Commercial Property Management Is Basically Free (Here’s Why)
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It sounds unrealistic.
But in many commercial leases, it actually can be.
In this episode, Aviva Sonenreich explains why professional commercial property management often costs landlords nothing — because in many triple-net (NNN) leases, tenants pay the management fee as part of the operating expenses.
Yet many commercial property owners still choose to self-manage. Over time, that decision can quietly reduce the value of the asset.
Professional property management isn’t just about collecting rent or paying invoices — it’s about protecting the property’s long-term income and value.
In this episode, you'll learn:
- Why commercial property management often costs landlords nothing in NNN leases
- How management fees are typically incorporated into operating expenses
- Why professional property managers help protect a building’s net operating income (NOI)
- The hidden risks of self-managing commercial real estate
- Why sophisticated property owners treat property management as an asset preservation strategy
- How property managers act as a professional buffer between landlords and tenants
If you own commercial property and want to protect its long-term value, this is an important concept to understand.
0:00 Are you considering commercial property management? If so, this video is for you. I realize I could make a video today about what a property manager does. That's really basic. Today I want to get into why you need a commercial property manager and how it benefits you. Poor to no property management on your asset will silently erode your assets value faster than you can say what the tapping. This will cost you thousands today and hundreds of thousands, if not more tomorrow. Story time. In 2017, I found a property off market that ownership was looking to sell.
0:40 The main partner, we'll call him the general partner, had passed. He was managing the property and as the family was picking up the pieces of his passing, they needed to sell this asset. That's where we came in. We closed the deal and after a few weeks the buyer starts getting checks in the mail. There was an additional stream of income on this building that none of the living partners knew had existed. So what happened? The managing partner, who was doubling as the property manager, had secretly signed a lease to an oil and gas company and didn't tell his family or other partners. I can't make this up, this is crazy. Upon closing, the lease to the oil and gas company, which no one knew about, transferred to the buyer. You see minerals on a property, subsurface minerals are a completely additional asset that can be sold with or apart from the property.
1:35 But the general partner consummated this lease without telling any of his other partners and he took it to the grave. So when he died, nobody knew that this existing oil and gas lease and additional income existed on the property. Had the living owners known that there were additional revenue stream coming from the property, they could have gotten hundreds of thousands of more dollars on the sale. The owner and property manager who passed had been crooked and he. Sure, it was great for the buyer, but for the seller, for you, the owner, that's devastating and devastatingly expensive. Look, I know the objections.
2:17 I don't have a property manager. I don't need a property manager. I don't have oil and gas. Here's another story. A friend of mine's parents passed and he inherited a property. He didn't have any property management at the time. When I tell you the moment the tenant realized that they now had a kid as a landlord, boom, rent stopped getting paid. They just threw their hands up and said we're not paying Month after month of this kid trying to collect rent and the tenant just lying. Wound up in a really messy lawsuit and eventual eviction of the tenant. But it cost my friend hundreds of thousands of dollars. It cost the tenants an insane amount of money. And if you don't have a property manager to act as a buffer between you and your tenants, you could very well either put yourself in this position or those inheriting your property. We don't want people to inherit messes. Property management is so much more than invoicing and bill pay.
3:15 It's a buffer between the landlord and the tenant. The best part? In a triple net lease, the tenant actually pays for the triple Nets. It is industry standard in a triple net lease that the management fee paid to the management company is incorporated into the triple Nets and paid for by the tenants. It almost sounds too good to be true, and it's not. It's just the industry standard. Sophisticated property owners want a strategic and discipline approach to preserving their asset in the immediate and long ride. We preserve risk today when it comes to rent, and we preserve risk for tomorrow when it comes time to sell. I don't want you to end up in a scenario like the two property owners I just discussed whose asset income was tremendously affected by either a lack of property management or poor property management in general.
4:07 If you own a commercial property in Colorado, the question should not be whether or not you have property management management, but rather whether or not your property manager is preserving your precious capital. If you're not sure, they're my friends is the risk. That's a wrap for this week on commercial real estate secrets. If you found value. Do us a favor and subscribe, leave a review and share it with a fellow commercial real estate lover. For brokerage services or to connect, visit. Warehouse Hotline com I'm Aviva. We'll see you next week.