Your Tenant Isn’t Psychic And Your Spreadsheet Isn’t A Property Manager

What if your property’s biggest risk isn’t the market, but messy onboarding? We walk through a practical, field-tested process for turning leases, CAM, and vendor costs into predictable cash flow—using a real case, Berry Hill Plaza, to show how the details compound into stronger returns.

We start where most owners don’t: administration and accounting. Clean lease abstracts, amendments, and a prior month’s invoice let you bill accurately on day one. Then we dig into the mechanics that drive NOI over time—annual increases on the lease anniversary date, automated late-fee and interest rules, and why QuickBooks alone can’t replace professional property management software. The right system prevents skipped escalations, avoids awkward retro-billing, and keeps your income aligned with the lease you negotiated.

From there, we unpack CAM budgeting and year-end reconciliation. Taxes and insurance may swing with the market, but consistent vendor bidding on landscaping and refuse can lower controllable costs, and transparent true-ups build tenant trust. We also cover the unglamorous essentials that stop disputes before they start: defining who fixes what, handling HVAC caps, and getting tenant insurance certificates that name the landlord as additional insured. Individually metered utilities, clear line-item invoices for gross leases, and renewal education set the stage for fair, market-aligned outcomes without surprises.

We also call out the silent killers of NOI: DIY projects paid out of pocket, undocumented vendor work, and staff assignments that can’t be recovered through CAM. Professional management is not an extra line item when your leases already allow recovery—it’s the operating system that protects your asset and your time.

If you want stable cash flow, cleaner financials, and fewer emergencies, start by getting the inputs right. Subscribe for more actionable commercial real estate strategies, share this episode with an owner who needs a better process, and tell us the one onboarding step that saved you the most stress.

Learn more about Blue Commercial Properties on our website.

Transcript

Show Intro And Focus On Building Value

Michael Carro 0:00

Welcome to Blue Dirt, the podcast that digs deep into the foundation of commercial real estate investing. Unlike most real estate shows that focus on deal making and market trends, Blue Dirt gets into the nuts and bolts of what truly builds long-term value, the building itself. We break down how to spot deferred maintenance before it costs you, why a solid preventative maintenance program is a game changer, and how triple net leases can maximize your investment returns. We'll also explore the importance of strong landlord-tenant relationships and how they drive stability and growth in your portfolio. Whether you're a seasoned investor or just getting started, Blue Dirt gives you the practical knowledge to make smarter, more profitable decisions in commercial real estate. It's time to get your hands dirty and build value from the ground up. Let's dig in.

Hosts And Topic: Property Onboarding

Michael Carro 0:52

Welcome to Blue Dirt, where even idiots can make a killing in commercial real estate. I'm Michael Caro with SVN Southland Commercial Real Estate, and I'm joined by Don Redhead with Blue Commercial Properties. So today we're going to talk about when we get a property and the owner wants to have a property manager manage that property. A lot has to be done. And there's a significant onboarding process that can be in place, especially if it's a building that has a lot of tenants, certainly a lot of infrastructure. And so today we thought it would be helpful for you to know what blue in this case does when they're onboarding a property, why they go through this process, why they do almost like a lease abstract for each tenant, and why that's important. So once their uh property management system gets properly loaded, how the system then takes over and allows for a lot of accurate uh invoicing, collections, reporting, and uh yeah, including late fees and and things like that. So all of that kind of comes into uh onboarding a property. So, Don, where do you think is the best place to start?

Why Admin And Accounting Come First

Don Redhead 2:10

Probably I really I think the accounting part, it seems like as far as the accounting, the leases, the administration uh part is is quite honestly the most important. It allows you to hit the ground running, kind of right out of the gate. Even when we onboard a property, a lot of times the administration part of it and the document onboarding part of it actually gets done first and is a lot quicker because we already are hitting the ground with communication and and notifying uh the tenants. The property itself uh tends to come secondary, actually.

Michael Carro 2:48

You mean the physical, the facility. All right, so so as usual, we don't like to talk in theory. So let's pick a property that we think is a good representation for uh what we want to do. You know, um,

Choosing A Real Case: Berry Hill Plaza

Michael Carro 3:02

it could be an office building that has a lot of tenants like Midtown and had a lot of transition. It can be um something like Government Street, uh, that had, you know, a lot of individual offices, which can be some little more executive office space, which is a little bit more complex. Uh if you want to do just a single tenant building uh to make it more convenient and easy, just pick a property and so we can really I like to talk about something specific.

