Chapter 17Property Management

A property manager is also a people manager and relationships are important. This manager may be checking a property’s plans for adequate fire planning, for upgrading the HVAC system, or for a remodeling project.

2©2013 Kaplan, Inc.

17 Property Management

• Learning objectives– Identify the basic elements of a management

agreement– Describe a property manager’s functions– Explain the role of environmental regulations and the

Americans with Disabilities Act in the property manager’s job

– Distinguish the various types of risk management

3©2013 Kaplan, Inc.

17 Property Management

In Georgia, a property manager must hold a real estate license

Property Manager’s Responsibilities:• Achieve objectives of the property owners• Generate income for the owners• Preserve or increase the value of the investment

property

4©2013 Kaplan, Inc.

17 Property Management

Property managers generally work for a property management company. As such, they:

• Search for new opportunities• Specialized in property types

5©2013 Kaplan, Inc.

17 Property Management

New Opportunities• Community Association Management• Housing for elderly• Manufactured housing• Resort housing• Concierge services• Asset Management• Corporate properties

• Leasing Agents

6©2013 Kaplan, Inc.

17 Property Management

Professional Associations• BOMA & BOMI• CAI• IREM• ICSC• NAA• NARPM• NAHB

7©2013 Kaplan, Inc.

17 Property Management

• Elements of a management agreement in Georgia:– Identify the property

– Terms and conditions under which property will be managed

– Terms and conditions under which property broker will remit property income and statements to the owner

– Specify payments of property-related expense

– Specify amount of fee or commission

– Specify where security deposits, prepaid rents, or commissions will be

– Effective date of agreement and termination

– Terms and conditions for termination of agreement

– Signatures of broker and owner or their authorized agent

8©2013 Kaplan, Inc.

17 Property Management• Manager’s responsibilities

– Financial reports• Operating budget• Cash flow report, Income and expenses, profit and loss• Budget comparison

– Renting the property

– Marketing

– Selecting tenants

– Collecting rents

– Maintaining good tenant relations

– Maintaining the property – prevention and correction

9©2013 Kaplan, Inc.

17 Property Management

• Manager’s responsibilities– Maintaining the property

• Preventive• Repair or corrective• Routine• Construction• Tenant improvements (commercial or industrial)

10©2013 Kaplan, Inc.

17 Property Management

• Federal laws affecting property management– The Americans with Disabilities Act– Equal Credit Opportunity Act (ECOA)– Fair Housing Act

11©2013 Kaplan, Inc.

17 Property Management

12©2013 Kaplan, Inc.

17 Property Management

• Risk management– Tenant safety and security– Risk management techniques

• Avoid risk by removing the source• Control risk by preparing for the emergency before it happens• Transfer risk to another party – insurance• Retain risk by deciding its occurence is small

13©2013 Kaplan, Inc.

17 Property Management• Risk management

– Tenant Insurance • protects tenant’s personal property against loss

– Commercial Insurance (apartments, shopping centers, offices, warehouse, etc.

• Fire and hazard• Flood• Consequential loss, use, and occupancy• Contents and personal property• Liability• Casualty• Surety bonds• Multiperil policies

14©2013 Kaplan, Inc.

17 Property Management• Risk management

– Claims– Handling environmental concerns

15©2013 Kaplan, Inc.

17 Property Management

• Georgia Community Association Management (CAM)– Definition of CAM– CAM structure and powers– Fidelity bond or insurance for CAM