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NY Real Estate > Property Management > Flashcards

Property Management Flashcards

1
Q

Property Management

A

The administration of residential, commercial and/or industrial real estate. Property management typically involves the managing of property that is owned by another party or entity. Property managers are typically paid a fee and/or a percentage of the rent brought in for the property while under management.
-acts as the owner’s fiduciary in the day-to-day sale and leasing of the property

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2
Q

When to use a Property Manager?

A

For any income producing property:

-condo, co-op, rental building, commercial, retail, industrial property, single family home, luxury high-rise

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3
Q

Functions of a Property Manager

A
  • Produce the greatest net return for the owner (best NOI for the property)
  • Protect and increase the owner’s investment
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4
Q

When is a license required?

A

A property manager is required to have a license id they are working on behalf of more than one property owner
-not required for a salary employee for one owner

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5
Q

Management Agreement

A

A contract between the owner of a property and someone who agrees to manage it.

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6
Q

The Management Agreement is a contract, which typically contains the following:

In writing and signed

A
  • Description of the property
  • Management authority
  • Length of agreement
  • Reporting
  • Management fees (3-20% of the rent roll)
  • Accounting responsibilities (collect all rents and hold in trust account for the owner. Funds cannot be comingled and should be kept in a SEPARATE ACCOUNT)
  • Requirements for insurance and risk management
  • Owner’s responsibilities and objectives
  • How and why the agreement can be terminated
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7
Q

Rent Roll

A

This document provides a list of all rents in the building and helps determine the total gross rent roll for the property
Listing of all of units in building
-An owner typically gives their sales agent a copy of the rent roll in order to understand what the Gross Rental Income is for the property
-The owner of a rental property will typically share the rent roll with the rental agent so they can gain a better understanding of comparables

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8
Q

Office Building Management Requirements for Property Managers

A
  • Keep vacancies to a minimum
  • Analyzed demographics to attract the proper tenants
  • Negotiate leases
  • Rent schedule
  • Market to certain professions to best utilize space
  • rearrange space to best meet tenant’s needs
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9
Q

Retail Management Requirements for Property Managers

A
  • Understand the needs and desires of tenants

- Maintain common areas

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10
Q

Residential Management Requirements for Property Managers

A
  • Tenant selection: credit checks, criminal background checks, previous landlord references, employment verification
  • Maintenance
  • repair
  • Tenant eviction
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11
Q

Residential Management

A

Requirements for Property Managers

  • Tenant selection: credit checks, criminal background checks, previous landlord references, employment verification
  • Maintenance
  • repair
  • Tenant eviction
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12
Q

Obligations of Property Managers to Owner

A
  • Goals must be the same with the property owner
  • Preventive maintenance (ex. replacing filter, tightening a bolt)
  • Corrective maintenance
  • Be aware of trends in the market, pricing, amenities, population growth, governmental issues, zoning issues
  • Provide periodic reports to the owner
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13
Q

Obligations of Property Managers to Owner

A
  • Goals must be the same with the property owner
  • Preventive maintenance (ex. replacing filter, tightening a bolt)
  • Corrective maintenance
  • Be aware of trends in the market, pricing, amenities, population growth, governmental issues, zoning issues
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14
Q

Preventative Maintenance

A

Keeping property and equipment in a good state of repair so as to minimize the need for more costly major repair work or replacement

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15
Q

Property Manager

A

An individual or company responsible for the day-to-day functioning of a piece of real estate.
-strives to produce greatest net return for owner

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16
Q

Resident Manager

A

A manager of a property who lives on-site.

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17
Q

Property Management Report

A

An accounting report issued periodically by the property manager to the owner outlining all income and expenditures for that accounting period.

