Learning Centre

If you think that your cash flow is not what it should be, you should arrange for a proper review of your operations. Here are some tips to help you get started.

Over the years, we have assumed the management of several properties – some who were self managed by owners and others from professional management companies. This month we took over the management of a portfolio of buildings from another management company. As we began our take over review we noticed several anomalies.

Firstly – one tenant was over $35,000 in arrears. Secondly, another commercial tenant had had a step increase in their rent but they had never paid it and were also in arrears – by $15,000.

Notably, recoveries had not been calculated for the past two years, which means the landlord was losing money.

Further to that, in one of the residential buildings, the caretaker had been using a secondary suite for storage for the past six months and the landlord was unaware of this. Therefore, they were losing rental income every month from this.

Real estate is not a passive investment. The landlord or their property manager should be reviewing the business monthly. Unfortunately, although this landlord was using a management company, they were not being diligent.

When we take over the management of any new property, the first thing that we do is perform a thorough review of the existing operations:

Typically this includes:

• Performing a Suite inspection to ensure vacancies line up with rent roll
• Looking at the receivables to find out which tenants have not paid and why
• Review all commercial leases for step-up rents
• Ensure recoveries have been calculated
• Reviewing Insurance for adequacy
• Perform an audit of all storage lockers and parking spaces

These are just some of the items a property manager should be looking at on a regular basis.

If you are a landlord and you think your cash flow is not what it should be — perhaps you should arrange for a review of your operations.