it comes with owning a property. Maintaining a commercial property can be just like maintaining your own home. It can be time-consuming and expensive, but it does reap some valuable rewards.
For as long as you own your own commercial property, the work never really ends. But as long as you keep the above tips in mind, you can make the most of your commercial income and your investment.
