October 2009

The Benefits of Professional Property Management

Presented by Mark J. Mayfield, CCIM & Randy Graham

Managing Directors, Sperry Van Ness – Rock Hill, South Carolina

 

The reality is that commercial real estate properties and portfolios that are actively managed not only perform better on an operating basis, but in most cases, they yield more on disposition as well. That said, my question is this: Why is it that so many commercial real estate principals still attempt to manage their own portfolio? While the answers clearly vary on a case-by-case basis, the most common reason usually boils down to the perception that money can be saved by not paying third party management fees. Indeed, the age old dispute between “do it yourself” and “do it for you” business models is alive and well in the commercial real estate industry. In the text that follows I’ll make the case for professional management as a value added service that is accretive to overall property returns. 

Let’s begin our discussion with discussing the difference between property management and asset management. It was not too long ago that there were very distinct differences between these two disciplines. Property managers were deemed to be tactical in nature, focusing on day-to-day operating issues such as routine maintenance, minimizing vacancy, collection of rent/lease payments, and first tier communication with tenants. Asset Managers on the other hand were strategic in nature focusing on adding value to the property by making positioning decisions that would increase net operating income (NOI) and valuation. While these distinctions still exist among some firms, the increased sophistication of professional management firms over the past few years have caused the lines to be blurred to the extent that many firms now provide both disciplines in an integrated service offering.

As an owner of commercial real estate, unless you’re a very large and sophisticated commercial enterprise, attempting to do it yourself, or to hire internal staff is not only inefficient and very expensive, but in this author’s humble opinion it’s very short sighted. You see, the right question to ask is not can you manage your own portfolio, but should you? Let me provide an analogy for illustrative purposes…I could do my own taxes, I have the financial acumen to do so, and who knows my financial position better than I do? Why should I pay a CPA to do something that I could clearly do myself? Following is how I viewed the decision to outsource my tax work:

  1. Time: It is not the highest and best use of my time. I simply have better things to do, and it would take me much longer to organically prepare the return than it would my CPA. I would also likely e incur greater amounts of frustration than I care to subject myself to.
  2. Competency: While I’m generally capable of synthesizing my financial information and preparing the returns, I’m not immersed in tax law on a daily basis. I think I know what I could do, but am also certain I’d miss opportunities and end-up leaving money on the table.
  3. Risk: If the accounting firm makes a mistake it is their error, and ultimately it will be there problem to resolve. If I’m audited I’ll have them to represent my interests in dealing with the IRS.
  4. Cost: I’m certain my accounting firm saves me more in taxes than I pay them in preparation fees. It simply makes financial sense to use a professional.

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In 1996, Mark Mayfield and Randy Graham started in business together and in 1999 started their own company Southern Commercial Real Estate, LLC (“SCRE”) in Rock Hill, South Carolina located 15 miles south of Charlotte, NC.  With a successful track record and established entity, SCRE expanded its services and national reach on January 1, 2007, by joining forces with a nationally recognized leader in commercial real estate brokerage, Sperry Van Ness, to form Sperry Van Ness/Southern Commercial Real Estate, LLC.

  • Sperry Van Ness was founded in 1987, when Rand Sperry and Mark Van Ness created  a commercial investment real estate firm with one key mission: To create unprecedented value for commercial real estate investors.  Today Sperry Van Ness is one of the largest, most respected and fastest growing commercial real estate brokerage firms in the industry.
  • Sperry Van Ness currently has more than 1004 advisors internationally.
  • Sperry Van Ness is located in more than 150 cities across the US, as well as in Costa Rica and Panama.
  • Sperry Van Ness completed over $11.6 billion in sales and leasing transactions in 2007. 

Experienced Commercial Real Estate Broker

Most brokers choose commercial real estate because it combines autonomy, flexibility, profitability and a passion for client service excellence. But what may be lacking is a clear point of differentiation that can give them a competitive edge.

In a study done by Pepperdine University, the top 5 things brokers want most are:

  1. National Brand Leverage
  2. Support Staff
  3. Marketing Materials
  4. Technology Support
  5. True Cooperation

Sperry Van Ness offers all these and much more.


If you're a broker who wants to make a difference in your career - one that can maximize profit, product offering, support systems and earning potential, it's time to talk to Sperry Van Ness.

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Mark J. Mayfield, CCIM

Managing Director|BIC

Randy Graham

Managing Director

1926 India Hook Road | Rock Hill, SC 29732

803.325.1000 | 803.325.1214 | www.svn-scre.com | info@svn-scre.com