Flashcards in Chapter 8 Deck (10)
What are common challenges an asset manager must consider when determining which management firm to hire?
condition of the property
Describe the three tiers of management firms and how they are different.
*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
*smaller-operate in a particular market
*more risk due to limited size but they are good at specific properties
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
conflicts of interest
What are the key issues negotiated in a property management contract?
in house services
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.
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.
What is the goal or property management transitions?
to ensure the transition is smooth and has minimal impact on property operations.
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
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