PROPERTY MANAGER AND OWNER RELATIONSHIPS

Question 1

PARTIES TO A MANAGEMENT AGREEMENT (3)

Answer 1

1. PRINCIPAL-OWNER-CLIENT
2. SPECIAL AGENT-PMIC-BIC-AGENT
3. GENERAL AGENT-PM

Question 2

LAW OF AGENCY

Answer 2

COVERS RELATIONSHIP BETWEEN 3 PARTIES

Question 3

ESSENTIAL ELEMENTS OF MANAGEMENT AGREEMENTS (4)

Answer 3

1. IDENTIFICATION OF THE PARTIES
2. CONTRACT PERIOD
   *DEFINITE START AND END DATE
3. MANAGER’S RESPONSIBIITIES
   I) MONTHLY REPORT’S AND DISBURSEMENTS
   II) POWERS FOR RENTING, OPERATING, AND MANAGING
4. OWNERS RESPONSIBILITIES
   *MAINTAIN INSURANCE

Question 4

FIDUCIARY RESPONSIBILITIES (6)

Answer 4

1. OBEDIENCE
2. LOYALTY
3. DISCLOSURE
4. CARE, KNOWLEDGE, AND DUE DILIGENCE
5. ACCOUNTING
6. CONFIDENTIALITY

Question 5

MANAGEMENT PLANNING (3)

Answer 5

1. ECONOMIC FACTORS
2. ANALYSIS OF OWNER’S OBJECTIVES
3. PREPARATION OF MANAGEMENT PLAN

Question 6

ECONOMIC FACTORS (5)

Answer 6

1. NEIGHBORHOOD AND REGIONAL MARKET ANALYSES
2. RENTAL PRICE
3. PROPERTY ANALYSIS/APPRAISAL
4. EVALUATION OF COMPARABLES
5. MARKET VALUE

Question 7

NEIGHBORHOOD MARKET ANALYSIS

Answer 7

• WILL INCLUDE ALL INFORMATION PERTAINING TO THE RENTALS IN THE NEIGHBORHOOD
• SHOULD ASSESS HIGHEST AND BEST USE FOR THE PROPERTY
• FACTORS TO CONSIDER ARE LAND USAGE, SUPPLY AND DEMAND, NEIGHBORHOOD AMENITIES AND FACILITIES

Question 8

REGIONAL MARKEY ANALYSIS

Answer 8

• WILL INCLUDE ALL DEMOGRAPHIC AND ECONOMIC INFORMATION
• SHOULD INCLUDE POPULATION, EMPLOYMENT OPPORTUNITIES, INCOME POTENTIAL, AND FUTURE KNOWN PLANS
• SHOULD BE UPDATED YEARLY

Question 9

RENTAL PRICE

Answer 9

FINAL RESULTS OF REGIONAL AND NEIGHBORHOOD MARKET ANALYSIS

Question 10

PROPERTY ANALYSIS/APPRAISAL CONSIDERATIONS (8)

Answer 10

1. POTENTIAL RENTAL INCOME
2. OPERATING COSTS
3. LEASES
4. QUANTITY AND QUALITY OF SPACE
5. PHYSICAL CONDITION OF INTERIOR AND EXTERIOR PREMISES
6. EQUIPMENT
7. HEALTH AND SAFETY HAZARDS
8. COMPETITION

Question 11

PREPARATION OF MANAGEMENT PLAN (5)

Answer 11

1. PURPOSE
2. OPERATING BUDGET
3. FIVE-YEAR FORECAST
4. COMPARATIVE INCOME AND EXPENSE ANALYSIS
5. POLICIES AND PROCEDURES

Question 12

OPERATING BUDGET (9)

Answer 12

1. ESTABLISH OPTIMUM RENTS
2. DETERMINE GROSS ANNUAL SCHEDULED RENTAL INCOME
3. ADJUST TO REFLECT ANTICIPATED MARKET TRENDS
4. FISCAL YEAR
5. CALCULATE YEARLY OPERATING COSTS
6. ESTABLISH NECESSARY RESERVE FUNDS
7. DEBT SERVICE
8. REVIEW CASH FLOW
9. NET OPERATING INCOME

Question 13

MARKET TREND ADJUSTMENTS

Answer 13

• UNTIL FACTUAL DATA IS KNOWN, PM SHOULD ASSUME 5% VACANCY

- PM SHOULD REDUCE THE POTENTIAL GPI BY THE VACANCY RATE EVERY FISCAL YEAR

Question 14

CALCULATING YEARLY OPERATING COSTS

Answer 14

1. ESTABLISH NECESSARY RESERVE FUNDS
2. DEBT SERVICE
3. REVIEW CASH FLOW (NOI)

Question 15

RESERVE FUNDS

Answer 15

TYPICALLY 10-15% OF THE TOTAL COST SHOULD BE MAINTAINED IN RESERVE FOR EMERGENCIES AND UNFORESEEN ISSUES

Question 16

DEBT SERVICE

Answer 16

CASH REQUIRED OVER A GIVEN PERIOD FOR THE REPAYMENT OF INTEREST AND PRINCIPAL ON A DEBT

Question 17

CASH FLOW (NOI)

Answer 17

MONIES LEFT OVER AFTER COLLECTING ALL RENTS AND PAYING THE BILLS