Property Management Information
Real estate brokerage also engages in some type of property management apart from buying and selling.
Real estate licensee helps the income property owners in finding a suitable tenant for their invested property.
In some cases Real estate agents also act as a property manager .
Property manager is a person who acts on behalf of the owner to manage their income property.
It can be a real estate agent or any other person the owner appoints.
But for this purpose there should be a valid agreement .
An agency agreement between the ownwer and the real estate firm is called the Property Management Agreement. This agreement explicitly states the duties and responsibilities of the Property Manager like seeking tenant,advertise the property, collect rent,disburse expenses, take preventive measure to maintain the property ,take corrective actions for the damaged property and supervise housekeeping and maintenance. The agreement also states property manager compensation. The type of agreement depends on the type of property to be managed.
Types of Property-
There are 4 kinds of property for rental incomes :
Each type of property requires expertise and the property manager should specialize in that type. Residential property includes single family homes,apartment buildings, condominiums and cooperatives.Generally owners of single family homes sometimes appoints a property manager, but condos and apartment buildings complexes have a dedicated property managers.
The residential properties have a high tenant turnover rate like apartments lease lasts six months to a year as compared to industrial which lasts for a longer period like more than 10 years.Office lease are also longer that residential lease and the rent is based square foot with esclation clause. Offices also requires high maintenace in the common areas like public restrooms.So a property manager should have a good supervision quality. Retails lease are also longer.While renting the retail space the property manager should act intelligently and wisely and rent out in such a way that all the businesse supports each other and more customers gets attracted to the businesses. Industrial lease are the most longest. A property manger should analyse what type of industry it is,whether the facilties surrounding will be suitable for that buisness,will there will be need for more expansion in next few years.
To give property on rent a lease is signed between the owner and the tenant.
Lease:A lease is a valid written contract between the owner and the tenant where the owner promises certain possesory rights to the tenant, in the property leased, for a fixed duration of time and in return the tenant promises some consideration,in this case money.
The lease should be signed by the owner if it is one year or longer. Also if the lease is longer than one year it need to be notarized.
The tenant should also sign it but it is not compulsory . The security deposit ,possession of the property and the rent paid by the tenant is the indication that the he/she has accepted the lease. Lease generally have expiry date and the property manager should act before it get expired.
There are five different types of lease fixed leases, graduated leases, net leases, percentage leases, and ground leases.
Fixed lease are also called Flat lease or Gross lease . In fixed lease the tenant pay the rent and utility(electricity bill) while the owner pays the operating expenses like property taxes ,repairs, maintenance, property insurance.
Graduated lease is also called index lease .This lease have an esclation clause- the rent increases after a duration based on the index. In this type of lease the tenant pay a fixed rent and after a duration like one year the rent increases based on the index like 3%.
Percentage lease is very popular in retail businesses. In this type the tenant pays a fixed rent plus a percentage of their income .
Net lease- In net lease the tenant pays the rent plus all the other operating expenses like property taxes,utilities,repairs, hazard insurances.
Ground lease is a very long term lease , like it can be 99 years. In this type of lease the tenant rents the land and constructs its own building on it.
A property manager should have the best knowledge of all type of lease.
Termination of lease: Lease can be terminated by
What ever the situation is the property manager should find a suitable solution and avoid any circumastances,if he/she can, that leads to termination of the lease. The property manager should give each and every report to the owner.And wait for the owner's approval to act for those situations which are out of his power.
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