managing lease

UNIVERSITI TUN HUSSEIN ONN MALAYSIA11/04/2023 1

Managing Lease Lecture 3

ByDepartment of Construction & Real Estate Management

Faculty of Technology Management

(Session 1 2012/2013)


Lecture outlines

• Managing leases–Managing leases negotiations–Managing tenant relations–Managing reports and insurance–Managing office administration


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



– 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



– 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.



• Establishing landlord-tenant relationship– Move-in inspections– Servicing the lease– Clear understanding of lease terms– Manager’s personal efforts

• Meeting with tenant• Newsletters

– Handling maintenance requests• Requests in writing• Speedy response• Excessive demands• Role of maintenance personnel

– Commercial and industrial variations



• Rent collection– When to pay– Encourage prompts payments– Late fees– Billing notices

• 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



• 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



• 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)


Group Discussion (L3-2)

• Sayid Bajrai manages a 75-unit apartment complex. One of his primary functions is to manage tenant relations. In one week, Sayid had to deal with 3 unpleasant tenant situations. One tenant, A, has been late with her payment. For the last three months, A has paid the rent only after receiving the landlord’s official ‘pay or quit the premises’ eviction notice. This month, A is late again.

• A second tenant, B has repeatedly requests for various services and repairs, most of which have not been the landlord’s responsibility. B just told Sayid that he wants his apartment repainted. When Sayid told him that the landlord was not obligated to repaint the apartment in the middle of his one-year tenancy, he became very upset and threatened to start a tenant revolt.

• The third tenant, C, who has been a model tenant for 5 years, just told Sayid that he would not be renewing his leases when it expires in 2 months. When Sayid asked him the reason of terminating the lease, he replied that he was uncomfortable with present management policies.


Group Discussion (L3-2)

• Questions– What can Sayid do to solve the rent

delinquency problem with A?– What can Sayid do to head off the threatened

tenant revolt– How should Sayid respond to C’s statement

about present management policies?


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


Managing report and insurance

– Operating budget• 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



• 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



• Determining management expenses– Direct cost– Indirect cost

• Calculating the management fees– Per-unit cost method– Adjustment to perunit fee– Percentage rate– Management pricing worksheet


References

• Evans, M, (2007), Opportunities in Property Management Careers, McGrawHill.

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

managing lease

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