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49 Cards in this Set
- Front
- Back
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responsibilities of a property manager |
-achieve the objectives of the property owners |
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preserving the value of an investment property while generating income as an agent for the owner is accomplished by...
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-securing suitable tenants |
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possible sources of property management business...
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-corporate owners
-apartment buildings -owners of small rental -residential properties -homeowners' assocations -investment syndicates -trusts -owners of office buildings -elderly housing -resort housing -asset management services |
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a highly detailed plan that lays out the owner's objectives with the property, as well as what the property manager wants to accomplish and how, including all budgetary information
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management plan
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a contract bet5ween theowner of income property and a management firm or individual property manager that outlines the scope of the manager's authority
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management agreement
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management agreement should be in writing and include the following points....
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-description of the property
-time period the agreement will cover and provisions for termination -definition of management's responsibilities -statement of owner's purpose and responsibilities -extent of manager's authority as an agent -reporting frequency detail -compensation - management fee or other compensations; a negotiable percent or flat fee or both -allocation of costs - shoudl state which of the property manager's expenses such as office rent, office help, telephone, advertising and association fees will be paid by the manager -antitrust provisions - management fees cannot be standardized in the marketplace because standardization would be viewed as price-fixing -equal opportunity statement |
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one of the primary responsibilities of a property manager is maintaining financial reports...
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including operating budget, cash flow report, profit and loss statement, and budget comparison statement
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-gives an owner a sense of profit to expect during a certaing period of time
-should be based on anticipated revenues and expenses |
operating budget
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-a monthly statement that details the financia status of the property
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cash flow report
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-income column of the cash flow report includes...
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-gross rentals
-vending contracts -storage charges any losses from uncollected rental payments or evictions are deducted from the total gross revenues to give you total adjusted income |
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fixed expenses include...
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-employees' salaries
-real estate taxes and insurance premiums -utilities |
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variable expenses include...
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-repairs
-capital improvements -landscaping |
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formula for arriving at Cash Flow is....
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Gross rental income + other income - losses inclurred = total income
total inome - operating expenses = net operating income before debt service net operating income before debt service - debt service - reserves = cash flow |
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-statement prepared monthly, quarterly, semiannually, annually
-provides a general financial picture based on the monthly cash flow reports and does not include itemized information |
profit and loss statement
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formula for profit and loss statement
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gross receipts - operating expenses - total mortgage payment + mortgage loan principal = net profit
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statement that compares the actual cash results with the original budget
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budget comparison statement
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setting rental rates....
influenced primarily by supply and demand |
-must cover fixed charges and operating expenses as well as provide a fair return on the investment
-must consider the prevailing rates in comparable buildings -must consider the current level of vacancy in the property to be rented -high vacancy level may indicate poor management or undesirable property -a high occupancy level may indicate rents are too low |
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-rental rate for residential space is usually stated as the monthly rate per unit
-commercial leases are usually stated according to their annual or monthly rates per square foot |
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marketing
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-advertising - must comply with nondiscriminatory federal, state and local laws
-management activities - import to maintain good public relations -marketing costs - cost-benefit analysis identifies best advertising methods |
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selecting tenants
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-size of the space meets the tenant's requirements
-tenant has the ability to pay -tenant's business will be compatible with the building and with the other tenants -if tenant is likely to expand in the future, expansion space will be available -landlord must comply with applicable fair housing laws and ADA |
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collecting rents
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-select tenants carefully
-substantiate their ability to pay through their financial references -maintain a firm and consistent collection plan |
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maintaining good relations with tenants
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-keeping tenants satisfied minimizes turnover and expenses for the landlord
-good property manager will -use good communication systems to keep tenants informed -ensure that maintenance requests are attened to promptly -enforce all lease terms and building rules fairly -keep accurate records regarding rental payments and lease expirations |
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maintaining the property
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-property manager must balance the service requirements of the property with their costs
-physical integrity of the property must be protected |
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4 types of maintenance
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-preventative
-repair or corrective -routine -construction |
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type of maintenance that preserves the long-range value and physical integrity of the building
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preventative maintenance
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type of maintenance that involves the actual repairs that keep the building's equipment, utilities, and amenities functioning
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repair or corrective maintenance
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type of maintenance that includes such day-to-day duties as cleaning common areas, performing minor carpentry and plumbing adjustments, and providing regularly scheduled upkeep
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routine maintenance
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alterations to the interior of a building to meet the functional demands of the tenant
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tenant improvements (also called build-outs)
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Federal laws affecting property management
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-ADA
-Equal Credit Opportunity Act -Fair Housing Act |
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-managers should use the same lease application for every applicant
-requirements for credit reports must be equal -be consistent in evaluating applicants' income and debt and whether to rent to an applicant |
Equal Credit Opportunity Act
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-property managers must take care that their practices of attracting tenants do not violate fair housing laws
-blockbusting and steering are prohibited |
Fair Housing Act
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encouraging people to rent or to sell a property by claiming that the entry of a protected class of people will have a negative impact on property values
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blockbusting
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channeling of protected class members to certain buildings or neighborhoods
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steering
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property manager must evaluate the perils of any risk by deciding to...
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ACTOR
-avoid it by removing the source of the risk -control it by taking preventive measures -transfer it by taking out an insurance policy -retain it by insuring with a large deductible |
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security of tenants
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-recent court decisions held landlords and their agents responsible for physical harm inflicted on tenants by intruders
-property managers should evaluate measure to protect tenants from unauthorized entry to building and secure individual apartments -lease can have a crime-free provision that makes criminal activity a ground for eviction |
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types of insurance coverage
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-tenant's insurance
-fire and hanzard -flood -consequential loss, use and occupancy -liability -casualty -surety bonds multiperil policies |
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insurance a tenant gets to protect personal belongings
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tenant's insurance (renter's insurance)
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-coverage against direct loss or damage to property from a fire on the premises
-standard fire coverage can be extended to include other hazards such as windstorm, hail, smoke damage, or civil insurrection |
fire and hazard insurance
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-separate policy from home, rental, or buiding insurance policies
-covers damage caused by heavy rains, melting snow, failed, levees, etc |
flood insurance
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-covers the loss of revenue if the property cannot be used to produce income
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consequential loss, use and occupancy (also loss of rent or business interruption insurance)
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-covers contents and personal property when they are not physically located on the premises
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contents and personal property insurance
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-covers the risks an owner assumes whenever the public enters the building
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public liability insurance
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-protects employees whiel they work either under a state program or a private insurance policy
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workers' compensation
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-coverage against theft, burglary, vandalism, and machinery damage as well as health and accident insurance
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casualty
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-cover an owner against financial losses resulting from an employee's criminal acts or negligence while persoming assigned duties
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surety bonds
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-an insurance package that includes standard types of commercial coverage, such as fire, hazard, public liability, casulaty
-special coverage for terrorism, earthquakes, and floods is also available |
multiperil policies
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2 possible methods can be used to determine the amount of a claim under an insurance policy
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-depreciated actual or cash value
-current replacement cost |
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commercial policies include coinsurance claues that require the insured to carry fire coverage, usually in an amount equal to ____% of a building's replacement value
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80
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handling environment concerns
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-be aware of the possible environment hazards
-be able to respond to a variety of environmental problems -must provide proper disposal of waste -may have to provide facilities for recycling -provide lead-based paint disclosure forms -be able to handle air quality issues |
