Real Estate Finance Discussion Questions
Property manager is one who functions in the capacity of the property owner to carry out actions that an owner finds it difficult to perform or does not have time to actively engage in such activities. It is the job of a property manager like me to be on constant guard for catching hold of development programs and carrying out means to preserve the property effectively. Property managers are constantly updated with the market demands that float in the industry therefore the manager will be able to match the owners need (supply) with the demand that persists in the industry. In this way renting or selling or purchasing facility is at the back of my mind to exploit the opportunity as it arises. Similarly incurring unnecessary costs will be cut down as only relevant maintenance costs are expensed which are mandatory for property’s survival.
Legal problems are also avoided which are sometimes the backbone for huge financial losses for the property owner because every activity has to be performed within the set boundary of legal framework. Default risk is also one of the major concerns in today’s financial crisis hence not only financial strong tenants are found but manager even goes out of the way to check whether the respective tenant pays dues on time and does not cause damage to the property. (Ebooker)
No doubt a property owner tries to minimize the cost but often an owner does not have time to be fully up to date with the current and upcoming turnarounds of real estate industry. Decisions are being based on either less relevant information or in an untimely fashion which can cause a significant potential loss. Filtering out the relevant information from an overload of data is quite difficult for someone who does not possess the experience in the industry. Areas with respect to current financial, legal, political and economic aspects need to be covered before selling a property therefore it’s highly likely that incorrect decisions will be made by the property owner himself which will limit the upside potential of earning money. Therefore one way of analyzing the cost and benefit from hiring a property manager is the fee paid to him/her against selling the asset without his/her assistance.
On the other hand if an owner asks for selling the property from a real estate agent, the agent is likely to quote the market price of the current property. However the problem that arises is a potential conflict of interest of a property manager or agent trying to sell the property so that he/she could earn their commission rather than selling it at the best price possible. Therefore unless a reputable property manager is hired who has shown high ethical practice, it is unlikely that property manager will sell the assets in the best interest of the landlord.
Ebooker. Property Manager Benefits. 11 December 2009