What are the biggest challenges facing commercial real estate landlords in Worcester County, Massachusetts for the year ahead?
Are you prepared for these hurdles facing multifamily and office building owners in Massachusetts and if not can you make the necessary changes fast enough not to get caught off guard?
5 top concerns for Worcester investment property owners:
1. Rising Labor Costs
Cheap labor has been easy to come by for property owners. Highly skilled and experienced professionals have been plentiful during the last seven years of economic downturn but as things are improving workers are demanding big pay raises fast. Unless owners are ready for these big spikes in costs for maintenance, bookkeeping, marketing and more positive cash flow stands to have a big bite taken out of it. The simple solution is of course to switch to a professional property management company in Worcester County and let them bear the brunt of the increases.
Even for small and mid-sized office and apartment buildings bookkeeping is about to become a major nightmare. Now it isn’t just screening, vendor invoices and collecting rents. Landlords need to be learning about and preparing for dramatic changes in healthcare benefits for employees under Obamacare as well as a flurry of new tax laws. Software can help streamline recording but it won’t provide all the critical insight needed to keep investors out of trouble.
3. Daily Emergencies
Those new to leasing multi-family units or office space will quickly find those first few surprises in tenant requests and urgent issues aren’t just one-offs; that’s the daily grind for commercial real estate owners; it’s daily emergencies 24/7/365. You need the manpower allocated to deal with them in advance or it will drive you bald and weary fast.
4. Unexpected Maintenance
Expect unexpected maintenance; it just comes with the territory. From new roofs to blocked pipes and ailing pool pumps, expect and prepare for the worst and hope for the best. Best practices call for maintaining a reserve account and getting serious about preventative maintenance to drive down costs. This helps savvy landlords stay ahead of the game and reduce the stress.
5. Legacy Issues
Knowing when to sell and planning for legacy issues is another major factor many are completely overlooking with everything else going on today.
Should you sell now while cap rates are good and buyers are buying furiously? What are the downsides to waiting until interest rates and prices are higher?
Do you have a plan for property management if an emergency arises and you cannot handle it any longer and are self-managing your rental property now? Will a family member take over, and if so is that in writing somewhere? Do you have any heirs that will want to take over daily management or can do a good job of it? If not; should you be bringing in a property management firm in Worcester County now, or at least interviewing them to ensure a qualified match?