18
Q

Properties that typically require management services

A

condos, coops, apts, single family residences, mobile home parks, office buildings, shopping malls, industrial parks, farms

19
Q

Institute of Real Estate Management (IREM)

A

offers property management courses

20
Q

Net Operating Income (NOI)

A

Gross Income - Operating Expense = NOI

21
Q

Budget

A

Gross Income - Operating Expense = NOI

  • -> Operating Income: common charges, storage, other misc (like application fees), commercial laundry income, water and sewer billbacks
  • -> Operating Expenses: Real estate taxes, labor and related
  • -> Utilities & Services: electric, gas, water
  • -> Total expenses
  • -> Operating Income
  • Typically the management fee in a condo building is a fixed amount
  • In a rental property, the management fee will ne a percentage of the income collected
22
Q

Capital Expense (CAPEX)

A

Expenditures creating future value. Incurred when a property owner spends money to upgrade a building in an effort to add value and/or extend the useful life of the building

23
Q

Marketing Plan:

Plan developed by a property manager or broker that describes how rents will be maximized

A

The Market:

  • Market activity
  • Vacancy rates
  • Competition
  • Environmental
  • Demographics
  • Technology trends
  • Supporting businesses, schools and infrastructure
  • Zoning
  • Governmental restrictions
  • Forecasting
  • Tenant analysis
  • Tenant turnover

Property:

  • Building
  • Units price
  • Property Value
  • Competition
  • Sales Force (advertising, budget etc)

Owner’s Objectives:

  • Mission Statement
  • Marketing
  • Target Area

Financial Statement:

  • Marketing program finances
  • Cost advantages
  • Proposed budgets
  • Contingency Plan

Management Proposal:

  • Description of property
  • Contract period
  • Management company’s responsibilities
  • Timely reporting to owner
  • Qualifications of the Management Company
  • Management reports samples
24
Q

Marketing Plan:

Plan developed by a property manager or broker that describes how rents will be maximized

A

The Market:

  • Market activity
  • Vacancy rates
  • Competition
  • Environmental
  • Demographics
  • Technology trends
  • Supporting businesses, schools and infrastructure
  • Zoning
  • Governmental restrictions
  • Forecasting
  • Tenant analysis
  • Tenant turnover

Property:

  • Building
  • Units price
  • Property Value
  • Competition
  • Sales Force
25
Q

Reporting

A

Monthly Report:

  • Accounts Receivable Report
  • Accounts Payable Report (shows what bills are to be paid. Includes: security deposits, vendors, copies of paid bills)
  • Budget analysis
  • Monthly variance report
26
Q

Violation & Termination

A
  • if property manager has a friend who wants to move in and wants to give him a better rate
  • payment or kickback
  • management can set how to terminate
27
Q

Eviction

A

A legal proceeding by a lessor landlord to recover possession of real property.

28
Q

Fiduciary

A

A person who on behalf of or for the benefit of another transacts business or handles money or property not the person’s own; such relationship implies great confidence and trust.

29
Q

General Agent

A

Someone authorized to transact every kind of business for the principal.

30
Q

Lessee

A

A person to whom property is rented under a lease.

31
Q

Lessor

A

One who rents property to another under a lease.

32
Q

Management Proposal

A

A document that sets forth the duties of the manager when employed by the owner.

33
Q

Operating Budget

A

An amount of money set aside by the owner for a specific period for the property manager to manage the property effectively.

34
Q

Planned Development Unit

A

A highly designed residential project that features relatively dense clusters of houses, which are usually surrounded by areas of commonly owned open space maintained by a nonprofit community association.

35
Q

Risk Management

A

Controlling and limiting risk in property ownership.

36
Q

Stabilized Budget

A

A forecast of income and expenses for a property, typically over a three to five year period.

37
Q

Variable Expense

A

Property expenditures that vary depending of the operations of the property.

38
Q

Corrective Maintenance

A

A maintenance task performed to identify, isolate, and rectify a problem with a property so that the property can be restored to an acceptable condition

39
Q

Capital Reserve Budget

A

Money set aside by a property owner for long-term capital expenditures to a property

40
Q

Skills required of a Property Manager

A

Supervising others
Handling landlord-tenant relations
Understanding general accounting principles
Understanding lease agreements with tenants

41
Q

In most rental buildings, this is commonly found to be the largest expense for the building?

A

Real Estate Taxes

42
Q

Which of the following expenses is typically related to the age of the building?

A

Building repairs

NY Real Estate (21 decks)

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