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Flashcards in Chapter 8 Deck (10)
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1

What are common challenges an asset manager must consider when determining which management firm to hire?

location
leasing
redevelopment
tenant relations
performance
holding period
condition of the property

2

Describe the three tiers of management firms and how they are different.

Top Tier-National
*advantages in standardized policies/personnel depth
*centralized accounting leads to better expense controls and timely reports

Mid-Tier-More Limited Geographical Area
* partner with similar firms in other geographical markets to serve clients outside of their own markets

Specialty Firms
*smaller-operate in a particular market
*more risk due to limited size but they are good at specific properties
*more personal

3

What are the seven basic elements of a proposal that an asset manager should request from all perspective property management companies?

personnel-training, background, certifications, etc.

Systems and Procedures-accounting and management firms/software

Operations and Construction-staffer skills and knowledge and should state who does it

contract terms
references
conflicts of interest
confidence

4

What are the key issues negotiated in a property management contract?

indemnification
liability limits
termination
delegated authority
employees
in house services

5

What is the purpose of incentive clauses, and what kinds of incentive clauses can asset managers use?

Incentive clauses are targeted to a specific problem of the property and may be tied to increase occupancy or net income.

They can use cancellation fees, construction management, reimbursable costs and training costs.

6

What is the purpose of a monthly reporting package, and what types of comprehensive reports are typically provided to an asset manager?

Update asset manager on financial results of the property.

They should review actual to budget variances, receivable and manager's comments and summaries.

examples-statement of cash receipts, disbursements, current rent roll, aged receivables, monthly bank statement and reconciliation, transfer of excess funds, and misc. accounting reports.

7

What is the goal or property management transitions?

to ensure the transition is smooth and has minimal impact on property operations.

8

Identify the kinds of incentive clauses that asset managers can use. Discuss the purpose of each incentive clause.

cancellation fees-used to recover management company's set up costs

construction management-compensate management for extra effort to oversee construction projects.

reimbursable costs-costs for manager's office and staff which are added to the operating expenses

training expenses-training costs for property specific systems

9

What types of comprehensive reports are typically provided to an asset manager? Explain the purpose of each type.

statement of cash receipts/disbursements-compares actual to budget

current rent roll

aged receivables-past due payments

bank statement/reconciliation-reconciliation performed by someone not writing check or making deposits.

transfer of excess funds-cash flow statement; all cash received and paid and the reserve amount

misc accounting reports

10

What are some of the main items to examine when making property management transitions?

1) property communication-formal introduction to tenants, vendors, suppliers, etc.
2) rent roll
3) accounting
4) property operational efficiency-deferred maintenance and needed capital improvements
5) environmental issues
6) service contracts-last bid dates, expiration dates, COIs
7) tax/utility bills
8) tenant relations
9) common area maintenance reconciliations
10) budget