Real Estate Principles and Practices Chapter 15 Property Management 2010 by South-Western, Cengage Learning Key Terms Certified property manager (CPA) Industrial parks Management budget Management contract Neighborhood shopping centers Office parks Property management Regional centers Resident manager Residential property management Strip centers 2010 by South-Western, Cengage Learning Overview To manage real estate of another requires a real estate license Property manager: produces the highest possible net return for an investor Properties that require management Duties and obligations of the property manager 2010 by South-Western, Cengage Learning The Need for Management Professional trade organizations IREM: Institute of Real Estate Management CPM: certified property manager APM: accredited property manager ACO: accredited management organization BOMA: Building Owners and Managers Association RPA: Real property administrator 2010 by South-Western, Cengage Learning The Need for Management Management includes: Securing and retaining tenants Collecting rent Advertising Providing cleaning and maintenance services Keeping financial records and accounts 2010 by South-Western, Cengage Learning The Need for Management For fewer vacancies and collection loss: Investigate tenants credit record Verify employment Check references Proper maintenance Attend to complaints 2010 by South-Western, Cengage Learning The Need for Management Fair housing laws Condominium management Resident manager: Resident manager: on- site Living unit plus salary 2010 by South-Western, Cengage Learning The Need for Management Consider needs of tenant Supervision of staff for operation & maintenance Office Parks: Office Parks: options for small and large tenant Priced per square foot 2010 by South-Western, Cengage Learning The Need for Management Shopping Centers: Strip centers Neighborhood shopping centers Regional centers Types of tenants best suited to the center Competition 2010 by South-Western, Cengage Learning The Need for Management Rent in shopping malls: flat fee + percent based on volume Title III of the Americans with Disabilities Act of 1992 Public establishment must be accessible to persons with disabilities 2010 by South-Western, Cengage Learning The Need for Management Industrial Parks: Located away from core of the city Manager usually the same firm that sells and leases Long term leases on net basis Environmental concerns 2010 by South-Western, Cengage Learning The Need for Management Analyze farm to evaluate production potential Lease terms: share crop, cash rent, guaranteed bushel, or net lease Marketing techniques Production records and financial statements 2010 by South-Western, Cengage Learning Management Contracts Names of parties Property description Duration Terms Management fees Authority vested in agent Operating expense budget Monthly accounting Purpose and goals 2010 by South-Western, Cengage Learning The Management Plan Interior and exterior inspection Owners objectives Current market conditions, competition, and expected rents 2010 by South-Western, Cengage Learning The Management Plan 1. Assign a manager 2. Supervise services performed 3. Leasehold and capital improvements 4. Tenant relations and lease renewals 5. Collect rent, pay bills, prepare operating statements 2010 by South-Western, Cengage Learning The Management Plan 6. Annual budget 7. Maintenance personnel hour accessibility for emergencies 9. Mechanical systems: service contracts or in-house maintenance programs 2010 by South-Western, Cengage Learning Functions of the Manager Secure and maintain tenants Preserve value Care and maintenance Financial accounting and records 2010 by South-Western, Cengage Learning Renting the Space Market the space to yield the highest return High occupancy low turnover Adjust rental rates Commercial areas Space for a growing tenant Concessions to large anchor tenants 2010 by South-Western, Cengage Learning Communications Good relationship with tenants Prompt servicing of repairs in tenants unit 2010 by South-Western, Cengage Learning Advertising Planned in advance Provided for in annual budget Incentives Type of ad helps secure the right tenants May not be discriminatory 2010 by South-Western, Cengage Learning Employees Management is accountable for actions of personnel Training and supervision May contract out the work 2010 by South-Western, Cengage Learning Maintenance and Cleaning Services Preventive: Preventive: mechanical equipment Corrective: Corrective: repair malfunctioning equipment Ordinary: Ordinary: regular routine Construction: Construction: new space or renovation 2010 by South-Western, Cengage Learning Security and Safety Sufficient lighting and monitors New locks and keys Emergency procedures Illegal drug activity Smoke detectors 2010 by South-Western, Cengage Learning The Budget Annual operating statements: itemize income and expenses Baseline to measure the managers performance Management budget 1. Expenses and maintenance service Supplies Painting and decorating Salaries Repairs 2010 by South-Western, Cengage Learning The Budget 2. Utility expenses Heating fuel Electricity Gas Water 3. Fixed charges Real estate taxes Insurance