Don Redhead 3:29

Yeah, I I and I I almost want to do a few, right? Because there's there's ones that we have.

Michael Carro 3:36

We can do a few. Just let's pick something and then we can I like to talk about the asset itself.

Don Redhead 3:42

So how about uh one that was always kind of a struggle was the garden. Oh god, you want to start there?

Michael Carro 3:50

I mean, no, that's that's not that's too hard. It is too hard, it's too complex. Um, and most people will never own that type of asset. Well, that's fair. And so let's talk about something that's more normal, whether it's a retail building. Let's talk about Berry

Unit Layouts And Individual Metering

Michael Carro 4:07

Hill.

Don Redhead 4:07

Okay, okay. That's great.

Michael Carro 4:09

So uh Berry Hill Plaza, yeah, it's it's in Northwest Florida. Uh it has 12 units. 12 units. When this property was acquired, there were uh all 12 units were occupied. 11 of the spaces were occupied with existing tenants in leases that were not triple net. Yeah. The 12th lease was come was done while we had it under contract. So I actually drove the bus to ensure that it had a triple net lease in place.

unknown 4:49

Yeah.

Don Redhead 4:50

And so with the existing property manager.

Michael Carro 4:53

Professionally managed that facility was when we took it over. Right. And so so then we purchased the property, closed on it. Okay. So this building is about 13,000, 14,000 square feet. Each one's about 1100 square foot. That's right. 1115 square feet, if I'm not mistaken. So um times 12, they're all exactly the same. And just to give you a laydown, uh, the first four units was one tenant. There's a gym, yeah. Yep. The next two tenant, the next two spaces will was one tenant. The next two spaces was one tenant, and then there was a uh again, so a lot of combined units, which is fine. That's no problem. Um, but it the building was built that it could be equally divided in 12 spaces, which we love because they each had their own what?

Don Redhead 5:47

Wait, wait. It's one of the single greatest things, I think, in terms of of ease of management, when you have the 12 units that they're individually metered for gas, electrical, plumbing, all of those become single source responsibilities for the tenant that is is in those spaces to have in their name. That way you're not having to, you know, even auto pay, you know, as as

Data From Prior Managers And QuickBooks Limits

Don Redhead 6:15

great as that is, occasionally somehow it falls off uh whether it's it's the utility companies or it's ours, a bank changes, whatever it happens, it it just reduces your risk uh of lapse and coverage uh for that utility for there. So I love it. It makes our job uh significantly easier.

Michael Carro 6:34

So we close on that property and and then uh sometimes we will get good data from a previous property manager, and sometimes the data is lacking, or if the owner did it themselves, that a lot of properties are are uh owner managed, which typically does not have good records, even if they have quick books, which might is better than not having QuickBooks, it's still not anywhere near having good property management software. So walk through the onboarding process of a in this case a multi-unit retail space.

Don Redhead 7:13

Yeah.

Michael Carro 7:13

So I mean with different types of leases.

Don Redhead 7:16

With different types of leases. So your your initial request uh for information is always kind of the best, right? You want the most, you know, accurate, uh full-encompassing, you know, checklist. Uh and we'll actually probably post this. I will I'll clean it up so it looks more visually appealing because right here it's just for internal use, but this is something actually people could use. Um the first thing that we're always asking for is the leases, right? Is is the very first thing. But as we kind of go through, I'm gonna use this as a little bit of a cheat sheet and then also reference you know why it's

Breaking Down Gross Vs Triple Net

Don Redhead 7:51

important. Uh the next thing is if we can get, like you said, QuickBooks, historical financial information is extremely important, especially as the great example you used was if the space has a bunch of gross leases, right? These people are paying, you know, one number, triple net isn't a factor. If we have good historical data, it allows that one tenant that you're referring to to say, hey, this new lease, we know what the triple net's actually gonna be because we have two years of historical financial information, and we can back that out and actually get the triple net, the cam number that we're gonna bill. That is extremely helpful. Otherwise, what you're gonna be doing is guessing. And we've had to do that before too, right? We have we have other types of facilities that are of similar use and and you know, type of demand on the infrastructure that we just say, hey, uh, this warehouse, we typically see $4 a square foot. We don't have budget numbers, but that's what we're gonna run with for right now.

