Magazine article Journal of Property Management

Profiting from Roofing Maintenance?: It's No Fairy Tale

Magazine article Journal of Property Management

Profiting from Roofing Maintenance?: It's No Fairy Tale

Article excerpt

"Once upon a time, in a land far away, there lived three little pigs..." This age old tale talked about a big, bad wolf that blew the pigs' houses down, roofs, walls and all. But in this day and age, buildings aren't made with sticks or hay, and the properties are worth millions of dollars. Unfortunately, many property managers still prepare for the future like they did in the past, believing the maintenance of the roof will "magically" take care of itself. But unlike the classic nursery rhymes of the past, it rakes preparedness and planning, not straw and sticks, to keep elements out and profits coming in. Keeping a roof over their head is why the tenant signed a lease in the first place. And if the roof leaks, that tenant isn't going to stay there very long.

A Recipe for Profitability

As the economy and real estate market grew through the late '90s into the new millennium, property managers everywhere focused on property enhancements and improvements that would help increase rising rents.

But today, as vacancy rates slowly rise and employee layoffs increase as a result of a weakening economy, maintenance costs are often the first areas scrutinized when it comes to cost savings. Though this may reduce expenditures in the near-term, long-term problems will almost certainly result, including damaged merchandise, furnishings, fixtures, and equipment.

According to David Morris, CSM, assistant vice president with PM Realty Group, tenants rely on their property managers for roof maintenance. He says that commercial owners are always wary of slower times, because if budgets decrease, fewer roofing improvements take place, which can lead to many problems related to roof deterioration.

"While many think holding costs down and keeping property in the best shape possible are contradictory, they go hand in hand," says Morris. "It's crucial for real estate management companies to have short- (1-2 years) and long-term (3-5 years) maintenance plans so that there are no unexpected costs, and so that needed maintenance is performed, even when consumer spending is down."

Compared to the concerns of today's property managers, the old woman who lured Hansel and Gretel into her cottage with a roof made of cake had it easy. If something went wrong with the roof, she'd simply bake more and replace it. But in today's market, planning for continued maintenance makes much more sense, says Anthony R. Vross, executive vice president of Simon Roofing.

"In today's volatile market, you don't want a big up-front expenditure for roof replacement if you plan on selling a property soon, nor do you want a cheap fix that could jeopardize a future sale," says Vross. "When water is entering your building, you have to fix it, regardless of the economy. But, many owners are not well informed about their roofs and are left with the belief that they need a new roof, which may not be the case. Or, they opt for a cheap fix today, which ends up carrying a big price tag in the future."

In the end, adding value to the property through a well-thought out roofing plan not only helps ensure tenant retention, bur also gives the owner added leverage when selling or leasing the property. A well-prepared roofing plan allows property managers to truly have their cake and eat it too.

Trolling for Income

In the story of the Three Billy Goats Gruff, a troll lived under a wooden bridge, constantly harassed and concerned about someone disturbing his home. In fact, the troll would have likely inspected the bridge quite often, just to ensure that the roof over his home wouldn't collapse. The troll understood that roof inspection should not be overlooked. However, this important area of roof maintenance is too often forgotten, according to David Rockman, president of Warren, OH-based David Rockman & Associates. "The roof is a building's most neglected item," says Rockman. "Nobody worries about it until it leaks. …

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