Property Management Flashcards
Property Management
can be defined as the administration of rental or other property by a person or a team of people who are acting for the owner. The management of the property is done for a fee.
Property Management Tasks
collecting rent, maintaining the property, performing marketing and budgeting functions and overseeing relations with tenants
PM’s have Dual Responsibiltiy
to the owner and to the tenants of a property. He or she must understand that the owner is interested in the highest return from the property and the tenants want the best value for their money, including space that is properly maintained.
PMs are responsible for
Renting the units promptly at the highest market rent possible
Keeping operational and other costs within budget
Preserving and enhancing the physical value and prestige of the property
Types of Propertys managed
Apartments Condominiums Duplexes Industrial complexes Office complexes Shopping centers
License Requirements
If a property manager is going to lease (or list for lease) real estate, or negotiate or attempt to negotiate for the lease of real estate, or aid in locating real estate for lease, control the acceptance or deposit of rent from a resident of a single family residential property unit, or if he or she holds herself out as engaging in any of those activities, he or she will need a broker’s license. A salesperson working under a broker may engage in such activities.
Individual PM
usually a real estate broker who manages properties for one owner or a number of owners. Such a manager may be a member of a small property management firm devoted to full time property management, he or she may be a self-employed manager, or he or she may be one of several managers in a large real estate firm.
Individual Bldg manager
usually manages a single large property. This manager may be employed by a property manager or directly by an owner and may or may not have a real estate license.
Resident Manager
lives on the property and may be employed by a real estate broker, a managing agent or an owner to manage a property on a part-time or full-time basis.
Real Estate Asset manager
acts as the property owners’ agent and adviser for the property. He or she plans and directs the purchase, development, and disposition of real estate on behalf of the business and investors. A real estate asset manager focuses on long-term strategic financial planning rather than on day-to-day operations of the property.
Management proposal
A description of the property, including the land and all improvements
A list of what maintenance will be required
Information about how maintenance records will be kept
Information regarding the accounting procedures the manager will use
A schedule of property inspections
Several proposed budgets – operating budget, capital improvement budget, stabilized budget
Information about the proposed management fee
management agreement
employment contract for a property manager. The owner is the principal and the property manager is the agent in this agreement, which creates a general agency between the parties. As such, the property manager owes fiduciary duties to the owner.
management agreement details
The beginning date of the contract Identification of the parties Property description Duration of the agreement Definition of manager responsibilities Definition of owner responsibilities Extent of authority Accounting responsibilities Insurance and risk management Reporting requirements Management fee Agreement Termination
What is the difference between a management proposal and a management agreement?
A management proposal is submitted to the owner for review before any formal agreement is made.
The management agreement is the employment contract for a property manager.
How do the owner and the property manager arrive at a management fee?
The fee is a negotiated item. It often is a base fee and/or a percentage of the collected rents.
What accounting skills are important for a property manager to have?
The manager must understand general accounting principles (GAP) and be able to prepare and interpret monthly and yearly reports.
What financial skills should a property manager have?
A manager must be knowledgeable in and be able to apply the principles of appraisal, finance, money markets, and depreciation techniques to their management of the property.
What must a property manager do when establishing a rental schedule?
Make a thorough analysis of comparable properties in the neighborhood.
What is a rent roll?
The rent roll of a property is a list of the number of rental units in a property, the length of each lease (expiration date), and the monthly income for each unit.
Owner’s goals
The property manager’s first responsibility is to realize the maximum profit on the property that is consistent with the owner’s instructions. To realize maximum profit, the property must run efficiently. The manager must maintain the highest occupancy rate possible through good marketing.
PMs should…..
Generate a useful budget
Define the parameters for maintenance
Make sure all maintenance operations run smoothly
Track income and expenses
Create an effective marketing plan that considers future plans
Send periodic reports to the owner
PM’s should have 3 kinds of budgets
Operating
Capital reserved
Stabilized
Operating budget
This annual budget includes the income and expenses for ongoing operations.
Capital reserve budget
plan to finance long-term outlays, such as for fixed assets like facilities and equipment. It includes variable expenses, for such things as remodeling and capital expenses, such as new equipment. Variable expenses are usually not predictable, but can become a property need at any time.
Stabilized budget
forecast of income and expenses that can be projected over a short period of time, usually five years.
How does preventive maintenance differ from corrective maintenance?
Preventive maintenance is a schedule of planned maintenance actions aimed at the prevention of breakdowns and failures, while corrective maintenance involves the repair or replacement of components which have already failed or broken down.
What kind of reports should a property manager be giving to the owner?
Monthly account statements
Delinquent accounts report
Detailed annual statement
planned unit development PUD
type of building development with a designed grouping of varied and compatible land uses, such as housing, recreation, commercial centers, and industrial parks, all within one contained development or subdivision. A PUD generally has a homeowners association to maintain the standards and make decisions about property improvements that would benefit all the homeowners.
List three skills needed by office building managers. (See screen 33 for other correct answers.)
Analyze the local demographics to attract tenants
Negotiate leases
Develop competitive rent schedules
Why is leasing in a retail property critical?
Leasing in a retail property is very critical because each of the retailers in a shopping center depends on the traffic that is generated by the other tenants in the center.
What tasks do managers of condos, coops and PUDs do that are different from other property managers?
They take care of the budgets and collect assessments, coordinate maintenance of the common areas, deal with landscaping and security issues, and enforce the regulations set forth by the association or board of directors.
What is a Certified Property Manager?
An IREM designation for an individual who meets a certain level of education and experience requirements.
To be a competent property manager, the individual must possess a number of important skills in several areas, including:
Supervision Accounting Building System Knowledge Landlord-Tenant Relations Lease Space Advertising Building codes and regulations Union labor Purchasing Financial matters Building construction Ecology Dealing with employees and tenants
a RENTAL space may be unintentionally vacant because
Rent is not right – too high or too low for a prospect Space not ready to rent Ineffective advertising Inattentive manager Poor resident-retention program Unappealing appearance or public areas No traffic or lookers High vacancy factor in the area
A critical task for a property manager is the maintenance
Routine maintenance
Preventive maintenance
Corrective maintenance
New construction
Several organizations offer training courses for property managers, including:
The Institute for Real Estate Management (IREM) offers both educational and professional programs in property management.
The educational institute of the Building Owners and Managers Association (BOMA) promotes the interests of the real estate industry through various programs.