Michael Carro 8:56

So let's so uh just so you know, uh, when we start off with a property, again, all of our leases are triple net, but when we buy a property, sometimes they're not. Once we identify what the actual triple net is, now when you buy a property, that tenant who has a lease, they have every right to maintain that lease. And the uh the new landlord has the obligation to honor that lease. So it's not like we're gonna come in and change things, but it's still important for me to let that tenant know what they're actually paying. So let's assume for the sake of argument, a tenant is paying a full number, what a single number of a gross lease, a gross amount of let's say it's $1,500. And they just have been getting an invoice from their previous landlord for $1,500 a month, and that's all they've been paying, which is fine. That's all they were, that's what they agreed to pay. Well, what's important for me is I'm gonna go down once we own a property and I'm gonna break down what they're paying by line item so they truly understand what their rent is. Because I think in a gross lease, a lot of tenants really don't know what their rent is. They just they think their rent's $1,500. When in actuality, their rent might be $900, the property taxes might be $150, the property insurance might be $200 a month, you know, the common area electricity and water might be, you know what I mean? And so it will break down their invoice so they still see that they're paying $1,500, but I want them to know what they're actually paying that $1,500 towards. And why is that? Well, when it comes time to renew or to or to sign a new lease

CAM Reconciliation And Year-End True-Ups

Michael Carro 10:45

altogether, if if they have an option to renew, then they have that option. That's their right. But let's say they don't have an option, but they want to stay. Well, I can show them that, hey, listen, the $900 you pay is not market. And and again, I'm gonna my thing is how do we educate everybody so we know what we have? You know, if you're really paying $900 and the market for that same space is is $1,400 plus triple net, well, if I were to give you a a, if I were to increase your rent from $900, $1,200, you're still paying $200 below market. You know? And so my my personal view is if I can give my existing tenants a lower rate than market because I'm honoring that they have been there, um, they win and I still win because now I've still got upward pressure on that lease rate. So that's I think part of the value of breaking it down, which which is what we can do with this software.

Don Redhead 11:44

And you're you're you know, I'll say mitigating long-term risk on fluctuations to the operating expenses, right? The property taxes, insurance.

Michael Carro 11:55

Not in this case, because that we're still honoring their gross lease.

Don Redhead 11:58

Yeah, and and I should have qualified that. When we did those new leases at Berry Hill, like you were talking about. Yes, a lot of times the the rental rate, we actually gave them the same, you know, said, okay, you were paying $15 a square foot, but the triple net is $5 a square foot. So now we're gonna reduce your lease rate on a new lease to $10. And then the $5 we showed them that that was what the cam expense was there. Right. As well as um uh shows them that that's a the the fee that has to be paid for the operation of the property and that they can have control of it with the right, you know, maintenance, you know, uh things in place. Don't abuse the trash, don't leave you know things everywhere and

Controllable Costs And Vendor Shopping

Don Redhead 12:42

and drive those expenses.

Michael Carro 12:43

So that's part of the initial onboarding that we like to do from an invoicing standpoint. But and Don wanted to focus on the accounting to get started.

Don Redhead 12:51

So and the other things, you know, we have balance sheet accounts receivable, payable, those uh those aren't really as important if you're buying it. It's really more of you as a property management company would be taking over the management. If you have good balance sheets, like a lot of our properties do, you know, the CPA will go through at the end of the year, move things around, adjust things, and us having year end uh entries reflecting that is good information to carry forward. Um, same thing with accounts receivable payable, right? You want to know who's owed money during this transition, which a lot of times if you're actually buying the property, it's not as important.

