Property Management Vocabulary

Vocabulary flashcards related to property management concepts and terms.

Property Management

Involves leasing, managing, marketing, and maintaining real estate owned by others, usually rental property.

Lender Compliance Requirement

A requirement by many mortgage lenders that investors hire a professional to manage their properties to ensure rent collection and mortgage repayment.

Role of the Property Manager

Complex; requires a manager to wear many hats in one day, such as a market analyst, salesperson, accountant, advertiser, and maintenance person.

Three Principal Responsibilities of the Property Manager

Achieve the objectives of the property owners, generate income for the owners, and preserve and/or increase the value of the investment property.

Property Management Companies

Companies that manage properties for a number of owners under management agreements.

Relationship between Property Manager and Owner

A general agency relationship exists with the property owner, or they can be an independent contractor.

Possible Clients of Property Management Business

Include corporate owners, apartment buildings, owners of small rental residential properties, HOAs, investment syndicates, trusts, and owners of office buildings.

Good Reputation

A manager who consistently demonstrates the ability to increase property income while meeting legal requirements and enhancing the property's attractiveness to tenants.

Housing for Seniors

New opportunity in managing housing for those aged 55 or older, including federally assisted housing programs.

Manufactured Homes

Homes that are built in a factory meeting HUD specifications and may be placed on individually owned land or in communities.

Resort Housing

Managing second homes or resort rentals presents specific challenges such as caring for vacant properties and attracting short-term tenants.

Concierge Services

Training and managing of concierge staff for office buildings and other settings.

Asset Manager

Monitors a portfolio of properties by analyzing their performance and making recommendations to the owners.

Corporate Property Manager

Allows a corporation to invest in real estate and increase its capital even if the corporation is not knowledgeable about property management.

Leasing Agent

An independent contractor working on a commission basis and skilled in securing a lessee.

Management Agreement

A contract that creates the general agency relationship between the owner and the property manager.

Fiduciary Responsibilities of a Property Manager

Care, Obedience, Accounting, Loyalty, Confidentiality, Disclosure.

Manager's First Responsibility

To realize the highest return on the property in a manner consistent with the owner's instructions and the law.

Key Elements of a Management Agreement

The manager's authority, reporting frequency, compensation, allocation of funds for repairs, liability, antitrust provisions, and equal opportunity statement.

Management Plan

Outlines the details of the owner's objectives and what the property manager expects to accomplish, including financial objectives.

Three Factors Analyzed in Preparing a Management Plan

The owner's objectives, the regional and neighborhood market, and the property itself.

Operating Budget

A projection of income and expenses for the operation of a property over a one-year period.

Cash Flow Report

A monthly statement that details the financial status of the property, noting sources of income and expenses as well as net operating income and net cash flow.

Sources of Income

Rentals collected, late rental payments, utilities, and vending machine proceeds.

Expenses Incurred by a Property

Fixed and variable expenses.

Cash Flow Calculation

Derived by taking total income, subtracting operating expenses to get net operating income, then subtracting mortgage payments and reserves to determine cash flow.

Profit and Loss Statement

A financial picture of all the money coming in and all the expenses that must be paid out, used to determine whether the business made money or suffered a loss.

Budget Comparison Statement

Compares projected budget versus actual income and expenses to assess financial performance.

Goal of Marketing

Attract the most reliable tenants.

Assessing Advertising Methods

A cost-benefit analysis helps the property manager assess whether a particular advertising method worked to attract new tenants.

Selecting Tenants

To comply with all federal, state, and local fair housing laws.

Commercial Rents

Charged cost per square foot per year basis.

Primary Maintenance Objective

Protect the physical integrity of the property over the long term.

Three Types of Maintenance

Preventative, repair or corrective, and routine maintenance.

American with Disabilities Act (ADA)

Ensure people with disabilities have full and equal access to facilities and services; requires reasonable accommodations.