Perfect Phrases for Landlords and Property Managers

Hundreds of Ready-to-Use Phrases for Negotiating Agreements, Dealing with Tenants, and Managing MaintenanceBy John A. Yoegel

The McGraw-Hill Companies, Inc.

Copyright © 2009 John A. Yoegel
All right reserved.
ISBN: 978-0-07-160051-4

Contents

Chapter One

Managing Investment Properties: Goals and Objectives

It may be obvious, but let’s start with a basic definition of the kinds of properties we’ll be talking about in this book. The major distinction that is made in any discussion of property management is the difference between a property that is purchased to live in with additional units that provide income, as opposed to a property that is bought for investment purposes, that is, for the income that the property will generate now or in the future. A similar situation exists with an owner whose business is located in part of a building he or she owns with the rest of the space being rented out.

Some people refer to properties bought for investment purposes generically as commercial properties. This is not so much wrong as it is imprecise. Commercial properties are properties that are used for business purposes. Office buildings, retail stores, shopping malls, and factories, among other types of properties, fall into the category of commercial properties. On the other hand, properties that people live in are referred to as residential properties. These could be anything from a single-family house to a large apartment building or a condominium or cooperative apartment.

The simple distinction that we deal with in this book is not commercial versus residential, but rather for what purpose the property was purchased. Any property, whether commercial or residential, that is purchased solely for owner occupancy is not the purview of this book. I will be discussing and providing perfect phrases for properties that have been purchased and are being managed for their income potential as investments. One rather obvious crossover that I’ll discuss in a later chapter are some of the issues faced by the owner/manager who either lives or works in part of the building and rents out the rest of the space or other apartments. These owner-occupied buildings can have some unique benefits, and problems, that we’ll address.

In some ways any of us who own a single-family home, condominium, or cooperative, manage it. We make sure all the bills are paid, like the oil or electric, and we keep it in good repair. We do this ultimately to keep the tenants happy, and that would be us. And we also do it to maintain the value of the property.

Our goals as either an owner/manager, commonly referred to as the landlord, or professional property manager of an investment property are no different. We should be doing what we can to keep our tenants happy because to put it simply, happy tenants will be willing to pay higher rents and will recommend the building to other prospective tenants, which will keep our vacancy rates low. All of this translates into more financial return on an investment. Maintaining the building will also generate both short-term profits as well as long-term gains when the building is sold.

The goal of maximizing income from an investment property while maintaining or increasing its value is, of course, not totally within the control of the landlord or property manager. Market forces, supply and demand, and the overall economic situation, as well as the particular microeconomic climate for that type of rental space in that particular area are usually beyond the control of the landlord or property manager. In the first instance a wise choice of investment property will anticipate or mitigate some of these market forces. But since investing in real estate doesn’t come with a crystal ball, the property manager’s and landlord’s job is to anticipate as much as possible and react appropriately to changes in market conditions. Although this book is not directed toward decisions made when choosing a property in which to invest, it will address the property manager’s role in recommending actions that may be taken to maintain or enhance the property’s marketability in changing circumstances.

As noted, whether the property is managed by an owner-occupant landlord, absentee landlord, or professional property manager, the goals in managing an investment property usually are the same. Perhaps the biggest difference between a landlord and professional property manager is the flexibility that a landlord has to react to certain situations or modify his or her business plan. Whereas a landlord might instantly be able to renegotiate a rental agreement, a property manager, depending on the extent of his or her authority, may have to seek the owner’s approval. As you use this book you’ll note that most of the phrases can be used by landlords as well as property managers. In some instances the phrases are unique to property managers or landlords.

So far we’ve been talking about landlords and property managers interchangeably. An important aspect of managing an investment property is the relationship between an owner who chooses not to manage the investment property and the property manager who is hired to do the job. Some phrases are presented that also address this relationship.

Chapter Two

Managing Investment Properties: Skills and Responsibilities

As an introduction to getting the greatest benefit from using the phrases in this book, it is worthwhile to briefly review the basic duties, responsibilities, and skills needed to manage an investment property. Regardless of whether you are a landlord or professional property manager the duties and responsibilities are much the same. This review is no substitute for detailed study and experience in the property management field.

One can categorize the duties in managing a property into four major areas:

* Planning

* Budgeting

* Maintenance

* Marketing and leasing

These areas will be further broken down in the book, but a brief overview at this point will provide easier access to the material.

Planning

A landlord or property manager should always be anticipating changes in market conditions that may affect the property. These could be changes in the general economic conditions of the country or a particular segment of the economy. For example, interest rates could go up, making it more expensive to secure financing for major renovation. Or a building devoted to renting space to high- tech companies may suffer if there is a downturn in that part of the economy.