Michael Carro 13:29

But if you're taking over management, but staying focused on onboarding only. Yes. The the reason why these processes are important is you want you want really clean data. And so, um, and why do you want clean data? Well, because what what the property manager is gonna do is they're gonna do all of the accounting and then hand over a clean ledger balance sheet, PLs, and everything to the CPA, to the owner's CPA, who then is gonna create the tax return. Well, the cleaner that can be to the CPA, the better it is for the client. And so um, and also at the end of the year, when you're collecting triple net fees from a tenant and you're paying the actual fees to the vendors, whether it's the insurance company, the tax appraiser, or utilities or whatever,

Critical Lease Data To Abstract

Michael Carro 14:24

there's gonna be a delta. Either the tenant's gonna pay you a little bit more, or the tenant's gonna pay you a little bit less. The goal is for it to be zero, but within a couple months after the end of the year, the property manager will do what's called a CAM reconciliation. So that way there's a true-up. So you the tenant might have paid, and I'm just gonna use random numbers, they might have paid an extra $200 this year on property insurance, then what it actually cost. So that would show up in the reconciliation, but they might have paid uh $100 too little uh for property taxes. They might have paid $100 too little for insurance. So you add up all of that, and the the landlord owes the tenant a little bit, or the tenant owes the landlord the little bit. The goal is you hope it's the goal is zero, or you hope it's a very small small number. And then the property manager will then make adjustments on their predictions for the next year, right? And so right now, you know, most of the time we see prices increase. But in in Florida, where we've had uh very mild hurricane seasons the last couple of years, uh, this is the first year we're seeing several insurance um policy rates go down. So now we get to pass that savings along to the tenants, which we're always excited to do because a lot of times we're the bearer of bad news where things are increasing. And so now they will never recognize the fact that it's going down, and that's okay. But our goal is to, is to keep rates uh outside of rent as low as possible because you know, a lot of those things we can't control, you know. So there's three things

Amendments, Buildouts, And Responsibilities

Michael Carro 16:09

that, you know, there's a couple of things we can't control: property tax, property insurance. We can go out and get competitive, but we can't control those markets. Where the property manager does have flexibility and controllable expenses can be landscaping.

Don Redhead 16:22

Landscaping, you know, if you go up for annual contract reviews, if there's uh trash, right? Refuse, there's a lot of different vendors in our area. We have waste management, we have republics. So occasionally we'll go through and reshop them. A lot of times that we'll get approached by like a new rep and they get all excited, try to convert a lot of our business over, and that's the time. Um, but yeah, always share the good news if you can. Right. Uh if there's if there's a significant decrease in property insurance. And it is something that uh we probably don't share as much as we should. We do share, but we do take. I mean, if you watched the other episode, we beat Mike up pretty you know quite a bit. Uh, that we are shopping all the time. We force those guys to shop. Yeah, we take it very seriously. It's it's as if we're paying that money.

Michael Carro 17:09

Right. And and he's referring to Mike Edens with Hub Insurance and also Mike Price with Hub Insurance.

Don Redhead 17:15

Season one guest.

Michael Carro 17:16

Yeah, they are they're they're great. And um, and they've uh but the last few weeks we've seen some a lot of our policies and on our places have been coming down a couple thousand dollars less.

Don Redhead 17:28

So and really with new construction, I was very surprised with uh the large warehouse development off of uh of nine mile, the property insurance there was almost as much as a building of fifth size that was you know 60 years old. It's kind of crazy.

Michael Carro 17:43

So all right. So in the lease, so when you're onboarding a lease, the things that are important are gonna be several things. Yeah. You know, the tenant name, the lease start date, lease end date, renewal options, the time for renewal, the lease rate, are there annual

DIY Pitfalls And Missing Reimbursable Costs

Michael Carro 18:02

increases? You know, what is the what are the pass-through expenses? What am I missing?

Don Redhead 18:08

So to kind of dissect each one of those, the contact information is always to me the most important. If you can communicate with these people effectively, that's that tends to be it. Uh, one thing that isn't typically in the least, but is always very critical. Uh, we always request a previous month's invoice. It always helps us when we duplicate that invoice because a lot of times in the transition, we're scrubbing a tremendous amount of data. We're just replicating whatever the previous property management group is, whatever the previous month's tenant was. We can fix it next month, but we need to usually get them their invoice immediately. It's it's the transition window between a property management company uh or the buyer when you're communicating that is typically a couple weeks. And you know, usually we're trying to get invoices out by the 20th, right? For them to pay by the first. So there's just this little bit of limbo that the previous month's invoice is always very helpful. But when it goes in regards to the lease, the contact information is always the most important. The lease term, uh, some of the leases we're taking over have actually expired. Any amendments to the lease are always important. Uh, if you can go through that and get that information.

