Mixing Drinks is a Recipe for Disaster, So Why Mix Tenant Incomes?

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We all know that mixing alcoholic drinks, although tempting, will inevitably end in disaster. Unfortunately, a similar situation seems to be common in commercial property – and it’s having a dire effect on a landlord’s financial situation and on the investment itself.

During my time working in commercial property management, I’ve witnessed the rise of a worrying trend, where landlords and property management companies combine different tenant revenue streams. These mixed pots of money bring together rent, service charges and other income, leaving no discernible division between them and putting landlords and their investments in a precarious position.

Putting Landlords Out of Pocket

Like unwise alcohol-mixing habits, combining tenant income can make for financial sickness. In order to provide obligatory upkeep and maintenance of common areas, funds are withdrawn from the combined moneys, contributing to difficulties around accounting and monitoring what the investment is actually bringing in.

This often leaves landlords pocketing a lot less profit than they usually would, and putting Landlords obligations at risk if it’s no longer possible to afford services. From here, it’s only a matter of time until the tenant-landlord relationship – and the bank account – begins to strain, leading to financial woes.

Carlton Park’s Approach

At Carlton Park Management, we’ve experienced this scenario many times, and have come to understand the importance of ring-fencing funds received from the service charge to cover the cost of services our landlords have an obligation towards their tenants. We also feel strongly that the rent collected from tenants belongs directly in the landlord’s pocket – after all, that’s why they’ve invested in commercial property in the first place.

We’ve applied this understanding to how we work with our clients, separating out various tenant income streams to better manage properties, service tenants, and keep landlords profitable. By keeping service charges and rent apart from one another, we can ensure that any shortfalls are not skimmed off the rent, and that the client can always afford to look after tenants, as well as their own bank accounts.

By taking this approach with our clients’ property management, we’ve also been able to improve tenant loyalty, providing essential services without extra costs for landlords. In this scenario, everybody wins, and the tenant-landlord relationship is protected.

To find out more about how we elevate commercial property management above the competition, be sure to explore our website. Alternatively, feel free to get in touch – we’re happy to talk.

 

Image: Eaters Collective via StockSnap.io

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