Lecture on Commercial Real Estate and Property Management

Introduction

• Hosts: Ken and John Rosenberg from Levrose
• Levrose is a commercial real estate company in Arizona.
• Recently won the top local commercial broker firm by Ranking Arizona.
• John has 27 years of experience in office and retail real estate.
• Discussion focus: property management and self-management.

Background of Levrose

• Started over 27 years ago by John Rosenberg.
• Initially worked during RTC days managing properties for insurance companies.
• Levrose now has over 20 brokers and manages 80-90 properties through Mode Commercial.
• Business model includes leasing, brokerage, management, and property ownership.

Key Discussion: Self-Management vs. Hiring a Property Management Company

Common Questions

• Do I manage my property or hire a management company?
• What to look for in a property management company?

Experiences and Observations

• Many owners consider self-managing to save money.
• Self-management involves various tasks: maintenance, rent collection, bill payments, etc.
• Potential to "buy a job" by self-managing without realizing it.

Costs and Benefits

• Management fees range from $1,000/month; perceived as a cost-saving area.
• Professional management provides economies of scale that self-managing may lack.
• Management companies have established vendor relationships and can negotiate better pricing.

Case Studies and Examples

Importance of Professional Management

• Professional management includes a comprehensive list of responsibilities (tenant sourcing, lease management, vendor management, etc.).
• Example of improved efficiency and cost savings through professional vendor management.

Problems with Self-Managed Properties

• Self-managed properties often suffer from deferred maintenance and incorrect financial practices.
• Poor management can lead to significant financial losses, such as vacancy and maintenance issues.
• Management companies provide preventative maintenance and efficient repair processes.

The Value-Add Opportunity

• Mismanaged properties can provide significant investment opportunities.
• Professional management can uncover potential value-add through better management practices.

Benefits of Hiring a Property Management Company

• Ensures tenant satisfaction, leading to retention and renewal, avoiding downtime costs.
• More accurate financials and lease management practices.
• Provides access to professional networks for better deals and service reliability.

Conclusion

• Professional management yields efficiencies and savings that outweigh the monthly management fee.
• For investors serious about cash flow and property appreciation, hiring a management company is advisable.
• The right management can significantly impact the financial performance and value preservation of real estate investments.