Another situation that can affect a property is change in the area or neighborhood in which the property is located. Perhaps a residential neighborhood has grown unsafe or the land uses in the area are changing from residential to commercial. These are external changes that can affect a property.

Changes can also be internal. Buildings and their systems wear out. Leases expire. Employees retire. All of these changes can affect a building and most can be anticipated and planned for.

Although no one can predict the future, an owner or property manager needs to be alert to changes that will affect the property in some way and take appropriate steps to plan on minimizing the impact of anything from a broken furnace to a retiring superintendent. The landlord or property manager also needs to react quickly to external changes so as to both minimize any negative impact and if possible take advantage of the change to enhance the value of the building.

Budgeting

Budgeting involves collecting rents and paying the bills. On the income side a rent collection system should be established. Expenses generally fall into operating expenses and capital expenses. Operating expenses are those that recur either monthly or at least annually, such as power, fuel, and salaries. Capital or nonrecurring expenses are those that may occur periodically but not every year. Some of these expenses may only occur once during the length of ownership of the particular owner. For example, a roof might need to be replaced every 10 to 20 years. The property’s budget should deal with both of these kinds of expenses.

Therefore, the budgeting process has a planning element. A landlord or property manager needs to anticipate and plan for capital expenditures, renovations, and loss of revenues due to lease expirations, as well as unanticipated vacancies. In addition, when a property manager is employed arrangements must be made for periodic financial reports to the property owner.

Maintenance

The property must be maintained to meet health, safety, and building code standards. Further, it should be maintained in such a way as to avoid tenant complaints and make it competitive with similar buildings in the area. Maintenance is generally performed by employees of the owner or property manager, contracted companies or individuals, or a combination of the two.

Marketing and Leasing

Unless economic conditions remain extremely favorable, causing prospective tenants to flock to the property, at some point an owner or property manager will have to market the property. This might be something as simple as an ad in the newspaper or as elaborate as a marketing campaign.

Assuming the marketing campaign is successful, the landlord or property manager will then have to negotiate a lease with the tenant. Lease negotiations can be highly complex.

Skills Needed by a Landlord or Property Manager

To the extent that one can master the skills required, a property manager should have knowledge in the following areas:

* Leasing activities

* Budgeting

* Construction and project management

* Real estate economics

* Marketing

Note that the skills listed are reflective of the duties and responsibilities for the landlord and property manager. It is helpful, for instance, in planning for and executing a capital renovation for a property manager to have some knowledge of construction and project management.

In addition, a landlord or property manager should have a heavy dose of patience, good communication skills, both written and oral, and generally good people skills. It is in fact in the area of good communications that this book is most useful. Whether dealing with a tenant or a contractor, negotiating a lease or managing your property management team, you’ll find useful phrases in the chapters ahead.

Chapter Three

The Property Management Team

In most places anyone holding a valid real estate broker’s license can act as a property manager. However, property management is a unique specialty within the larger field of real estate. Many companies specialize only in property management, whereas some general real estate brokerages have property management divisions. In either case this specialized area requires all of the staffing, organizing, planning, and management skills that are needed to run any successful business organization.

The laws of your particular state will determine what, if any, type of state license is required to operate a property management firm and who within the firm needs to have a license. In addition, decisions need to be made about the legal form the organization will take (for example, corporation or partnership) if there is more than one business owner. These decisions are best made with the advice of an attorney and accountant. Regardless of the form the organization may take or the state licensing requirements, as with any organization the greatest asset is the people who work for you. Hiring the right people, training them, and stating clear goals for the organization as well as for individual performance, and rewarding employees accordingly are all part of running a successful enterprise. You, as the owner of the property management firm, will not only need knowledge of property management, but also business administration.

The phrases presented in this section will help you deal with a variety of issues that will be part of operating your property management firm. The phrases are geared toward hiring, training, and managing staff property managers. The term staff property managers is used to refer to those individuals employed by a property management company who are responsible for the day-to-day management of the properties. In very large firms where other hires are made, such as maintenance workers, most of these phrases, with minor changes, will be useful in managing other workers. This chapter is about getting the best people and then getting the best from the people you have.

Assembling the Team

The Boss’s Mindset

* Hire the best people possible.

* Make sure the people who are hired have the proper licensure and/or certifications.

* In order to secure the best people provide competitive wages and benefits.

* Make sure there is a good fit between the prospective employee and the company.

* Judge a prospective employee by a number of different but important criteria.