Michael Carro 19:19

The the amendments that he's referring to could be an amendment that um the tenant took over more space, the tenant extended their lease, the tenant assigned their lease to somebody else. So amendment can have a lot of different variables in there that could be very different than what the lease actually says. So it's important to identify any amendments.

Don Redhead 19:40

I mean, construction. Maybe the at the end of maybe five years or at least the tenant came and said, I want a whole new build out, right? Where's that construction related cost? Have they been billing it properly? Uh, so that's always very important. Who's responsible for certain maintenance things?

Michael Carro 19:56

I'll tell you something that I've noticed. Um, as uh Don takes over properties, invariably, and and I want you to speak to this, but um, and I'm not just pimping his services, but the reality of it is is most property owners hurt themselves with doing it themselves. And I don't mean the labor, they're usually missing things or not billing the tenants what the tenant and the landlord have agreed to be billed. And so almost every time the landlord hurts themselves. In addition, the landlord doesn't realize in most cases that the property management services is part of a cam fee that the tenants would be paying, anyways. So the the property owner thinks that all of this work has to be done pro bono by him uh or her, but but it doesn't. The property manager is is typically factored as part of that CAM, that commonary maintenance or triple net fee. So um, have you seen the same thing?

Annual Increases And Automation

Don Redhead 21:03

Yeah, it's like everything, right? If you do it for a living, we live and breathe it every single day, uh, both as an as an investor and the professional property management firm. I think the biggest one that I see is where landlords will actually send out their own vendor to do work, whether it's a their own handyman right for their house, uh, or it's their landscaper, and they'll say, Hey, go out. I want you to do this project there. And then we'll we'll kind of drive by and say, Hey, what's what's going on? Oh, I'm just having this guy do it. It's not a big deal. I go, okay.

Michael Carro 21:41

Um now this is a property that Don probably already manages.

Don Redhead 21:45

Correct. Yeah. So we're already managing it. And and I go, what do you mean? Like, what are they doing? Oh, they're just doing, you know, they're fixing something over there. I wanted it done like this. I go, okay, uh, are you paying them? Yeah, I'm gonna pay them. They they do it for a great rate. I go, okay, well, you're defeating the point because this is a CAM expense. You're you're you're maintaining this property, this common area for whatever it is. Say they're doing a landscaping improvement project, and they think that they're saving the property money because they have a person who will do it for a great discount, but but they're just paying for it out of their own pocket. So now it's not being documented in the operating expenses, which is not now being reimbursed to the by the tenants.

Michael Carro 22:30

And it's like they they think that they're hiding this over and they're they mean well, is the funny thing, but they don't understand that so they're not maximizing their return on investment because it that what Don is saying is it was it's in a reimbursable expense that many times the landlord never gives to the property manager. And again, hey, it's their money, they're allowed to do it, but but then they wonder sometimes they wonder, well, why isn't this property making as much money? And it's because they're not, they're not they're being managed effectively. They're not being managed effectively.

Don Redhead 23:03

And there's even ones that I've heard um we're dealing with another property that would be taken over, and they go, Well, I'm

Late Fees, Interest, And Software Rules

Don Redhead 23:10

just gonna send my employees over to do this work. I go, they go, because it's way cheaper that way. I was like, Yeah, but once again, it's the same principles at work here. You're sending your people out. There's opportunity costs, there's actually direct costs. They're going out there doing this work. We don't have documentation of it, therefore, we can't be reimbursed. That doesn't even go into you know insurance and things of that nature for the liability. But either way, um, you know, for some of these other stuff.

Michael Carro 23:36

Or the professionalism of the job that they're being hired to do. You know, uh, just because you have people willing to do it because they're making a wage, doesn't mean they're qualified to do the job itself. Certainly, I would implore you don't have any of your random employees do anything that's electrical or plumbing related. Um, those things could really damage a building significantly. Um, and so please hire a professional, you know.

