Is your commercial real estate in Austin overdue on maintenance and are unsure where to begin? Whether you are a property manager concerned about property condition or an investor considering capital improvements, improving your asset management strategy is a great place to start.

Asset management is more than basic property maintenance, repairs, and rent collection. It can provide a clear roadmap to maximize a greater return on investment. Here are four ways commercial real estate investors can improve asset management to better achieve their investment goals.

IDENTIFY YOUR HIGHEST AND MOST CONSISTENT REVENUE SOURCES TO INCREASE CASH FLOW

The first step to strengthening asset management for commercial real estate in Austin is having a structured financial plan. When investors have organized financial data about their property’s revenue sources, they can identify their most prominent revenue sources to maximize cash flow.

Commercial real estate investors can increase their property’s cash flow by:

• Identifying the highest and most consistent revenue sources
• Making financial projections based on property cap rates
• Looking at significant expenses and negotiating terms
• Setting realistic deadlines for commercial leasing and meeting deadlines

An actionable cash flow plan can increase revenue and decrease expenses to maximize your investment. By setting budgets and timelines, investors can improve the current state of their financial resources and constraints because they are managing them more efficiently.

MAKE CAPITAL IMPROVEMENTS TO YOUR COMMERCIAL REAL ESTATE IN AUSTIN TO MAXIMIZE PROPERTY VALUE

One of the most common mistakes made with asset management is not maintaining commercial real estate after investment. After investing in commercial real estate, ongoing maintenance is required to preserve its value and assets.

Ongoing property maintenance is also a preventative measure since investors are typically responsible for maintenance and repairs in commercial leases. If your property has lowered in value, can build equity.

According to the IRS, capital improvements include the following:

• Betterment– amounts paid for material condition repairs, additions, quality, etc.
• Restore– amounts paid for restoration after casualty losses, deterioration, new rebuilds, etc.
• Adapt– amounts paid to the property with a new or different use than originally intended

Capital improvements maximize your investment’s returns by increasing your commercial real estate’s assets and values. Whether it is through betterments, restoring, or adapting, investors can build more equity to strengthen their asset management and cap rates.

MONITOR THE CURRENT MARKET TO MINIMIZE INVESTMENT RISKS

Did you know there is currently an industrial real estate boom in Austin? The 2023 market shows an increasing demand after 83 million square feet of industrial leases were recorded in August 2022 alone. Although inflation and capital costs are rising, investors are not pulling back from commercial real estate in Austin.

Asset management strategies for commercial real estate market research should include the following:

• Find areas with curb appeal and low-crime rates
• Choose desired locations with solid infrastructures to attract customers and employees
• Allocate revenue streams to finance new purchases with minimal risk
• Mitigate risks, adjust lease terms, and prepare contingencies in case an investment fails
• Educate yourself continuously on trends to stay competitive in the market

A successful asset management strategy also leads to successful commercial property management. When investors demonstrate market knowledge, they establish credibility to earn future business and relationships. Capital improvements are crucial to asset management because it minimizes financial risks and capitalizes on new investment opportunities.

BUILD A DIVERSE INVESTMENT PORTFOLIO TO DRIVE MORE PROFITS

Another effective strategy to improve asset management for commercial real estate in Austin is building a diverse investment portfolio. A diverse investment portfolio can improve asset management by increasing your buying power.

When investors display a diverse portfolio with multiple asset classes, they can gain ownership of physical properties within the intrinsic value. The more type of real estate you invest in, the more buying power you gain.

Diversifying real estate investment portfolios to drive more profits should include:

• Various types of real estate markets — mixed-used properties, office spaces, retail stores, fitness facilities, local businesses, etc.
• Multiple asset classes — existing vertical and horizontal developments, new sustainable construction, etc. to earn more short and long-term profits
• Different locations — varying commercial and industrial land uses

Diverse portfolios also provide investor protection in the case of decreasing cap rates or revenue stream losses. We never suggest investing in commercial real estate without an exit strategy, regardless of financial plans and investor protection.

In case of market fluctuations or unexpected uncertainties, selling your property should not be the sole exit strategy. As mentioned above, implement multiple exit strategies, such as contingency plans and lease term negotiations. No commercial real estate investment is without risks, but you can prevent being unprepared for market downturns and mitigate risks more effectively to lower negative financial impacts.

REACH YOUR INVESTMENT GOALS WITH ASSET MANAGEMENT SERVICES

Do you want to maximize your commercial real estate investment? Contact Commercial Industrial Properties for asset management services.

We are a full-service brokerage and management firm to build the proper system you need to achieve your investment goals. Learn how we can help improve your asset management to drive more revenue today.