Property Management Flashcards
property manager is
someone who is hired by a property owner to market, maintain, and oversee the day-to-day operation of a property. This property is often a rental property but does not have to be.
Property management is the
vocation of renting or leasing someone else’s real property on their behalf in exchange for compensation and in accordance with a property management employee contract.
property management (owner) hires property manager because
an owner may not want to be in charge of collecting rent or tracking expenses or they may not feel knowledgeable enough in accounting to complete a property budget.
An absentee owner is a
property owner who does not occupy the property in question and therefore often utilizes a property manager’s services. It’s hard to keep tabs on your property when you’re not there.
Most important responsibility of property manager is
to realize the highest return possible on the owner’s investment.
they also help with
-Owners stay or get back on track
-Maintain their properties
-Turn the properties into profitable investments
-landlord
-marketing (draw tenants in to the property)
-maintaining relationships (landlord)
-rent collection
Community association manager (CAM): difference between a property manager and a community association manager
is that a community association manager must hold a CAM license, while a property manager does not need a CAM license.
CAMs manage community associations such as:
-Mobile home parks
-Planned unit developments (PUDs)
-Homeowners associations
-Cooperatives
-Timeshares
-Condominiums
If a license holder is managing one of these types of properties, and if that property has eleven or more units or an annual budget over $100,000, they need a CAM license
A CAM license is NOT required to manage a rental apartment building (the eleven units rule doesn’t apply here), commercial property, or single-family unit like a residential rental home.
Property managers are often responsible for leasing a property’s units and they typically act as
landlords. It’s important to note that whether or not a rental property is going to be profitable falls largely on the property manager’s ability to find AND keep happy tenants
Main landlord responsibilities
-Acquiring tenants
-Maintaining positive relationships with those tenants
Marketing plan Do’s as a property manager:
-A market analysis
-A budget
-An outline of their marketing tactics (i.e., a budget for how much money will be spent on each marketing strategy)
The marketing plan will also outline things like the property’s target market, goals, and mission statement.
A market analysis is a report that analyzes and assesses the defining characteristics of:
-The property itself
-The property’s region
-The property’s neighborhood
Market analysis will help
a property manager better understand their area so they can cater their property to the needs of that area.
-Assessing an area will help establish fair and profitable rental rates.
Fair marketing laws and guidelines state that
organizations can’t pick and choose their tenants based on factors like race or gender.
Property Specialization
-Industrial property
-Special-purpose property
-Residential property
-Commercial property
To effectively manage a special-purpose property, managers will usually need
some niche knowledge and skills.
i.e. movie theatre and sports arena
The management agreement is
a written contract between a property owner and a property manager to establish all duties of the property manager, including operation and leasing activities.
The management fee is the
price an owner pays the manager (or management company) for their services.
-The management fees must be clearly expressed in the management agreement.
A percentage fee is
a fee paid to the manager based on the effective gross income (EGI) of the building. This includes income from rent plus additional revenue streams.
A flat fee, or base commission, is
a fixed fee paid per unit, not based on a percentage of the income.
-Flat fees are pretty rare but may be more desirable when managing buildings where the owners are more interested in controlling expenses rather than increasing them.
Oftentimes, management fees are made up of both a flat fee and a percentage fee. A property manager may collect a base fee commission plus a specific percentage of the effective gross income. For some properties, compensation may also be collected per transaction. It all depends on how the property functions, the owner’s goals, and what is stated in the management agreement.
Fee structures are determined by the owner and their goals for the property:
-A percentage fee provides incentive for the manager to increase the income of a building.
-A manager being compensated by a percentage fee will work hard to maximize the revenue coming in.
In Florida, if a property manager does not receive a commission they are not required to have a real estate license. Having a license is always a good idea though, as licensed managers often have a more comprehensive knowledge of real estate. This allows them to do a better job of maximizing and protecting the owner’s return on their investment.
In addition to the management fees, the contract should also specify which bonuses or commissions the owner will pay the manager, if any.
An owner might offer the manager a commission for every new lease they execute or offer a lump-sum bonus if the manager is able to lease the building to capacity (meaning there are no vacancies).
The difference between a percentage fee and a flat fee is that a percentage fee:
is based on a property’s income whereas a flat fee is a fixed fee that does not vary
