Introduction to Property Management

13,655 views

Published on

Introduction to Property Management

  1. 1. Introduction to Property Management Lecture 1 Department of Real Estate Management Faculty of Technology Management and Business (Semester1 2012/2013)13/11/2012 1 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  2. 2. Lecture outlines • History of property management • Property management today • Where property managers work • Different property management jobs • Property management as a career13/11/2012 2 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  3. 3. History of property management • In its earliest day, the property manager had only one job, – TO COLLECT THE RENT • In the 1930s, economic depressions, where people out of job, the stock market crash, mortgage default that end up with the banks kept many of properties. • But bankers have no knowledge to manage property. • Thus the property manager was born.13/11/2012 3 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  4. 4. Property management today • For the last 25 years, most people became property managers by unintentionly. • In the 21st century, the growth of real estate investment by the investors and companies that manage large properties, demand for property management is indeed a full-time career.13/11/2012 4 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  5. 5. Where property managers work• Third-party managers – Work for the property owners of the property they manage• Real estate investment trusts (REITs) – Employee of the company• Institutional owners – Work for group of building owners: banks, large limited partnerships, foreign investors, etc.• Corporate real estate management – Work for corporations to manage their income producing real estate13/11/2012 5 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  6. 6. Different property management jobs • On-site manager – Day to day operation: collecting rent, preparing reports, supervising maintenance, cleaning works • Leasing agents – Leasing broker: locating & signing new tenants to occupy space in building • Tenant representative – Mostly for commercial property: assisting tenants in locating space and negotiating lease13/11/2012 6 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  7. 7. Different property management jobs • Property manager – Responsible for the operation of several properties, overseeing on-site manager, involve in planning and budget for property management activities, and usually report to asset manager • Portfolio (asset) manager – Executive responsible for large no of properties, evaluate the properties performance, act as a substitute to owner, approve policies and financial, act as advisor to owner.13/11/2012 7 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  8. 8. Property management as a career• Board of valuers, appraisers, estate agents (BOVAEA) – Role of property managers can be found in http://www.lppeh.gov.my/role.php13/11/2012 8 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  9. 9. Property management as a career• The Board was set up in 1981 under the purview of the Ministry of Finance, Malaysia.• The setup and operation of this Board is governed by the provision of Valuers, Appraisers and Estate Agents Act 1981.• Its primary function is to regulate the Valuers, Appraisers and Estate Agents practising in Malaysia13/11/2012 9 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  10. 10. Property management as a career• The Functions of The Board are – To keep and maintain the Register of Valuers, Appraisers and Estate Agents, Probationary Valuers and Probationary Estate Agents and firms of Valuers, Appraisers and Estate Agents. – To approve and reject applications for registration. – To hold disciplinary proceedings. – To conduct examinations. – To prescribe Scale of Fees. – To regulate the professional Conduct/Ethics of Valuers, Appraisers and Estate Agents. – To award scholarships13/11/2012 10 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  11. 11. Property management as a career• Role of Property Manager – Currently only a registered valuer can practice as a Property Manager. – The property manager ensures that the owner gets the best returns of his property investment. – He also ensures that the building is well maintained, the building services well looked after and all expenses paid. – He is able to optimise usage and enhance the investment in property. – He advises on lease renewals, selection of quality tenants and the appropriate tenant mix.13/11/2012 11 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  12. 12. Number of Firms & Registred Members & Probationary Members (Active) • Firms Firm Type Firms Valuer & Estate Agent (VE) 300 Valuers (V) 80 Appraisers & Estate Agent (AE) 9 Estate Agents (E) 900Estate Agent & Property Management 7 (EPM) Property Management (PM) 3513/11/2012 12 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  13. 13. Number of Firms & Registred Members & Probationary Members (Active) • Registered Members Licence Type Members Registered Valuers (V) 840 Registered Appraisers (A) 17 Registered Estate Agents (E) 165013/11/2012 13 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  14. 14. Number of Firms & Registred Members & Probationary Members (Active) • Probationary Members Licence Type Members Probationary Valuers (PV) 520 Probationary Estate Agents (PEA) 24313/11/2012 14 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  15. 15. Payment to Property Managers• An annual fee based on: – 5% of the gross annual rent on the first RM30,000 – 3% of the gross annual rent on the residue up to RM 100,000 – 2% of the gross annual rent on the residue over RM 100,000• The fee is applicable to each holding.• The expression ‘holding’ as used here has the same meaning as defined in Section 2 of the Local Government Act 1976.13/11/2012 15 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  16. 16. Section 2 of the Local Government Act 197613/11/2012 16 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  17. 17. Payment to Property Managers• The expression ‘gross annual rent means the rents reserved or deemed to be reserved by the lease or lettings plus any incidental receipts collected accounted for or both in the course of management.• Minimum fee : – As above but may be subject to a maximum discount of 30% and a minimum fee of RM50 per month.13/11/2012 17 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  18. 18. Discussion • Would you prefer to work as an employee manager or a third-party manager? – Why? – What are the advantages or disadvantages of each?13/11/2012 18 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  19. 19. Answer• Employee manager – Advantages • The security of a paycheck • The freedom from having to solicit clients and properties to manage – Disadvantages • Being confined to working for someone else13/11/2012 19 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  20. 20. Answer• Third party manager – Advantages • The freedom of running one’s own business (although the property owner’s goals must always be fulfilled) – Disadvantages • The work (and insecurity) of finding new clients and new buildings to manage13/11/2012 20 UNIVERSITI TUN HUSSEIN ONN MALAYSIA
  21. 21. References • Evans, M, (2007), Opportunities in Property Management Careers, McGrawHill. • Kyle, R, (2000), Property Management, 6th Edition, Dearborn. • http://www.lppeh.gov.my/role.php13/11/2012 21 UNIVERSITI TUN HUSSEIN ONN MALAYSIA

×