Real estate management
Real estate management - consists in making decisions and performing activities aimed at ensuring rational property management, in particular:
- proper economic and financial economy of real estate,
- safety of use and proper use of real estate,
- proper energy management within the meaning of energy law regulations,
- day-to-day real estate administration,
- maintaining the property in a non-deteriorated condition for its intended purpose,
- reasonable investment in real estate.
The essence of management
As a rule, real estate management comes down to determining the intent of action, gaining the necessary resources to achieve specific goals and controlling their achievement. It should be noted that real estate management is a constant and long-term process, where quality and commitment are the most important.
Trying to specify this concept more precisely, it can be stated that real estate management is not only taking care of keeping them in a proper technical and financial condition, but also constantly improving them, improving them to increase their value over time. It results from the fact that it is the proper functioning of the property management process that generates their value and desire among potential customers.
The most common definitions of the concept of real estate management can be found in such three key elements of the process:
- preservation of real estate in a non-deteriorated condition, with a view to increasing its value,
- achieving maximum income,
- absolute respect and counting with the needs of tenants.
You can also find such terms as:
Static property management - it consists in keeping the property in a proper, unproven condition.
Dynamic property management - it is more innovative management, where attention is focused not only on the property itself, but mainly on the needs of its tenants.
Property manager - a person having a professional license to perform this activity; acts as a liaison, intermediary between the owner of the property and its tenants. Its aim is to achieve the highest possible efficiency and efficiency in the use of a given facility, while simultaneously agreeing on the divergent requirements of the owner and tenants. In addition, his actions, decisions can not be against the requirements of the property owner.
In order to properly perform its task, the manager must first and foremost:
- "Get acquainted with the technical condition of the property in a material way, including through her visual assessment,
- check its legal status,
- analyze its financial status,
- discern the market. "
Contrary to appearances, the role of the manager is not so simple. Undoubtedly, the property manager must be a versatile person. In addition to being a specialist in his profession, he must also have knowledge of many other areas such as: law, finance and taxes, economics, social sciences, construction sciences, geodesy. It must be a person able to cooperate not only with the owner of the property and its users, but also with a wide range of professionals whose services are necessary for the functioning of the entire property management process.
An important feature affecting the assessment of a potential administrator is "the position of the manager on the market, time of functioning on the market, customer feedback about integrity, quality of services and professionalism of the manager" as well as "the range of services and the prices proposed for them."
"The role of the administrator lies in:
- implementing the adopted action strategy and management plan,
- maintenance and control of compulsory documentation,
- accepting and introducing tenants (...)
- analysis, planning and implementation of procedures for maintaining the technical level of real estate (...)
- implementation and control of the assumed operational budget and accounting,
- preparation and preparation of a report on the implementation of the budget,
- reducing operating costs,
- developing analyzes of profitability of investments and renovations,
- supervising renovation and construction works,
- formulating new goals and their implementation,
- raising funds for achieving the assumed goals,
- conducting market research and advertising campaigns within the assumed budget, in order to obtain the largest possible inflows from real estate,
- providing advisory services,
- cyclical reporting to the owner according to established rules,
- holding the board in a manner consistent with the principles of proper management and in the best interests of the owner. "
Property management contract
The activities of each manager are based on precisely defined principles and rules, which is to ensure effective performance of tasks resulting, inter alia, from the management contract
Therefore, it is stated that the basis for the manager's activity is a real estate management contract, which is a type of contract specifying the scope of specific services to be provided by the manager. It can be concluded between the manager and the owner of the property or, in the case of managing the common property, a housing community.
You can also extract different types of property management contracts:
- The basic type - includes the scope of duties and information on the amount of the manager's fee; operating costs are paid by the owner who deals with them in person or on their behalf regulated by the administrator.
- Result type - the contract consists in the fact that all property income from the manager representing the owner covers all expenses, and the surplus is the source from which the agreed fee is paid to the manager, and the difference goes to the owner.
- Investment type - the manager is entitled to collect and retain all income from real estate, but at the same time he is obliged to incur any costs related to the operation and investments related to real estate; his remuneration is the difference between income and any costs associated with the property he manages.
