Unit 23

Question 1

Management Plan

Answer 1

outlines the details of the owners objectives with the property, as well as what the property manger expects to accomplish and how, including all financial objectives.
- owners objectives
- the regional and neighborhood market
- the specific property
occupancy, absorption rates, and new starts are critical indicators.

Question 2

Mangement agreement

Answer 2

contract creating a general agency relationship between the owner and the property manager. It defines duties and responsibilities of each party. It is guide in operating the property. A reference in case of future disputes.
Property manager- general agent

Question 3

Property Manager Must…

Answer 3

• achieve the goals of the owner
• generate income for the owner
• preserve and increase the value of the property.

Question 4

Property manager in PA

Answer 4

Must be a licensed real estate broker or real estate licensee affiliated with a property management company or brokerage firm that has a property management department. The property manage may be an employee of the owner of the real estate.

duties:
- making financial reports
- renting property
- selecting tenants
- maintaining good relations with tenants
- marketing
- maintaining the property

Question 5

Financial Report

Answer 5

Includes an:
operating budget- Projection of income and expense of operation of a property over a one year period.

cash flow report- Monthly statement that details the financial status of the property. Current financial status of the property
Gross rental income + other income - loss incurred= Total income
Total income - operating expenses= Net operating income before debt service
Net operating income before debt service - debt service - reserves= cash

profit and loss statement- A financial picture of the revenues and expenses used to determine weather the business has made money or lost any.
Gross receipts - operating expenses - total mortgage payment + mortgage loan principal = net profit

budget comparison statement- Compares the actual results with the original budget often giving a percentage or a numerical variance of actual v. projected income and expenses. Helps identify trends

Question 6

Four Types of Maintenance

Answer 6

Preventative Maintenance- regularly scheduled activities such as painting and seasonal servicing of appliances and systems.

Repair or corrective maintenance- actual repairs that keep the building’s equipment, utilities, and amenities functioning. Repairing a toilet, fixing a leaking faucet, ro a broken air conditioning.

Routine maintenance- day to day duties such as cleaning common areas, landscaping.

Construction

Question 7

Risk Management Techniques

Answer 7

• Control it by installing preventative measures
• Avoid it by removing the source of risk
• retain it to a certain extent by insuring with a large deductible
• Transfer it by taking out an insurance policy

Question 8

Errors and Omissions Insurance

Answer 8

Protects against any financial management mistakes.

Question 9

Multiperil Insurance Policy

Answer 9

For commercial properties. Insurance package includes standard typed of commercial coverage such as fire, hazard, public liability, and casualty. Special coverage for terrorism, earthquakes, and floods. (flood insurance is always a separate policy)

Question 10

Tenant Improvements

Answer 10

Construction alterations to the interior of the building to meet a tenants particular space needs.