Don Redhead 24:05

And we have one's uh last example. They're they're doing some landscaping, and I think they hit a plumbing line and the plumbing goes out to the facility, and they're like, we're getting

Tenant Insurance And Additional Insured

Don Redhead 24:15

calls from the tenants saying, Hey, we have no water here. We don't know that there's a vendor that the landlord hired directly out there doing the work. The water's off to the property, they don't have insurance. It's a whole mess. So, I mean, we're going off on tangents, but it's it's still in the same way. We're always talking about the same subject here. Okay. Property management, commercial real estate. So onboarding, let's get back. So um uh annual increases. So we talked about exhibits, right? Right. Amendments, all the leases. Uh one thing that's surprising how much it actually is missed if you don't have uh good property management software, QuickBooks and stuff, they don't do it. I think there's plugins now uh from a software standpoint that you can get, but annual increases are something that are so important to us, right? We have them in almost all every one of them.

Michael Carro 25:06

And they're not necessarily done January 1st. It's the annual increases on the anniversary date of the lease start date. So it's gonna happen throughout the different uh terms. So, so if you are gonna try to remember or set a calendar reminder, guess what? You're gonna forget. And then what happens is you remember two years later. Oh, yeah. Hey, listen, I I never collected this. I never collected for this. And it's like, okay, well, what are you gonna do? You have two choices. You can go back to your tenant and say, hey, listen, I'm so sorry. I forgot to charge you, you owe me $10,000, in which case the tenant has a heart attack because guess what? They weren't paying attention either, and they don't have the $10,000. So now it creates this conflict. Uh, or what I see more often is I'm the landlord, oh, forget about it. We'll just charge them now the extra, you know, uh monthly amount. And

Maintenance Duties And HVAC Caps

Michael Carro 26:05

so you then for forego what you what you should have gotten was that $10,000. Yeah, you know, and so we see everything, and that's why if you're not going to have it professionally managed, invariably you typically hurt yourself. Yeah.

Don Redhead 26:18

And even if you do have, I only say because we just uh about three months ago took over, two months ago took over uh a couple professionally managed properties, and they had, I think, three tenants of say 15 tenants total, uh, that had not had annual annual increases. Some of that went back as far as 2019. So six years when when it was in the lease. When it was in the lease, and perfectly fair. Yeah.

Michael Carro 26:45

Perfectly, you know, it was all, you know, yes. So uh so it happens even with professionally managed companies. Yeah, bad data in, you know, bad data. But that's where the onboarding comes in. So it clearly wasn't onboarded correctly into their software. I'm sure they had the proper software, they're a good company, but it wasn't onboarded properly. So the onboarding is so critical. Even when you get into uh a late fee, if you say the rent's due on the first and late after the fifth, well, what happens after the fifth, right? Well, the system says you type it in, hey, it's a 10% late fee on the outstanding balance. Okay, great. I enter that in. What happens 30 days later? Well, it's not another 10% late fee, but in this case, in most cases, it's now a percentage, an interest rate on the outstanding balance. So now anything that's outstanding gets double whacked. It got the 10% big whack up front, but then it now is getting charged interest on an on a monthly basis.

Don Redhead 27:52

Yeah, that just and it goes once again. That's why I guess the long and the short of it, we're gonna keep saying is if the software that we use just allows for that to be input. And and even now uh we're expanding on it where we can create a lot of more user-defined

Defusing Disputes: Read The Lease

Don Redhead 28:10

fields and custom reports to where you can run things. Uh, another thing is insurance. That's always one that's a lot of the bigger groups never seem to have an issue with it. It's a lot of the mom and pops. And what we find is is it's not that they don't typically have the right insurance, it's just they're so busy running their business. It's this this thing that we have to hound them on so much to get uh a copy of their insurance. Well updated with the landlord. Let's talk about that.

Michael Carro 28:36

So there's Don's, there's there's a couple different insurance uh policies that that uh are in a pro in a property. The landlord has the has a policy, typically a building coverage, as well as liability. Then the tenant is is required to also have liability. Um and and they they already have it almost every time they have it, but they need to name the landlord as additional insured. So when you're going into the onboarding process, you're gonna put your current insurance into the property, but then you're gonna have this insurance information from the tenant, which is a liability policy. And so that's always the struggle that Don's talking about. Is uh it's they have it already. It's a simple email to their insurance company that says, Hey, insurance company, please name ABC properties as additional insured for this address. That's it. Send it to the that's all they do. And then guess what? What happens? Every year when they renew their policy, the insurance company

Good Input Prevents Years Of Errors

Michael Carro 29:40

automatically puts in the mail a new copy of the policy to the landlord. It can be that simple when it's done right.

