The ideal Baltimore property management partner delivers years of experience in the local market as well as general industry expertise. You’re also looking for innovation; a company that can help with technology and project management towards the goal of improving your asset and driving up your ROI.
The delivery of those services can be extremely specific, and the type of management you’re seeking likely depends on the type of investment property you own. Commercial investments are different from residential investments, and they require a unique set of skills.
Baltimore is a market with a thriving commercial real estate market as well as a strong residential landscape. If you have both types of properties in your portfolio, you’ll need a management company that can seamlessly switch from one type of management to the other.
Residential Tenants and Commercial Tenants
Tenancy is one of the main areas where residential and commercial property management differs. As you can probably guess, residential tenants are primarily concerned with choosing a home they’ll feel safe and comfortable in. You expect them to pay rent and utilities and to let you know when maintenance is needed.
When you’re attracting residential tenants, you’re going to highlight all the things that make your property an attractive place to live. Your location will count because tenants are looking for good schools, access to highways and public transportation, and proximity to work, restaurants, shops, and grocery stores. Many Baltimore tenants are looking for walkable neighborhoods.
Commercial tenants are also thinking about location when they choose a building or a property. The strengths and challenges of your location, however, will depend on the type of commercial tenant you have. Stores and retailers will want a visible, well-trafficked area. Warehouses will need plenty of space and access to the port or to highways.
Commercial tenants also have a different set of expectations and responsibilities. They are often responsible for expenses like property taxes, insurance, and maintenance fees when they rent space in your building. These expenses are often paid in accordance with different types of commercial leases.
A good property manager will identify and understand the differences in attracting and retaining commercial and residential tenants. The marketing will be a bit different. The screening will be different, too. The relationship your property manager establishes with commercial and residential tenants will have different priorities and nuances.
Baltimore Lease Agreements: Residential versus Commercial
Residential lease agreements are pretty standard. They are often one year in length, and then there’s an option to renew the lease or terminate the tenancy at the end of the lease period.
In that lease agreement, you’ll want to cover everything from rent collection policies to pet policies to how the tenant is expected to report maintenance issues. All of your rules and regulations will be put forth, including language that covers all the legal and regulatory requirements for residential leases. Lead-based paint disclosures, for example, need to be included for older buildings.
Typically, there’s very little to negotiate when it comes to residential lease agreements. You’ll discuss what’s included in the lease with your tenants, but they won’t really have the opportunity to ask for changes or to have additional language put in.
Commercial leases are usually very different. For starters, tenants and owners will actually negotiate. Usually, commercial tenants will want to make some modifications to the agreement and to the property itself.
A triple net lease, for example, is a generally accepted lease type in the commercial property management industry. This lease agreement requires that the tenant pay all property taxes, insurance, and common area maintenance fees. Other arrangements include the gross lease, where a property manager collects fixed rental payments to cover these expenses themselves, and the modified net, where a tenant and property manager split maintenance costs, and the tenant pays the property taxes and insurance.
You can also expect commercial property leases to be longer in length than residential leases. They’re usually more complicated, too, so you’ll want to make sure you have a strong commercial lease in place if you’re renting out office, retail, or warehouse space.
Managing Maintenance with Baltimore Investments
Residential and commercial property managers have different priorities with maintenance and repair responsibilities. Commercial property investors are often looking for ways to improve their investment property in order to earn more on it. Maintenance can also be more expensive, but you may not be shouldering those costs on your own.
With residential properties, maintenance is often taken care of by vendors and contractors as soon as possible, especially if there’s a habitability issue. Residential tenants are entitled to more legal protections than commercial tenants and expect their landlords to take care of providing a safe, habitable, and comfortable home. Commercial property managers are only obligated to provide repair services and utilities if a lease requires it.
Maintaining property values is important to both residential and commercial property owners. A good management company will facilitate that by improving properties and helping investors earn more and spend less on their units, whether it’s a residential home or a commercial building.
For commercial properties, this requires frequent property inspections, no matter how ideal a commercial tenant appears on paper. Third-party property managers can take this responsibility off a property owner’s hands while handling tenant maintenance requests and hiring contractors as needed. These services are especially useful for owners who live far from their rental property or have multiple rental properties. Either way, a property management company provides a buffer between a property owner and their tenants, which many investors find appealing.
For residential properties, those inspections are equally important. It will help property managers ensure there aren’t any deferred or unreported maintenance issues. Inspections allow management companies to document the condition of the investment and hold tenants accountable for damage at the end of the lease term. Also, inspections will provide peace of mind to owners because they’ll know that their tenants are following the requirements of their lease agreement.
Baltimore Property Management Responsibilities and Risk
Generally, residential property managers have to be more responsive and responsible for their tenants than commercial property managers. Residential tenancies require that you provide a safe and habitable place for people to live, and if you don’t fix something right away, tenants are free to take action against you or your property manager.
In commercial properties, your tenants are businesses. And while there are people responsible for those businesses, the scope of what an owner or a property manager has to provide is a bit different. Also, most commercial properties are operated during the day and during business hours, so you won’t have to worry about those late-night phone calls that frequently come in from residential tenants who are experiencing a maintenance emergency or other catastrophe.
Availability is also a factor. Residential property managers need to be willing to respond with urgency when those tenants call. They have to be available when the property is vacant as well, to ensure maintenance is taken care of, and to show the home to prospective new tenants. Commercial properties may have fewer responsibilities for your property manager, but they’ll still require a lot of attention.
All real estate investments come with risk, whether it’s a residential property or a commercial property. When you rent out units in a residential building, you have to worry about the damage that can occur from natural disasters, tenants, pets, and other things that are outside your control.
Commercial properties come with the risk of tenant damage and building damage due to weather or natural disasters. You also have other risks, such as theft, break-ins, graffiti, and personal injury.
Property Management Skill Sets
Residential and commercial property managers require different types of skills. In Maryland and throughout the metro DC area, commercial property managers are going to have to be extra concerned with government regulations and insurance matters. They must also understand the needs of different business owners, in industries as diverse as healthcare, manufacturing, food service and retail. Commercial owners and investors are going to be found in a wide variety of industries.
Residential managers are focused on protecting the condition of the home and meeting the needs of both tenants and owners while following the local market closely. They’ll need to understand rental values and fair housing laws. They’ll need to know how to manage a security deposit and what to do to keep tenant disputes to a minimum.
An effective Baltimore property manager must anticipate and meet the needs of all clients, whether they’re in residential or commercial properties. With residential properties, we find ourselves working hard to keep both owners and tenants happy. The risks are predictable and easy to avoid. With commercial properties, we find that every business is different, and that can create new challenges on our end.
Here’s what’s common in commercial and residential investments: You need a strong project manager who can take care of your property and help it earn you more money. That’s what we do at Stripe Management. Please contact us for more information. We work with owners, investors, and properties in Upper Marlboro, Prince George’s County, Washington, D.C., Capitol Heights, District Heights, Baltimore, and anywhere in the DC metro area.