* Understand the employee’s expectations of the company.

* Make sure the employee understands what will be expected of him/her.

* Avoid any and all references and questions to a prospective employee that may violate equal opportunity employment laws.

* Check the references of prospective employees. If possible, check with the owners of the building they have previously managed.

* After making an offer of employment, provide a reasonable time for the prospective employee to respond.

* Follow up as promised with an applicant.

* Allow the applicant to explain any employment gaps.

* Arrange for one or more current employees to meet with the applicant.

* Be honest about the requirements and benefits of the job.

* Pose a few hypothetical property management situations to see how the applicant will respond.

Phrases

* “Assuming we were to hire you, would you have your real estate license by next month?”

* “How far along are you with your Certified Property Manager® courses?”

* “I’m sure you’ll find our wages and benefits package very attractive compared to other property management firms.”

* “Tell me why you want to switch from real estate sales to property management.”

* “I’m interested in what you were doing during the gap in employment indicated on your resume.”

* “Can you tell me a little more about (name of applicant) since you wrote a reference letter for him or her?”

* “What was your worst experience as a property manager in your previous jobs?”

* “We’ll expect you to be on call 24 hours a day, 7 days a week for the buildings that you’re assigned to manage.”

* “We’ll be in touch one way or the other by the end of next week.”

* “I do hope you’ll join our team, but either way could you let me know your decision by the end of the week?”

* “We have a policy here of applicants being interviewed by one or more of our current property managers, so I’ll turn you over to (name of current employee) for a little while.”

* “Why do you want to come to work for us?”

* “I’m sorry, but we don’t hire people without a property manager certification.”

* “Describe to me your perfect boss.”

* “Some of our buildings are located in less than safe neighborhoods. How do you feel about that?”

Training

The Boss’s Mindset

* Have the best trained staff possible.

* Discuss the importance of training during the hiring process.

* Emphasize the importance of training as a matter of company policy.

* Offer incentives to employees who acquire advanced training.

* Indicate training opportunities within the company when hiring.

* Provide financial assistance to employees for training.

* Provide mandatory in-house training programs.

* Follow through consistently with any rewards for advanced training.

* Establish a program of on-the-job training with employees assuming greater responsibility and taking on more difficult assignments.

* Establish a mentoring program matching junior employees with more experienced employees.

* Provide free time off for attendance at conferences.

* Allow employees to work flexible hours in order to pursue educational goals.

* If your only training to be the boss of a property management company is experience as a property manager, it is you who need training.

Phrases

* “I expect everyone to attend the monthly training seminars that we’ll be conducting here in the office.”

* “I want you to work with (name of more experienced employee) for a few weeks or so and then we’ll turn you loose on your own.”

* “The boss has assigned me as your mentor, so please come to me with any questions or concerns you might have.”

* “There will be an automatic raise of (dollar amount or percentage) when anyone achieves their property manager designation.”

* “I’m going to establish an educational assistance program to help any employee who wants to go to college or graduate school in a subject related to what we do here.”

* “I know you’re available whenever we need you to do your job, so I have no problem if you leave early one day a week to attend college classes.”

* “I’m sorry, but a course in political science (or some other unrelated subject) doesn’t qualify for our educational assistance program.”

* “By all means take the three days on us to attend the property manager’s conference.”

* “Usually we want people who already have some real estate training. But I think you have a great deal of potential and I’m willing to pay for you to get your real estate license if you’ll come and work for us.”

* “When you get your property manager designation you’ll be assigned your own buildings to manage.”

* “The training program we have in place has you start by managing small buildings at first and working your way up to managing our more complex properties.”

* “At the next company training session we’ll allocate some time for you to share with the group any new ideas that you learned at the conference.”

* “Congratulations! We’re all very proud of you for having been awarded your property manager designation.”

Managing the Team

The Boss’s Mindset

* Create an effective and efficient team of staff property managers and support staff.

* Different people have different skills and abilities. Develop the talents of individual staff members accordingly.

* Your highest paid people should not be doing work that lower paid people can do. Maintain an effective support staff to free up the time of your property managers.

* Employees are not mind readers. They need to know your expectations. Your ability as a boss to communicate clearly with your staff can make or break your organization.

* You must be many things as a boss: supervisor, coach, mentor, and instructor.

* There is almost nothing that will drive an employee crazier than inconsistency on the part of the boss.

(Continues…)

Excerpted from Perfect Phrases for Landlords and Property Managersby John A. Yoegel Copyright © 2009 by John A. Yoegel. Excerpted by permission of The McGraw-Hill Companies, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.