RE: Property Management & Leases

Property management involves the leasing marketing managing and overall maintenance of real estate.

Residential Property Management
- High degree of tenant relations
- Short term leases = High tenant turnover
- Apartments, condo, coops & homeowner association
- Single family housing

Commercial Property Management
- More complex but less emotional
- Retail - traffic onsite
- Help tenants attract customers
- Industrial

Roles of property manager
Position the property in the market and advertise it to prospective tenants
To do this the property manager may start by developing a management plan that
- Analyzes current market conditions
- Evaluates the subject property and its positives
- Outlines the investor's objectives

The management plan is then used to make recommendations regarding the property, position it in the market and help determine appropriate rate schedules.
- Continue current use
- Conversion
- Rehabilitate
- Modernize

Select tenants and negotiate leases
The manager may act as his own leasing agent or may hire a broker to lease the property for him.

Manager must be concerned with long-term viability of property
A leasing agent may be primarily concerned with a commission

Tenants should complement one another
Retail properties often use percentage rent

A wide variety of issues must be incorporated into the lease itself
- Commercial leases can be very complex
- Residential leases are more standardized

Collect rent and maintain good tenant relationships

Oversee administrative tasks
Preparing budget
Maintaining property
Hiring and overseeing employees
Recordkeeping

Legal issues for property managers
Americans with Disabilities act (ADA)
Accessibility
Employment

Fair Housing Act (FHA)
Prohibits discrimination on the basis of race, color, religion, sex, handicap, familial status, and national origin

Common Leasing Issues
Term of lease
Residential leases - max 1 year
Commercial leases - 99 years - 5 years or 10 years

Security deposit
Residential - 1 month rent
Commercial - Varies

Possesion of premises
Lessor grants the tenant an implied convenant of quiet enjoyment
Landlord may enter with notice or in emergency

Eviction
3 day notice for non payment
14/30 day notice for other lease violations

Use of premises - Any legal use unles restricted in the lease

Improvements to premises
Maintenance of premises

Assignment and subleasing - subleasing is allowed unless prohibited in lease

Recording a lease - typically only in long-term ground/mineral leases

Options: for renewal; for purchase

Types of leases
Ground lease
Net lease - double-net and triple-net lease
percentage lease
step or graduated lease
Indexed lease
ground lease
oil and gas lease