Real Estate Principles, 11th Edition By Charles F. Floyd and Marcus T. Allen

Property and Asset Management Chapter 10 Property and Asset Management

Property Management The role of the property manager is to manage the property with the objective of securing the highest net return for the property owner over the property’s useful life

Management Agreement Establishes the relationship between the owner and the manager. The agreement should address the powers of the manager relating to Rent setting Lease signings Rent collections Power to spend money on behalf of the property Authority to hire, fire, and supervise personnel

Management Agreement, cont. The agreement should specify the compensation to the manager Percentage of gross income Fixed amount Fee schedule for certain tasks Hourly rate

Functions of a Property Manager Administration Marketing and advertising Signs on the property Neighborhood flyers Bulletin boards Internet sites Listing with leasing companies Newspaper advertisements “Open house” days or weekends

Functions of a Property Manager, cont. Tenant selection Compliance with fair housing laws Put more emphasis on tenant’s prior, instead of current, landlord

Functions of a Property Manager, cont. Lease negotiations Amount of security deposit Day rent is due Day rent is considered late Nature of tenancy (stated period, period-to-period, etc.) Is the lease renewable?

Functions of a Property Manager, cont. Lease negotiations, cont. Tenant maintenance responsibilities How many people may occupy the premises? Who is responsible for insurance? Assigning and subletting Local disclosure laws Are pets allowed?

Functions of a Property Manager, cont. Move-in inspections Documentation of condition of property at start of lease Critical for claims against security deposit Property maintenance Maintenance to conserve the property Rehabilitation and renovation to compete in changing market

Functions of a Property Manager, cont. Rent Collection Handle eviction process if rent is unpaid Move-out Inspection Will go smoothly if there is a well documented move-in inspection

Functions of a Property Manager, cont. Security deposit returns Compliance with local laws See Close-Up “Green Acres Shopping Center – A Property Management Success Story”

The Role & Functions of an Asset Manager The functions of an asset manager include: Facilities management Acquisition of additional space for the firm’s operations Financing decisions relating to needed space Disposition of corporate real estate assets