Property Management

A property manager has a fiduciary relationship with the owner.

The primary goals of the property manager are to generate the highest net operating income while maintaining the value of the property.

A property manager is a general agent of the owner because they are engaged in an ongoing business relationship.

Most states recognize property management contracts as personal service contracts that terminate upon the death of either party.

Most states require property management agreements to be in writing. A property manager may be paid based on the gross or net income the property produces.

The duties of a property manager include:
- Preparing the budget
- Allocating money for fixed expenses, operating expenses, and reserve funds
- Selecting quality tenants, which involves being familiar with the market rent versus the contract rent
- Offering concessions to attract tenants

The lease agreement should specify when the rent is due. If the lease does not specify a date, rent is due the last day of the leasing period.

The property manager should maintain good relationships with the tenants. The duties of maintaining the property include hiring contractors and employees, overseeing their work.

The property manager must reserve funds for capital expenditure such as remodeling and renovating the property.

A property manager should have knowledge of the following:
- Market conditions
- Record keeping
- Expenses
- How to handle environmental hazards
- Risk management

Risk management involves evaluating the need for insurance coverage to protect the owner and manager from risk such as:
- Loss of revenue
- Liability from the injury of anyone on the premises
- Loss due to fire
- Medical coverage for employees
- Casualty losses

The four options a property manager has for avoiding risk are:
- Avoid the risk by removing the problem
- Retain the risk by purchasing insurance with a large deductible
- Control the risk by installing protective equipment
- Transfer the risk by obtaining insurance with no deductible