Managing Risks, Maximizing Returns:

A Guide to Commercial Property Investment in Wisconsin

While real estate is often seen as a safe investment, it does come with risks, especially commercial real estate.

The COVID-19 pandemic changed the way we live and work, and while some things have moved back in person, there’s no denying that the primarily-in-person world we inhabited before the pandemic is gone for good. Nowadays, people expect to be able to
work virtually, at least 2-3 days a week, and that has had a lasting impact on how people run their offices, including the types of (and how much) office space they’re looking for.

While we’re unlikely to face another event like the pandemic any time soon, it brings home the importance of managing risks in your commercial property investment in Wisconsin so you can maximize your return on that investment.

Managing Risks

There’s a lot of crossover between managing risks and maximizing returns, but to make things easy, let’s start with what you can do to manage your risks when it comes to your commercial property investment in Wisconsin.

Diversify Your Portfolio
Balance is the key to success in all areas of life, and your commercial property portfolio is no different. Just like you would diversify any investment portfolio so you don’t lose everything when one market crashes, you should take the same approach to your commercial property investments.

Spread your investments across different property types, locations, and tenant industries to avoid becoming overly dependent on one market. By maintaining this balance, you don’t have to worry about one market taking a hit, because you’ll have enough investments spread throughout other markets to ensure your investments keep generating returns.

Do Your Due Diligence
Real estate is too big an investment not to do your homework before signing on the dotted line, and there’s even more at stake if it’s an investment property.

So, before you sign anything, be sure to have inspections conducted on the property, including a title search and an inspection of environmental assessments to identify and manage risks before investing. This will prevent any nasty surprises during or after the
buying process.

Focus on Preventative Measures
The best way to ensure you get a return on your real estate investment is to conduct regular maintenance to ensure the building remains as safe and sturdy as possible. Renovations might sound extreme, but depending on the type of renovation, they might
be needed on a regular basis, such as when it’s time to update the HVAC system or install new solar panels.

These do come with an upfront cost, which is why some property owners make the mistake of putting them off. What those investors fail to realize is that regular maintenance and renovations on a property can end up saving significantly more money over the long term than their upfront cost.

Leverage Technology
Technology can help you do everything from helping you keep a regular maintenance schedule for your properties to tracking financial performance and analyzing market trends.

We’ve already discussed the importance of conducting regular checkups and maintenance on your property to help maintain its value. Rather than leaving that up to chance, make a schedule to have someone check in on your property on a regular basis. Technology can help you maintain that schedule, and can even alert you when something unexpected comes up, such as a storm, so you can send someone out for an emergency checkup to make sure everything is OK, and act immediately if the building sustained any damage.

Emergency Preparedness
In just the past few years we’ve faced everything from a global pandemic to flooding to wildfires, making it clear that we can hope for the best, but we should also prepare for the worst.

While Wisconsin is lucky enough to have avoided some of the worst parts of climate change, some aspects of climate change, such as hotter summers and more frequent and more intense storms, are inevitable.

Having a plan in place that lays out what is expected of everyone in the event of such an emergency is a crucial part of managing your risks as a commercial property owner.

Maximizing Returns
Several of the things you can do to minimize your risks can also help you maximize your returns. To avoid unnecessary repetitions, we’ll spend this next section focusing on things we haven’t already covered that can help you maximize your return on your
commercial property investment.

Location, Location, Location
If you want to buy an office building, make sure it’s in an area where people are either already working, or where people are starting to gravitate for work.

There’s a lot of common sense involved in this part of the process of maximizing your returns, but don’t forget what we said earlier about leveraging the power of technology. Computers were designed and built to process a lot of information very quickly, and they
excel at it, so don’t be afraid to use software to analyze data and identify trends you might not otherwise be able to see coming.

Property Upgrades and Renovations
We did already have a section on the importance of property maintenance to maintain the integrity of the property, so we won’t spend a lot of time on it here. We’ll just add that, in addition to helping you minimize risks, conducting regular maintenance and
upgrades to your property also allows you to charge more for rent.

Tenants want offices with all the bells and whistles, especially as they’ve had to work harder to lure their workers back into the office. So not only can regular maintenance and repairs save you money in the long run by reducing the need for expensive repairs, but it can also help you make more money right away by making the building so attractive to tenants that they’ll be willing to pay more for it.

Build Strong Tenant Relationships
It’s always cheaper and easier to keep an existing tenant than it is to find a new one. While some tenants move on because of factors that have nothing to do with you, many would be willing to stay under the right conditions. A tenant who trusts you and likes
working with you is more likely they’ll stick with you rather than move into another building.

They’ll also be more likely to bring issues to your attention so you can address them right away. If you are consistent in addressing those issues immediately, you’ll gain trust with your tenants, and trust is everything in business.

Last, but certainly not least, is the fact that a tenant who trusts you will also be more likely to let you know if they’ve received a competitive offer from another management company, thereby giving you a chance to counter the offer.

The Right Commercial Property Management
By now, you’ve probably guessed that a lot of the success of your commercial property investment hinges on the management of that property. That’s why it’s so important to partner with the right commercial property management company.

At Compass Properties, we take pride in our commitment to providing commercial management services that will never fail to point you in the right direction, just like a compass that always points north.