It should be borne in mind that sometimes contracts can be found, which are a mix of elements of various types of contracts mentioned above.
Property management plan
Planning plays an important role in the property management process. For this reason, one of the basic responsibilities of each manager is to develop a detailed property management plan.
"The property management plan is a document wider than the budget, it includes the analysis of the diagnosis and forecast of the state of the real estate. It is a plan containing, in accordance with the objectives of the owner, the activities necessary to maximize the potential of the property and improve its market position. Most often it is a document that is prepared for the purpose of analyzing the legal, technical or functional status of real estate and finding potential ways of operating on real estate. "
"The structure of the management plan includes:
- basic information about the property,
- real estate market analysis,
- ongoing financial analysis,
- strategic analysis,
- evaluation of the proposed variants of the procedure,
- implementation plan for the variant indicated,
- summary of the plan and conclusions. "
Examples of Real estate management
- Leasing: Negotiating contracts with tenants, collecting rent payments, and enforcing lease agreements
- Maintenance: Scheduling and performing regular maintenance, repairs and improvements to the property
- Marketing: Advertising available units, showing prospective tenants the property, and creating a positive image of the property
- Financial: Developing a budget, tracking income and expenses for the property, and preparing financial reports
- Legal: Ensuring compliance with local, state and federal laws, regulations and ordinances
- Customer Service: Responding to tenant needs and questions in a timely manner, and providing a pleasant rental experience
Advantages of Real estate management
Real estate management is a process aimed at ensuring rational property management. It has many advantages, such as:
- Increased efficiency and cost savings by streamlining processes and eliminating unnecessary steps. This helps to reduce costs and improve the overall quality of the services provided.
- Improved asset protection and management of risks associated with unpredictable changes in the real estate market.
- Minimization of risks associated with potential legal issues, such as tenant rights and obligations.
- Increased transparency of the entire real estate process, which allows for better tracking of the performance of the property.
- Improved communication between various stakeholders involved in the real estate process, from owners to tenants.
- Increased accuracy in the collection of rents and other payments related to the property.
- Increased ability to make informed decisions about the property, such as when to make repairs, when to renovate, and when to sell.
- Increased ability to attract and retain tenants, as well as to create a more desirable living environment.
Limitations of Real estate management
Real estate management has its limitations, some of which are as follows:
- Financial Constraints: Real estate management is subject to financial constraints, such as limited purchasing power, debt service requirements, and other financial restrictions that can hamper the ability to effectively manage property.
- Legal Restrictions: Property management is subject to a variety of laws and regulations, such as zoning and land-use laws, which can limit the use or potential value of a given property.
- Social/Political Influences: Social and political influences can also have an impact on real estate management, as local governments may have additional regulations or ordinances that affect the use or development of a property.
- Environmental Factors: Environmental factors, such as air and water quality, can also influence the ability to manage real estate, as they may limit the types of activities that can be conducted on a given property.
- Market Factors: The real estate market itself can be a limitation, as market trends can affect the value of a property and limit the potential of a given property.
Real estate management involves a variety of approaches to ensure efficient and effective property management.
- Planning - Planning involves the identification and analysis of the current and future needs of the property and how the property can be managed to meet those needs. It includes the implementation of strategies to manage and improve the property’s value.
- Maintenance - Maintenance is necessary to ensure the property is kept in good condition and is safe and secure for tenants. It includes regular inspections, repairs and upgrades, as well as preventive maintenance to reduce the risk of costly repairs in the future.
- Investment - Investing in a property can help to increase its value and rental income over time. It involves researching potential investments, assessing associated risks and returns, and making informed decisions about the best investments for the property.
- Tenant Management - Tenant management involves the selection and retention of tenants, as well as ensuring the timely payment of rent and compliance with the terms of the lease. It also involves resolving issues between tenants and landlords, in order to maintain a positive relationship.
- Financial Management - Financial management includes budgeting and forecasting to ensure income is sufficient to cover expenses and that the property remains profitable. It also involves the tracking and reporting of financial data, to provide insight into the performance of the property.
Summary: Real estate management involves a range of approaches to ensure efficient and effective management of a property, including planning, maintenance, investment, tenant management and financial management.
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