Owning a property as a source of income is a challenge in itself but managing that property for years is even more challenging. As a landlord in LA County, you must have considered hiring a property manager for your property to help you deal with everything related to your rental property.
However, you need to be sure which type of property manager you are hiring - residential or commercial. Here are some differences between commercial and residential property managers in LA.
Handling clients and tenants
In either case, both parties are essentially looking for a rented property. However, there are different sets of rules that apply to each.
A property manager having experience with commercial properties will be well versed in the nuances of a commercial setup. A commercial property manager has to ensure that the property is well equipped with amenities suitable for commercial use.
A residential property manager, on the other hand, is concerned with making the rental feel homey and welcoming, is outfitted with all the amenities that make a home habitable, as befits a residential property. Consequently, the client approach for each will differ.
Understanding rental payments
The rent scenario of a commercial property is different from a residential property. While tenants of residential property will be paying for their utilities, tenants in commercial properties have to pay maintenance charges, insurance fees and property tax in addition to the rent. A commercial property manager will know this and will help you keep track of all the expected legal payments.
Knowing legislation and regulations
The laws regulating property management have some key differences for residential and commercial properties. Residential properties are governed by the Residential Tenancies Act 1986 (RTA), The Building Act 2004, and The Building Code.
A commercial property management company operates under the Property Law Act 2007. This law governs the relationship between the tenant and the property owner.
Both these are very distinct from each other and if you are looking for a property manager for your commercial property in LA County, you must appoint a property manager who has an in-depth understanding of all the relevant laws concerning respective types of rental properties.
Property manager’s on-site and off-site presence requirement
While residential property managers are expected to address the requests and complaints of the tenant, they are not required to stay on site at all times. The duties of a residential property manager are fairly lenient, as compared to the commercial scenario.
For commercial properties, especially a large one, the property manager needs to be present on-site or at least be immediately reachable at all times.
Returns and risk profiles
As commercial properties tend to be leased for longer durations, the lease agreement is very detailed and covers the payment structure for all the subsequent years. The landlord can draft an agreement that ensures that he earns a progressive rent year on year. Statistics show that the rate of return is 5-8% for commercial properties whereas it is only 1-5% for residential properties.
The longer-term lease also balances any other risks related to your commercial property. As the investment has already been made, you don’t have to worry about finding another source of steady income for the duration of the lease. On the other hand, you consistently have to worry about finding a new tenant every now and then for a residential property.
Ideally, the type of property manager you choose should be one with expertise in that field, not a general property manager. If you would like some help understanding whether to choose a LA County Residential or Commercial Property Manager, contact us at Bell Properties. We have extensive experience in both fields and can help you make an informed decision for your LA County rental property.