Lecture 4 (managing leases)
1 like383 views
The document discusses the role of a property manager in managing various aspects of commercial leases and properties including negotiating leases, maintaining good relations with tenants, managing reports and insurance, and administering the property management office. It covers topics such as qualifying tenants, negotiating lease terms, handling maintenance requests, collecting rent, renewing or terminating leases, producing financial reports, and determining management expenses and fees. The overall goal of the property manager according to the document is to minimize vacancy rates, reduce tenant turnover, and maximize profitability of the commercial properties.
Lecture 4 (managing leases)
- 1. 6/30/2015 1 MANAGING LEASES Siti Hasniza Binti Rosman Universiti Teknologi MARA (UiTM) TABLE OF CONTENT • Managing leases • Managing leases negotiations • Managing tenant relations • Managing reports and insurance • Managing office administration
- 2. 6/30/2015 2 Managing Leases Negotiations • Discuss the role the PM plays in negotiating lease. The processes are: • Qualifying a tenant • Visitor registration • Special needs • Lease application • Evaluation of data • Identity • Fair housing • Rental history • Financial status Managing Leases Negotiations • Negotiating the terms • Controlling the process • Cooperating brokers • Role of attorneys • Security deposits • Concessions • When to grant concessions • Rent schedules and rebates • Free rent • Length of lease period • Tenant alternatives
- 3. 6/30/2015 3 Managing Leases Negotiations • Signing the agreement • Prospect hesitancy • Is this the best space available at the price? • Do the concessions meet my needs? • Should I act immediately? • Closing techniques • Follow up Managing tenant relations • The success of PMs greatly depends on their ability to maintain good relations with tenants. • Dissatisfied tenants will lead to: • High tenant turnover • Space vacancy • Increase cost of promotion and marketing • Good communication system is vital for the effective PM.
- 4. 6/30/2015 4 Managing tenant relations • Establishing landlord-tenant relationship • Move-in inspections • Servicing the lease • Clear understanding of lease terms • Manager’s personal efforts • Meeting with tenant • Newsletters Managing tenant relations • Handling maintenance requests • Requests in writing • Speedy response • Excessive demands • Role of maintenance personnel • Commercial and industrial variations
- 5. 6/30/2015 5 Managing tenant relations • Rent collection • When to pay • Encourage prompts payments • Late fees • Billing notices Managing tenant relations • Lease renewals • The value of stable tenants • Bargaining factors • The length of the new lease term • The extent of repairs, alterations or redecorating to be done • The amount of rent to be paid • Concessions • Rental rate • Proper notice • Competition
- 6. 6/30/2015 6 Managing tenant relations • Rental increase • Fact of life • Avoid tenant protest • Increase services • Terminating the tenancy • Required notice • Exit interview (feedback form before moving out) Managing tenant relations • Rental increase • Fact of life • Avoid tenant protest • Increase services • Terminating the tenancy • Required notice • Exit interview (feedback form before moving out) • Fair housing compliance (giving notice termination upon expiring lease term) • Inspection of the premises • Return of the security deposit • Retention for damages • Last month’s rent
- 7. 6/30/2015 7 Managing tenant relations • Terminating the tenancy in court • Reasons for eviction (breach of contract) • Notice before eviction suit • Eviction suit (process of eviction and repossession of property) • Process of eviction suit must be served on the tenants • Actual removal (e.g. secure court order until the tenant physically remove from the property) Managing report and insurance • Operating reports • Financial report • Budget comparison statement • Income and expense report • Income • Vacant rental units • Support space (storage, offices) • Vacant space under major repair • Expenses • Wages paid to building personnel • General operating expenses • Maintenance expenses • Administrative costs • Profit & loss account • Operating budget
- 8. 6/30/2015 8 Managing report and insurance • Estimate conservatively • Prepare explanation • Examine discrepancies • Allow for an evaluation of management of skills • Cash flow statement for tax purpose • Determining profitability • Tax records • Risk management and insurance • Type of insurance Managing the office administration • Establishing the management office • Location and layout • Office design • Files • Leases • Correspondence • Work order bids • Financial files • Permanent files • Equipment
- 9. 6/30/2015 9 Managing the office administration • Computers and PM • Hardware & software • Staffing the management office • PM executive • Property supervisor (field manager) • On-site manager and building personnel • Purchasing agent • Office manager (controller) • Cashier –bookkeeper • Clerical personnel • Branch officers Managing the office administration • Determining management expenses • Direct cost • Indirect cost • Calculating the management fees • Per-unit cost method • Adjustment to per unit fee • Percentage rate • Management pricing worksheet
- 10. 6/30/2015 10 References • Evans, M, (2007), Opportunities in Property Management Careers, McGrawHill. • Kyle, R, (2000), Property Management, 6th Edition, Dearborn.