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MANAGING LEASES Siti Hasniza Binti Rosman

Universiti Teknologi MARA (UiTM)

TABLE OF CONTENT

• Managing leases

• Managing leases negotiations

• Managing tenant relations

• Managing reports and insurance

• Managing office administration

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Managing Leases

Negotiations

• Discuss the role the PM plays in negotiating lease. The processes are: • Qualifying a tenant • Visitor registration • Special needs • Lease application • Evaluation of data • Identity • Fair housing • Rental history • Financial status

Managing Leases

Negotiations

• Negotiating the terms

• Controlling the process • Cooperating brokers

• Role of attorneys

• Security deposits

• Concessions

• When to grant concessions

• Rent schedules and rebates

• Free rent

• Length of lease period

• Tenant alternatives

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Managing Leases

Negotiations

• Signing the agreement

• Prospect hesitancy

• Is this the best space available at the price?

• Do the concessions meet my needs?

• Should I act immediately?

• Closing techniques

• Follow up

Managing tenant

relations

• The success of PMs greatly depends on their ability to maintain good relations with tenants.

• Dissatisfied tenants will lead to:

• High tenant turnover

• Space vacancy

• Increase cost of promotion and marketing

• Good communication system is vital for the effective PM.

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Managing tenant

relations

• Establishing landlord-tenant relationship

• Move-in inspections

• Servicing the lease

• Clear understanding of lease terms

• Manager’s personal efforts

• Meeting with tenant

• Newsletters

Managing tenant

relations

• Handling maintenance requests

• Requests in writing

• Speedy response

• Excessive demands

• Role of maintenance personnel

• Commercial and industrial variations

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Managing tenant

relations

• Rent collection • When to pay

• Encourage prompts payments

• Late fees

• Billing notices

Managing tenant

relations

• Lease renewals • The value of stable tenants

• Bargaining factors • The length of the new lease term

• The extent of repairs, alterations or redecorating to be done

• The amount of rent to be paid

• Concessions

• Rental rate

• Proper notice

• Competition

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Managing tenant

relations

• Rental increase

• Fact of life

• Avoid tenant protest

• Increase services

• Terminating the tenancy

• Required notice

• Exit interview (feedback form before moving out)

Managing tenant

relations

• Rental increase

• Fact of life

• Avoid tenant protest

• Increase services

• Terminating the tenancy

• Required notice

• Exit interview (feedback form before moving out)

• Fair housing compliance (giving notice termination upon expiring lease term)

• Inspection of the premises

• Return of the security deposit

• Retention for damages

• Last month’s rent

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Managing tenant

relations

• Terminating the tenancy in court

• Reasons for eviction (breach of contract)

• Notice before eviction suit

• Eviction suit (process of eviction and repossession of property)

• Process of eviction suit must be served on the tenants

• Actual removal (e.g. secure court order until the tenant physically remove from the property)

Managing report and

insurance

• Operating reports

• Financial report • Budget comparison statement

• Income and expense report • Income

• Vacant rental units

• Support space (storage, offices)

• Vacant space under major repair

• Expenses • Wages paid to building personnel

• General operating expenses

• Maintenance expenses

• Administrative costs

• Profit & loss account

• Operating budget

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Managing report and

insurance

• Estimate conservatively • Prepare explanation

• Examine discrepancies

• Allow for an evaluation of management of skills

• Cash flow statement for tax purpose

• Determining profitability

• Tax records

• Risk management and insurance

• Type of insurance

Managing the office

administration

• Establishing the management office

• Location and layout

• Office design

• Files

• Leases

• Correspondence

• Work order bids

• Financial files

• Permanent files

• Equipment

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Managing the office

administration

• Computers and PM • Hardware & software

• Staffing the management office • PM executive

• Property supervisor (field manager)

• On-site manager and building personnel

• Purchasing agent

• Office manager (controller)

• Cashier –bookkeeper

• Clerical personnel

• Branch officers

Managing the office

administration

• Determining management expenses

• Direct cost

• Indirect cost

• Calculating the management fees

• Per-unit cost method

• Adjustment to per unit fee

• Percentage rate

• Management pricing worksheet

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References

• Evans, M, (2007), Opportunities in Property Management

Careers, McGrawHill.

• Kyle, R, (2000), Property Management, 6th Edition,

Dearborn.