Chapter 3 Flashcards
What purpose does and asset plan serve in the property management industry?
An asset plan provides direction for successful real estate by analyzing a property in relation to its market and matching owner objectives to property management.
Why is it important for asset managers to review rent rolls in analyzing a property’s current state.
Rent rolls list details about each lease. A review of rent rolls allows property managers to reconcile rent roll data to actual leases and determine if there are lease provisions which negatively impact the performance of the property.
What are several aspects of a property that should be evaluated in a physical property review?
curb appeal sustainability interior quality mechanical records foundation and exterior compliance with disability legislation property operations vacant space tenant feedback building plans aerial photo inspection
What is R/U factor and what is the average R/U factor?
- RU=rent-able area/usable area. Also called load factor.
- Usable area refers to the total area in a tenants space.
- Rent-able area includes a proportional share of common space within the building
- 12-18% is considered competitive.
Identify the purpose of an asset plan and three key components of the plan.
The plan provides the necessary direction for successful real estate management.
1) Legal document inspection
2) Physical property review
3) Market Analysis
What are the legal documents that asset managers should review to assist them in developing an effective asset management plan and evaluating a property’s status.
ownership documents budgets environmental report disability legislation and regulation pending litigation monthly reporting package operating history soils report title report
Explain how an asset manager evaluates a property’s fit into the overall market.
By conducting a market analysis including comparable properties, economic statistics (population, trends, job growth, etc.), and real estate statistics (sqft market size, current and historical vacancy rates, average rent, new buildings under construction, absorption rate).
What budget documents should be reviewed as a part of the legal inspection portion of developing an asset plan?
current rent roll
stacking plan (floor by floor building layout)
maintenance and management contracts
capital budget
ground leases (lease where tenant leases vacant land)
debt service
What type of information is found in a Phase I ESA?
A listing of all environmental issues associated within a property-asbestos, underground tanks, lead pant, mold, and PCBs.
Describe the purpose of the market analysis in evaluating the current status of a property.
To determine how a subject property compares to other buildings in a market.
What are some economic statistics that an asset manager may review in the market analysis process?
population statistics employment data job growth major market employers other relevant statistics
Identify the types of real estate statistics that are important to an asset manager’s market analysis.
total size, in sqft, of the market current and historical vacancy rates average market rent average concession packages new buildings in construction historical and projected absorption rates economic condition of the market market commissions to leasing agents and brokers
Define absorption rate.
The rate at which space available for lease is taken off the market in a given geographic area during a given period.
Define cure period.
The mount of time it takes a market to achieve a relative equilibrium.
Explain what is involved in a market analysis of competing properties.
A comparison of 4 to 6 comparable properties with onsite inspections.