Don Redhead 29:46

Yeah. And that's once again, usually it's just we find it's it's an entrepreneur thing and they have to do something a little different, and it just they never prioritize it.

Michael Carro 29:56

Right.

Don Redhead 29:56

Uh, the other thing that is always a Little bit more of a it needs a special amount of attention is when we're onboarding the new lease, who's responsible for certain maintenance items, right? If it's not our leases and we're inheriting certain leases, they have ones that you know, hey, here's a cap of $6,000 annually on HVAC or whatever it is. So just pay a little extra attention to these areas because uh well, I say the good thing is the good thing is the tenants absolutely know that they're always they're always like, hey, this is more than my $500.

Michael Carro 30:32

So they're usually I will tell you, to me, that's the number one thing in a lease when I'm dealing with a tenant, is I draw them to that section of the lease because it's the number one thing that I really want all of my tenants to understand. I really want them to understand what is their obligation and what is the landlord obligation. And it's all fine, but and when you're signing the lease, everything's copacetic. But it's really going to be two years down the road when something happens. Intuitively, tenants are like, well, let me call the landlord. I'm sure it's theirs. And uh, and so when they make that call, um, it's like, okay, well, I I don't have the lease in front of me. What does the lease say? Well, I don't know. I didn't check.

Part One Wrap And CTA

Michael Carro 31:14

Well, go to the lease, or I'll go to the lease, let's check. And if it's if it's the landlord's responsibility, no problem, we'll get it taken care of. But if it's your responsibility, we can help you find a vendor and you can call them, or the property manager can do this for you, but just know that you're gonna get billed for it. Either way, it's fine with with with us, um, but it's it's probably the most important section, I think, between a landlord and tenant. That comes up the most frequently.

Don Redhead 31:41

Correct. And your statement there just from a, I'm gonna say a property manager's I don't want to say arsenal comes off a little, but a tool that you can use to defuse most of the situations is uh, I'm not sure. Have you looked at the lease? Just what you're saying, there's so many times that I think I know the lease, but in fairness, we have how many tenants? 450, 500 tenants. Every single lease is different, right? Every single lease we have is different. And that gives us a good, I'm gonna say, hey, every lease is different. Have you already looked at it? And a lot of times that automatically diffuses versus coming off of this confident, oh, I know it's it's 100% you, because a lot of times we don't. We can't know all of those leases off the top of our heads with how many pages many of these commercial leases are. So that's just a good idea.

Michael Carro 32:32

And sometimes there's a tug of war in the beginning of a lease negotiation that you know a landlord or tenant will give something to get something, and maybe it's it's this air conditioning example that Don gave. So we just don't know.

Don Redhead 32:44

So yeah, I mean, that's most of the information uh when it comes down to onboarding the lease, uh, but taking the amount of time on the front end to make sure everything is input correctly. Uh bad data in, bad data out, right? Same thing with good ones, even with the professional groups. You know, 2019, somebody must have input a lease incorrectly. And they just ran off it, right? They're not gonna audit once it's already input because they're assuming that somebody followed this process and it was input correctly.

Michael Carro 33:13

Right. So this is part one of a two-part series, as we've decided uh just now. Yeah, we're about three minutes over. So we're gonna uh pause here. So we're gonna pause here and we're gonna have part two in our next episode. Well, that wraps up another episode of Blue Dirt Podcast, where even idiots can make a killing in commercial real estate. That's a wrap for this episode of Blue Dirt. We're here to help you build smarter, invest wiser, and create long-term value in commercial real estate. One solid foundation at a time. If you found today's insights useful, be sure to subscribe so you never miss an episode. And if you know somebody who could benefit from these discussions, share Blue Dirt with them. Got questions or topics you'd like us to cover? Reach out. We'd love to hear from you. Until next time, keep digging deep. Stay sharp, and remember real value is built from the ground up. See you on the next episode.