OVERVIEW Property management is the administrative operation and maintenance of property according to the objectives of ownership. Property management brings knowledge, experience, good judgement, and efficiency to the administration of income. producing/revenue property. One objective of property management is to attain the maximum value of the building over the economic life of the property. This is done by achieving maximum revenue with minimum costs, and ensuring that the property value is not placed in jeopardy. Property management involves maintaining the balance between responsibility and service to the owners and tenants. WHAT IS PROPERTY MANAGEMENT? Property management is the administrative operation and maintenance of property. According to the objectives of ownership. The term property management conjures up a vision of an individual who cuts grass and plows snow in season, and who acts as a Mister Fix-it, sometimes coordinating repairs done by others. Another popular images is that of chief of operations in a large commercial complex, the senior person who oversees the operation of the physical plant, the electrical, plumbing, heating, air conditioning, elevator, and other systems. While property management encompass the work envisaged by both of these images, this will demonstrate that a property manager also requires a knowledge of marketing and leasing techniques. Also need is an understanding of property finance and issues, which can jeopardize its stability, personal and corporate taxation rules, which affect the owner, as well as basic property valuation techniques. In addition, a property manager is required to take a longer-range view. Not only is the function performed over many months, but also many management plans designed to resolve serious property issues require a year or more to fully implement. In addition, the property owner will have a long-range perspective, which necessities that, the manger plan in those terms as well. In short, a property manager must be able to provide a wide range of service to a property owner, all of which are designed to maximize the owner's benefit from the property over time. A professional property manager is very much a financial advisor specializing in property investments. THE COMPLEXITY OF PROPERTY MANAGEMENT The traditional image of property management being the collection of rent, the eviction of tenants, and the repair of leaking roofs, is out-dated. Today, property management is a multi-faceted profession. The constant reconciliation between the often-conflicting objectives of owners and tenants makes property management complex. Specialized educational programs offered by professional institutions like REIC and BOMA have arisen to train property mangers to deal with the complex nature of their profession. Further evidence of the increasing complexity and sophistication is the fact that the provincial government has recognized the need for legislation to control real estate matters including property management. Today, there are many provincial statues affecting real estate e.g. Real Estate and Business Brokers Act, Tenant Protection Act, Condominium Act, Co-operative Corporation Act, etc. SPECIALIZATION WITHIN PROPERTY MANAGEMENT Since there are different types of properties and ownership, management companies tend to specialize. Properties can be grouped according to their unique problems and specific needs (e.g. residential or medical), and according to size (e.g. small or large), with systems and procedures developed to handle them. Thus we see a broad range of property management firms from single specialty companies to full service companies with divisions developed to handle the entire spectrum of management. OBJECTIVES Property managers must strive to manage a property in such a way that, while keeping the landlord's interest at heart, maximum enjoyment for the tenants is created so that they are willing to pay maximum rent for the use of the property. In this context, the main objective of a property manager is to assist a landlord in achieving his/her investment objectives by providing quality professional property management. This objective is achieved by: - obtaining or maintaining maximum revenue from the property under the guidelines provided by the landlord and subject to any applicable government regulations:
- keeping the operating expenses at a minimum:
- satisfying the landlord's and the tenant's non-financial objectifies (where possible): and
- maintaining the positive characteristics of the property.
The above can be met with good organization and control of all administrative functions. RESPONSIBILITIES As a property manager, primary responsibility is owed to the landlord and secondary responsibility to the tenant. Within the terms of the lease, both the landlord and the tenant will seek and expect certain rights and benefits. The relationships which the property manager has with the Landlord and tenants are crucial in forming the expectations of both parties to he lease. LANDLORD AND PROPERTY MANAGER RELATIONSHIP The property manager is responsible to the Landlord either as an employee or as a professional manager under contract. He/she will implement the landlord's policy which will often be based on his/her recommendations. For this reason, it is important that the landlord be kept informed on everything that may affect the investment. DUTIES OF A PROPERTY MANAGER- Physical and Building Operations
- Financial
- Marketing
- Legal
Compliance with the Tenant Protection Act, The Co-operative Corporations Act, the Commercial Tenancies Act, and the Condominium Act as applicable leasing and contract administration. WHY DO PEOPLE RENT?- Renters by choice
- Couples without children
- Older couples
- Senior citizens
- Renters of necessity
- Couples with Children
- Single Parents
- Transients
- Singles
- Students
WHY OWNERS LEASE THEIR RESIDENCE!- The property was purchased by the owner as a revenue producing investment.
- The property was purchased in a good market as a future retirement home.
- The property is inherited as part of an estate, and the owner may wish to lease it while waiting for an improved market to sell it, or keep it for his/her own retirement.
- The owner has transferred to another city, but wishes to retain the house and reoccupy it upon their return or retirement.
THE AGREEMENT When managing any property for a fee, it is essential that there be some form of written contract between the landlord and the property manager or management company. Without such a document the manager has no mandate. This document is usually referred to as a management agreement and may be in variety of formats and contain any number of clauses. However, to be valid, a management agreement must contain at least the following four essential elements: - The names of the parties to the agreement.
- The term of the agreement, the commencement date, and any renewal provisions.
- A description of the property to be managed.
- A clear statement of the services that will be provided and the fees to be paid.
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