Construction is more important than you think
If you own a commercial building or complex, you are either managing it yourself or have a property manager. So you know there are many responsibilities and tasks associated with managing your property. But you may have never thought about the role of construction in property management. This post takes a look and gets you up to speed on what you need to know about this important aspect of the job.
Definition of property management
According to Wikipedia, it is:
“the operation, control, and oversight of real estate as used in its most broad terms. Management indicates a need to be cared for, monitored and be held accountable for its useful life and condition.
Property management involves the processes, systems and manpower required to manage the life cycle of all acquired property as defined above including acquisition, control, accountability, responsibility, maintenance, utilization, and disposition.”
How does construction fit into property management?
Construction has several roles to play.
Repairs
Repairs are mostly self-evident. They involve fixing things that are broken through misuse. A window broken by a baseball is a good example. Simple repairs may be carried out by an onsite employee. But more extensive ones may be handled by a third-party. Say if someone drives a car through your front entrance.
Maintenance
Many times an onsite employee will provide maintenance. But it can be more efficient and less costly to contract it out in other circumstances.
Routine maintenance involves the day to day upkeep of your property to keep it functional. Replacing loose fasteners on railings, fencing, steps, or deck planks are examples. Recaulking older windows is another.
Preventive maintenance is a proactive service to avoid unnecessary repairs. Regular inspections and service prolong the useful life of your assets. It is also an important part of maintaining the safety of your property.
Capital Improvements
Capital improvements are a different thing altogether. They are almost always carried out by a third-party. According to Investopedia they are:
“the addition of a permanent structural improvement or the restoration of some aspect of a property that will either enhance the property’s overall value or increases its useful life. Although the scale of the capital improvement can vary, capital improvements can be made by both individual homeowners and large-scale property owners.”
They also have very different tax implications.
The components of your property eventually wear out and have to be replaced. Replacement is necessary even if they have been properly maintained. Technology also changes and requires upgrading or installation of new systems and components. New regulations from government also require additions to or adaptations of your property and its constituent parts. You might even have to carry out upgrades just to stay competitive.
Replacing old windows with new energy-conserving ones is an example of a capital improvement.