Property Management Flashcards
What is performed by a property manager?
Maintaining the physical asset Tenant acquisition Rent collection Lease negotiation Keeping financial records
Types of lease interests
Leased fee
Leasehold
Ground lease
Leased fee
Landlord, ownership
Leasehold
Tenant, holds the space
Ground lease
Valuable land gets leased to use, building owner isn’t the same as the land owner
Categories of leasehold estates
Tenancy/estate for years (stated)
Periodic tenancy (year to year)
Tenancy at will (lets you stay)
Tenancy by sufferance (evicts)
Residential lease
Based on the estate for years leasehold; a contract
less than freehold estate
Tenant selection criteria
Employment stability and earnings adequacy Occupancy period expectation Credit rating Housekeeping habits Compatibility characteristics
Is the offer and acceptance similar to real estate sales?
No, rental properties aren’t negotiated
Sales involve negotiation and takes longer to close the sale
Consideration
Written in the lease: financial asset, rent, rights to the space, real estate
Use by the tenant
Can be used for any legal purpose
Limits: pets, grills, hanging pictures, can’t run a business
Tenant’s right to exclude and landlord’s right to enter
Renters can exclude most anyone from the property and landlord can enter without asking
When can the landlord enter without asking?
Make repairs
Collect unpaid rent
Inspect for waste
Who is usually responsible for repairs?
The seller
Liability to third parties
If a third party is injured on the property either the landlord or tenant can be held liable
Tenant- if injury is because of damage they didn’t tell the landlord about
**Types of third parties
Invitee
Licensee
Trespasser
Invitee
People that have to come on the property
ex. mailman, utilities
Licensee
Guests; people you invite on the property
Trespasser
Someone not wanted/invited on the property
Assignment
Let the new tenant take over (liabilities and everything)
Subletting
Original tenant is still liable
Ways to terminate a lease
Expiration of the term Mutual agreement Merger of leasehold and freehold (buy) Breach of covenants by tenant or landlord (having pets if not allowed) Tenant abandonment of property
Commercial lease
Retail 3-5 years; office 10-15 years; industrial properties
Based on the estate of years leasehold
A contract
Rent agreements
Gross rent Net rent Percentage rent Graduated rent Escalated or indexed rent
Gross rent
You pay a high rent and the landlord pays operating expenses
Net rent
You pay a base rent plus property tax, and the tenant pays part of the operating expenses
Percentage rent
Retail/restaurants
$2 per sq ft base rent + 1% gross sales
(gross sales bc gross profit can be manipulated)
Closer to the anchor (Winn-Dixie) pays more rent because more sales
Graduated rent
Start at $5/ft and goes up gradually - steps
Escalated or indexed rent
Rent * CPI (inflation)
Follows the CPI index, landlord would do this to not be tied into a low rent scheme for years
Types of net rent arrangements
Net rent
Net-net rent
Net-net-net
Types of net rent
Net rent
Net-net rent
Net-net-net
Net-net rent
Tenant pays a flat rent to the owner plus the property tax and property insurance
Net-net-net
Tenant pays flat rent plus entire property tax, property insurance, and CAM (common area maintenance)
*Most common
Percentage rent with a minimum
Tenant pays a minimum rent (base) with an additional % of the gross sales
Rent = 2% gross sales + min base rent
