Top 10 Landlord Mistakes for Commercial Property

Have you heard the joke about the two types of commercial property Landlords?

  • Type 1 pays an agency to manage every aspect of prospecting, leasing and dealing with their commercial tenants
  • Type 2 has a lot of headaches, wrinkles and no hair!

But seriously, which type are you? Many times I hear commercial property owners say “why pay an agent just so I can check my own bank balance each week?”

If it really was that simple, property management firms wouldn’t exist. Instead, we see multi-national firms with tens of thousands of square metres under management and growing at a rapid pace.

As someone who has experienced both sides of property management as both a landlord and a tenant, I know which type I am. For me, the paltry amount of a few percent paid to a company to manage my problem tenants is money well spent.

Dream Tenants

Of course if you have a dream tenant who never does anything wrong, always pays on time and is locked in on a 10 x 10 x 10 year lease, maybe you can do it yourself. But here’s the trick. While these dream tenants do actually exist, they don’t just fall on your lap, they have to be nurtured and courted in just the right way… because every landlord wants them! From experience, I know that these dream tenants often like that layer between owner and tenant to remove the emotion out of the equation. When you own it, your heart is in it – it’s natural. But sometimes you may be pushing a little too much. Big companies are distanced from the emotion and this is why they like dealing with another unemotional party – the agent – who can talk on their level and just give the facts. That’s the dream tenants. What about the bad ones?

Tenants from Hell

I am constantly amazed how many self-managed landlords I deal with who call up in a fluster asking for help to fill a vacancy quickly because “they did a runner”! Then my conversation with them usually goes like this…

  • So what, you got their bond money right?
  • Well… you got some bond money didn’t you?
  • You mean you didn’t collect enough to cover the….?

You get the idea. So by saving a few percent on “bloody real estate agents”, these brilliant property gurus often find themselves in the hole for tens of thousands of dollars trying to remove all the dodgy tenants’ unwanted garbage and then clean up the premises back to a presentable state. Sometimes, this cost runs into 6 figures, not to mention the lost rent over the weeks and months it takes to make good. But hey, at least they saved a few bucks on agent fees right? 

So without further ado, here is our list of…

Top 10 Landlord mistakes for commercial property

  1. Never manage a new tenant yourself. Appoint a property manager…  until you know they’re a “Dream Tenant”.
  2. Always have your own insurance. Don’t rely on the tenants Public Liability insurance because they often cut corners, get useless insurance or let it lapse. Guess who picks up the bill?
  3. Don’t use your own cheap signs and advertising. As the saying goes; “When  you pay peanuts, you get monkeys”.
  4. Don’t be a cheapskate. If you find a good agent who takes on your job for a reduced commission and they get a good result, that should be an introductory rate only. If they got the job done for you, wouldn’t you want them to keep coming back to repeat that? Keep underpaying them and you’ll only end up with the down-and-out agents who accept less – and perform worse.
  5. Listen to agents’ advice on marketing. Agents do this job all day every day. Just because you own the property, doesn’t make you a marketing expert. Agents are out there everyday seeing what all your competitors are doing. Listen to them (the good ones that is) and profit.
  6. Directors guarantees aren’t worth the paper they’re written on. Many landlords think because they have a signature of the company director, they’ve got them on the hook. Not so. Many directors are straw men. You can’t get blood from a stone. So how do you cover yourself? See below.
  7. Collect the right bond.  What’s the right amount? Depending on who you’re dealing with. If it’s a large multi-national you don’t need much. But if it’s a start-up on a try-out lease, they need to stump up enough cash to cover you in the event they “do a runner”. No cash, no deal. No exceptions.
  8. Do regular inspections. See item 1 and save yourself the pain.
  9. Don’t be too hard to deal with. Yes, you may have amassed an impressive property portfolio and you’re a smart operator who’s made a fortune by being a tough guy. Congratulations. Now leave your ego out of it. There’s always plenty of people around wealthier than you, who treat people with respect and don’t go for the jugular every single time. Give a little now, and win in the long term.
  10. Get the right tenant. See items 1 – 9 above.


Thanks for reading. Now go and enjoy your golf… unless you’re a Type 2 landlord!

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