Real Estate Econmics 156 Foldvary

Property Management

The property manager is an agent of the owner for all functions the owner does not wish to do himself: leasing, operating, marketing.

They are often independent firms and contractors.

They have a fiduciary relationship with the owner.

Often they are bonded.

Homeowner associations and condominiums often hire a management firm.

The take care of the landscaping, maintain the utilities.

The management agreement.

The manger sets the rentals, makes leases, collects the rentals, hires the staff.

The manager typically gets a percentage of the rental, such as 5 percent.

There is a tradeoff between the rental amount and vacancies.

If there were perfect mobility, there would be no vacancies.

There would be no shortage or surplus.

Tenants would immediately leave bad landlords,

and landlords would immediately evict bad tenants.

But moving and finding tenants has a cost, so with immobility,

there can be opportunism - exploitation.

Landlords can be more selective for commercial tenants,

seeking complementarities that will maximize revenues.

Book mentions that the best reference is the landlord before the current one.

The lease specifies the rental and the due date.

Psychologically, it is better to have an early-payment discount than a late charge.

There are also real estate asset managers, who manage the financial aspects of large holdings such as by a corporation.