Chapter 1 Flashcards Preview

BOMI Asset Management > Chapter 1 > Flashcards

Flashcards in Chapter 1 Deck (13)
Loading flashcards...
1

Describe and asset manager's role and responsibilities.

1) Meeting ownership objectives
2) Developing and asset plan
3) Establishing and Monitoring Financial Objectives
4) Managing the audit process
5) Making property financing recommendations
6) Overseeing leasing/property management team
7) Enhancing value
8) Managing acquisitions/dispositions
9) Addressing troubled assets.

2

Define value.

The monetary worth of a property, good, or service. Value is also the present worth of future benefits that accrue to real property ownership.

3

Explain the purpose of an asset plan.

It recommends specific actions to meet the owner's objectives for a given property.

4

Describe the concept of highest and best use in relation to enhancing property value.

It is the lawful use of a property that produces the greatest net income to its owner. Four criteria-legal permissibly, physical possibility, financial feasibility, and maximum profitability.

5

Identify the last step in the ownership cycle of investment real estate.

Property disposition-selling the property.

6

Explain the notion of a "troubled asset" and provide an example of how an asset obtains this categorization.

troubled asset-a non-performing asset
*physical condition of the building
*change in market conditions
*internal financial discepancies

7

State the fundamental purpose of asset management.

To preserve and create value.

8

What are asset manager's primary relationships in the property management field?

Portfolio managers
Property managers
Leasing agents

9

Discuss the most important economic data used in valuing real estate.

income/employment data-
*the number of service sector jobs indicates the current and future need for office space.
*trends in wages affect retail sales which impact the need for office space.
*disposable income impacts apartment rentals, singe family housing values, and rental trends

10

Identify examples of secondary relationships and asset manager maintains.

attorneys
appraisers
architects and engineers
environmental consultants
other consultants

11

Describe the purpose of a Phase 1 ESA and how it impacts property value.

ESA (Environmental Site Assessment)-the preliminary phase of an environmental assessment that focuses on identifying possible contamination from historical and current uses of a site.

Most properties cannot be bought, sold, or leased without an ESA.

12

How do an asset manager's roles and responsibilities differ from those of a portfolio manager?

A portfolio manager's job includes protecting owner's investments and relieving owners of the need to manage the process themselves. Their primary focus is on ensuring diversification, managing the allocation of capital among assets, and maintaining the best market position for assets.

Asset managers support the portfolio managers by providing updated market analysis data and presenting recommendations for property modifications based on owner objectives.

Sometimes they are the same person.

13

Describe similarities and differences between a property manager and asset manager's roles

Asset managers function more on a strategic level, using tools such as investment analysis, operations analysis, and market analysis to help maximize the value of a property. In contrast, property managers focus on day to day operational aspects of keeping the property running according to ownership standards.

Areas where responsibilities of the two overlap:
*Identifying change of use opportunities for a property
*Researching market issues and trends to anticipate challenges for property operations.
*Recommending and implementing capital improvements plan designed to increase rental income.
*Creating new property marketing plans.